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June 30, 2022 • 3 mins read

Royalties in Music Distribution, Explained

By Jacque Alec

When you’re talking about music distribution, one of the most important topics to discuss is royalties. Musicians need to be aware of how their music is being distributed and what they can expect in terms of royalties.
In this article, we will explain how royalties are paid out in music distribution and what percentage of royalty musicians can expect to receive. We’ll also cover the different types of music royalties and how you are paid for streaming music services. By understanding music distribution royalties, musicians can make more informed decisions about where their music is being played!

What is Royalty?

A music royalty is a payment made to the owner of a song for the use of that song. The owner of the song can be the composer, lyricist, publisher, or performing artist. Royalties are paid out whenever music is used on television, radio, in films, or in live performances. For example, if you hear a song on the radio, the artist who composed that song will receive music royalty.

How Are Royalty Payments Distributed?

There are two main ways that music royalties can be distributed:
  • performance royalties
  • mechanical royalties
Performance royalties are paid out whenever music is performed publicly. This includes performances on television, radio, or live concerts. Mechanical royalties are paid out whenever music is reproduced, such as when a song is downloaded or streamed.

What Percentage of Royalty Do Musicians Receive?

The percentage of music royalties that musicians receive can vary depending on the type of royalty and the music distribution agreement. For example, performance royalties are typically split between the artist and the record label. In mechanical royalties, the artist typically receives 75% of the royalty, while the record label receives 25%.

What Are The Different Types of Music Royalties?

There are two main types of music royalties:
  • Publishing Royalties
  • Recording Royalties
Publishing royalties are paid out to the songwriter or composer whenever a song is used. Recording royalties are paid out to the artist and record label whenever a song is reproduced.

How Are You Paid For Streaming Music Services?

When you stream music on a music streaming service, you are typically paid a mechanical royalty. The rate that you are paid per stream can vary depending on the music streaming service. For example, Spotify pays out $0.00437 per stream, while Apple Music pays out $0.00783 per stream.
By understanding how music royalties work, musicians can make more informed decisions about where to distribute their music. By knowing the different types of royalties and how they are paid out, musicians can ensure that they are getting the most from their music distribution agreements!

Are Music Royalties a Good Investment?

Yes, music royalties can be a good investment for musicians. They provide a way for musicians to make money from their music without having to tour or sell merchandise. Additionally, music royalties can provide a passive income stream that can help support you during tough economic times.

What Are The Risks of Investing in Music Royalties?

The risks of investing in music royalties include the possibility that the song will not be popular and will not generate any royalty payments. Additionally, there is always the risk that the music industry could change and new technologies could make music royalties obsolete.
Despite the risks, music royalties can be a good investment for musicians who are looking for a way to generate income from their music.

Conclusion

Royalty payments are a vital part of the music industry, and musicians should understand how they work in order to get the most from their music distribution agreements. By understanding the different types of royalties and how they are paid out, musicians can ensure that they are getting the most from their music! Thanks for reading! I hope this article was helpful in explaining music royalties. Please feel free to share it with your friends if you found it helpful!
What questions do you still have about music royalties? Let me know in the comments below and I’ll do my best to answer them!
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