Updated: May 30
Written by Becca Choi
Music Royalties Explained
When it comes to earning money as a professional musician, it’s not nearly as straightforward as getting paid through an employer—or even as an artist who sells physical copies of their art.
As a musician, songwriter, or producer, you’re going to earn your money through royalties, which is essentially a fancy way of saying that you deserve to be paid for your intellectual property, aka your music.
There are three main royalty streams that musicians and producers make their money from:
public performance royalties
If you’re interested in music licensing, you may dip your toes into sync royalties, but today we’re just going to cover mechanical and performance royalties since these are the two main ways you’re likely to earn money from your music.
What are Mechanical Royalties?
When you earn money from mechanical royalties, you’re getting paid for the physical and digital distribution or reproduction of your music.
This includes things like:
when you sell CDs, vinyl, and cassette tapes
when you offer digital downloads
when you put your music on streaming services
What are Performance Royalties?
As you might have guessed, you earn performance royalties whenever your music is performed. But there’s a catch. In addition to when you perform your music live, the following are also considered performances for the purpose of earning royalties:
plays on streaming services
internet radio services
Some of these performance royalties are songwriter royalties, while others are publishing royalties. All that means is that some of the money is due to the person or people who wrote the song, while some of it is due to whoever published the song (usually the label).
But if you play your cards right, you could be earning both as an independent artist.
How You Get Paid
Now that you know how the amount of money you’ll earn is calculated, it’s important to know how exactly that money ends up in your bank account.
When you’re signed to a label, the label handles everything and sends you money. When you’re an independent artist, you’ll need a music distribution service to help you collect what you’re owed.