Articles

Aug 17, 2024

Understanding the different types of music royalties

Navigating the music industry as a musician can be a labyrinth, especially when it comes to understanding the various streams of income generated by your creative works. To ensure you are collecting all the earnings you deserve, it’s crucial to grasp the different types of music royalties. This guide will break down the primary royalty types, explaining what they are, how they are generated, and why they matter to you.

1. Mechanical royalties

What are mechanical royalties?

Mechanical royalties are generated every time a musical composition is reproduced in a physical or digital format. This includes sales of CDs, vinyl records, and digital downloads, as well as streams on platforms like Spotify and Apple Music.

How are they generated?

  • Physical sales: Each sale of a physical copy of your music (CDs, vinyl, etc.) generates mechanical royalties.

  • Digital downloads: Purchases of your music from digital stores like iTunes contribute to mechanical royalties.

  • Streaming: Services such as Spotify, Apple Music, and Amazon Music pay mechanical royalties each time your song is streamed.

Why they matter

Mechanical royalties are a significant income stream, especially in the digital age where streaming dominates music consumption. Ensuring you are registered with a mechanical rights organization, like the Harry Fox Agency (HFA) in the U.S. or Buma Stemra in the Netherlands, is essential for collecting these royalties.

2. Performance royalties

What are performance royalties?

Performance royalties are earned when your music is played publicly. This includes radio play, live performances, background music in venues, and broadcasts on TV and online.

How are they generated?

  • Radio Airplay: Every time your song is played on the radio, you earn performance royalties.

  • Live Performances: Performing your music live at concerts, clubs, or festivals generates performance royalties.

  • Public Venues: Music played in restaurants, shops, and other public spaces contributes to performance royalties.

  • Broadcasts: Your music being used in TV shows, commercials, and streaming services also generates these royalties.

Why they matter

Performance royalties can be a consistent source of income, especially if your music is popular on radio or frequently performed live. Registering with a performance rights organization (PRO) like ASCAP, BMI, SESAC in the U.S or Buma Stemra. is crucial for collecting these royalties.

3. Synchronization (Sync) Royalties

What are synchronization royalties?

Synchronization royalties, or sync royalties, are earned when your music is used in visual media. This includes movies, TV shows, commercials, video games, and YouTube videos.

How are they generated?

  • Film and TV: Licensing your music for use in films and television shows generates sync royalties.

  • Commercials: Your music used in advertisements, whether on TV or online, contributes to sync royalties.

  • Video games: Game developers pay sync royalties to use your music in video games.

  • Online videos: Platforms like YouTube and TikTok also require synchronization licenses for music used in videos.

Why they matter

Sync royalties can be highly lucrative, often involving upfront payments in addition to royalties. They also offer excellent exposure for your music, reaching new audiences through different media. These usually handled directly by rights holders like labels, publishers, music managers or artists and third parties directly. When you’ve singed an exclusive license deal with a label, this income usually should show up on your royalty statements.

4. Master royalties

What are master royalties?

Master royalties are generated from the use of the actual recording of a song, often referred to as the “master recording.” This type of royalty is paid to the owner of the master recording, typically the record label or the artist if they own their masters.

How are they generated?

  • Streaming: When your recorded track is streamed on services like Spotify and Apple Music.

  • Sales: From the sale of physical or digital recordings.

  • Licensing: When the master recording is licensed for use in films, TV shows, commercials, and other media.

Why they matter

Master royalties are crucial as they ensure the creators and rights holders of the actual recordings are compensated. They alone usually represent more than half of the total income on your music. When you’ve released music through a record label, you should receive periodic royalty statements explaining your costs and earnings. At Royaltyport, we’ve automated the process of collecting and checking these from start to finish.

5. Print music royalties

What are print music royalties?

Print music royalties are earned from the sale of printed sheet music of your compositions. This is more niche but can be significant for composers and classical musicians.

How are they generated?

  • Sheet music sales: Sales of printed sheet music, whether physical or digital, generate print music royalties.

  • Songbooks: Collections of sheet music sold as songbooks also contribute to these royalties.

Why they matter

While not as prominent in the digital age, print music royalties still represent an important income stream for those whose music is frequently performed or studied.

Conclusion

Understanding the different types of music royalties is essential for any musician aiming to maximize their income. Mechanical, performance, synchronization, master, and print music royalties each play a unique role in how you earn from your music. By staying informed and proactive, you can ensure that every stream, sale, performance, and placement of your music translates into the earnings you deserve.