Maximizing Your Earnings: A Guide to Collecting All Your Royalties as an Artist or Producer
By Daniel Cruz Hernandez
We have found that many musicians and songwriters are unaware of the multiple income streams that their music can generate and therefore often miss out on collecting a significant portion of their earnings.
Your music generates significantly more revenue than just what you receive from your label or digital distributor (ex. Distrokid, Tunecore, etc). The purpose of this blog is to provide some guidance on the revenue streams associated with your music, empowering you with the knowledge needed to ensure you collect nearly every dollar that your music earns.
First, it is crucial to understand that each song is associated with two copyrights — 1) the Sound Recording, and 2) the Underlying Composition. The chart above illustrates the three main revenue streams resulting from each of these copyrights, creating a total of six main revenue streams you should be aware of. In the following sections, I will break down each of these revenue streams.
SOUND RECORDING COPYRIGHT: The first music copyright is the “sound recording,” also known as the “master.” The master is a recorded version of a song, which is typically owned by the recording artist if he or she is independent, or by their record label if the artist is signed. The copyright in the Sound Recording generates three primary income streams:
1. Interactive Streaming Royalties: Platforms like Spotify, Apple Music, and Tidal pay royalties to record labels and distributors for every stream.
How to collect: When the artist is signed, the record label distributes these royalties to the artist and/or producer once the recording costs from the song and the artist’s or producer’s advance are recouped. Unfortunately, there are very few independent artists who actually calculate and distribute these royalties to producers or featured artists themselves. Therefore, when possible, I suggest that artists use a platform like Distrokid that allows artists to register the percentage of earnings that collaborators are due from any song or album and automatically send those earnings to the collaborators.
2. Digital Performance Royalties: The sound recording also generates royalties from non-interactive streaming, known as digital performance royalties. Internet radio services like Pandora or SiriusXM are examples of non-interactive streaming platforms because they don’t allow listeners to select, rewind, or fast-forward the songs they’re listening to.
How to collect: To collect these royalties, you need to register with SoundExchange. Your digital distributor does NOT collect and pay these royalties. Individuals who are not featured artists on the song, such as producers or engineers, must have all featured artists on the song sign and submit a ‘SoundExchange Letter of Direction (LOD)’ to collect these royalties. You can find these LODs on SoundExchange’s website and should submit them to ‘accounts@soundexchange.com’.
3. Synchronization Fees and Royalties: When songs are used in monetized videos (e.g., films, TV shows, YouTube videos, video games), a sync license is required. Depending on the agreement, the license may require an upfront flat fee, backend royalties, or both. There is no standard rate for sync licenses; however, the payment is typically split 50/50 between the owners of the sound recording and the owners of the underlying composition (which will be discussed in the next section).
How to collect: The companies using the songs directly contact the record label, artist, or producers to arrange payment for their usage.
UNDERLYING COMPOSITION COPYRIGHT: The second copyright associated with a song is the “underlying composition,” often referred to as the “publishing.” Publishing includes the elements of a song that are not physically recorded, such as the underlying melodies and lyrics, which can be used to create multiple Sound Recordings. The difference is often clearer in pop music, where the songwriters will most likely not include the actual performing artist.
In genres where producers create the musical elements of a song, such as hip-hop and R&B, producers typically retain a 50% ownership share in the publishing. This copyright also generates three primary income streams:
1. Public Performance Royalties: Whenever a song is publicly performed, whether in a bar, at a concert, or on the radio, its songwriters earn public performance royalties. The performance income generated is split in half: one portion goes directly to the songwriters (referred to as the ‘songwriter’s share’), and the other half goes to the songwriters’ publishing companies (known as the ‘publisher’s share’).
How to Collect: Sign up with a Performing Rights Organization (PRO) like ASCAP or BMI and ensure that the artist has registered the song with the correct splits. If you’re with ASCAP, you need to create two separate accounts — one to collect your songwriter’s share and one for your publisher’s share. If you’re registered with BMI, you don’t need two accounts, and you would receive both your writer’s and publisher’s share automatically once the song’s registered. However, it is recommended that you create two accounts as the system sometimes makes mistakes.
2. Mechanical Royalties: Songwriters earn mechanical royalties from streams, downloads, or purchases of their songs. This is the most significant revenue stream that songwriters often overlook!
How to Collect: To collect mechanical royalties from streams within the United States, register for free with the Mechanical Licensing Collective (MLC) and ensure proper registration of your songs in their system. For the worldwide collection of these royalties, you will need a publisher. Consider joining publishing administration (pub admin) companies like Songtrust or Beatstars Publishing, which typically charge around 10–25% of the collected amount, although some may require an upfront fee to initiate the collection process. As your catalog expands, publishing companies may approach you, offering upfront advances in exchange for the right to collect your publishing.
3. Synchronization (Sync) Fees: Sync licenses typically cover both the sound recording and the underlying composition copyrights when songs are synchronized with visual media.
How to Collect: Similar to the sound recording section, these fees and/or royalties are paid by the company utilizing the songs for their visual works.
BONUS — YouTube Royalties: YouTube videos featuring a song also generate royalties for both the master recording owners (recording royalties) and composition owners (public performance and mechanical royalties). Navigating YouTube’s content ID system and ensuring that you collect all the royalties owed to you can be a challenging task, and many artists and producers are missing out on potential earnings. YouTube’s content ID system works by using a reference file provided by rights holders, which is then used to scan and flag videos that use content without permission. However, it’s important to note that not all instances of your music being used may get flagged by the system due to various reasons, such as slight modifications to the song, overlapping audio, or other complexities.
How to Collect: Most digital distribution companies offer an option to opt-in for YouTube content ID, where they will register your songs and reference files with YouTube’s system. Despite having content ID in place, some videos may still slip through the cracks and not get flagged. In such cases, consider working with a dedicated “YouTube monetization” company, as they will have the expertise and tools to manually hunt for unflagged uses and claim the rightful earnings on your behalf.
In conclusion, as an artist or producer, it is crucial to be aware of the various income streams available and take the necessary steps to collect every dollar you’re entitled to. Understanding the different copyrights associated with your music and ensuring your music is properly registered with organizations like the Mechanical Licensing Collective (MLC), a Performing Rights Organization (PRO), and SoundExchange will help you fully capitalize on your creative work and maximize your earnings.
If you are in need of further assistance with identifying and/or collecting your royalties, feel free to reach out to us anytime. We’re always here to help!
