Welcome to Sugo Music Group's Music Royalties FAQs, where artists, songwriters, composers, record labels, publishers, and music rights holders can find clear answers to common questions about music royalties. Explore our music royalties FAQs to learn how royalties are generated, collected, and paid, including streaming royalties, publishing royalties, mechanical and performance royalties, digital performance royalties, synchronization revenue, and other important royalty sources.
How do music royalties work?
Music royalties are payments generated when copyrighted music is streamed, downloaded, performed, broadcast, reproduced, licensed, or otherwise used. Because a song generally involves two separate copyrights—the sound recording (master) and the musical composition—a single use of music can generate more than one type of royalty for different rights holders.
Depending on the use, royalties may be payable to artists, songwriters, composers, record labels, publishers, master owners, and other rights holders. Payments can flow through music distributors, publishers, Performance Rights Organizations (PROs), mechanical licensing organizations, digital performance organizations, collection societies, and other licensing entities.
The amount and type of royalties generated depend on which rights are being used, how and where the music is used, ownership of those rights, and the applicable licenses and agreements.
Related Resource: Music Royalties Guide →
What are the different types of music royalties?
Music can generate several different types of royalties and licensing revenue. Major categories include sound recording or master royalties and publishing royalties, including performance and mechanical royalties, as well as digital performance royalties for certain sound recordings and synchronization licensing revenue.
Master royalties are associated with use of a sound recording, while publishing royalties are generated from use of the underlying musical composition. Performance royalties can arise when compositions are publicly performed or transmitted, while mechanical royalties can be generated when compositions are reproduced and distributed, including through eligible streams and downloads. Certain non-interactive digital performances of sound recordings can also generate digital performance royalties.
Synchronization licenses can generate revenue when music is licensed for use with visual media such as film, television, advertising, video games, or online video.
Which royalties apply depends on the particular use of the music and the rights involved.
Who gets paid when a song is streamed?
A single stream can generate revenue associated with both the sound recording and the musical composition, meaning several rights holders may ultimately be paid.
Recording revenue is generally paid to the owner or authorized licensor of the master recording, such as an artist, record label, or other master rights holder, typically through the distributor or other licensing partner. Publishing revenue is associated with the underlying composition and may be payable to songwriters, composers, publishers, or publishing administrators through the applicable publishing and collection systems.
The exact payment path depends on the streaming service, territory, type of stream, rights ownership, registrations, and contractual agreements. An independent artist who both owns the master recording and wrote the composition may therefore be entitled to revenue from both sides of the music copyright.
What is the difference between master royalties and publishing royalties?
Master royalties are generated from use of a particular sound recording, while publishing royalties are generated from use of the underlying musical composition—the music and lyrics embodied in that recording.
For example, when a recording is streamed, revenue associated with the master may be payable to the artist, record label, or other owner or controller of the sound recording. At the same time, the composition may generate publishing royalties for the songwriter, composer, publisher, or other composition rights holder.
The same person can own interests in both copyrights. An independent singer-songwriter who writes a song and owns the recording may have both master and publishing interests. In other situations, the recording and composition may be controlled by completely different parties.
Understanding this distinction is important because collecting master revenue does not necessarily mean that all publishing royalties are also being collected, and vice versa.
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How much do streaming services pay per stream?
There is generally no single fixed amount that every streaming service pays for each stream. Royalty calculations can vary by service, territory, subscription or advertising model, revenue generated, applicable licensing agreements, type of music right, and other factors.
For example, Spotify states that it does not pay a fixed per-stream rate. Instead, recording and publishing royalties are calculated through its royalty system and paid to the appropriate rights holders, who then compensate artists and songwriters according to their individual agreements.
Publishing royalties can also involve separate calculations. In the United States, for example, mechanical royalties from eligible interactive streaming services are calculated under statutory formulas rather than one universal per-stream rate.
For these reasons, online estimates stating that a particular platform always pays a specific amount per stream should generally be viewed as estimates rather than guaranteed royalty rates.
What are mechanical royalties and who collects them?
Mechanical royalties are publishing royalties associated with the reproduction and distribution of a musical composition. They can be generated by uses such as physical recordings, permanent digital downloads, and eligible interactive streams.
In the United States, The Mechanical Licensing Collective (The MLC) administers the blanket mechanical license for eligible streaming and download services and collects applicable digital audio mechanical royalties from those services. After matching reported usage to registered musical works, The MLC distributes applicable royalties to music publishers, administrators, self-administered songwriters, and other eligible members.
The MLC does not administer every type of mechanical royalty or every territory. Physical products, certain direct licenses, international uses, and other forms of mechanical licensing may involve publishers, mechanical licensing organizations, collection societies, or other licensing arrangements.
What are performance royalties and who collects them?
Performance royalties are publishing royalties generated when a musical composition is publicly performed or transmitted. Depending on the applicable laws and licenses, qualifying uses can include radio and television broadcasts, live performances, streaming services, businesses and venues, and other public performances of music.
Performance Rights Organizations (PROs) and other performing-rights societies license certain public performances and collect applicable performance royalties on behalf of songwriters, composers, publishers, and other composition rights holders.
In the United States, organizations such as ASCAP, BMI, SESAC, and GMR administer performing rights for their respective repertoires. Internationally, performing rights are administered by societies and collective management organizations operating in their respective territories.
Performance royalties are distinct from mechanical royalties, even though a digital stream can potentially involve both rights. The MLC, for example, administers applicable U.S. digital mechanical royalties but does not collect or distribute performance royalties.
What is SoundExchange and what royalties does it collect?
SoundExchange administers certain U.S. digital performance royalties for sound recordings. These royalties are associated primarily with eligible non-interactive digital performances, such as certain internet radio, satellite radio, and other digital music services operating under the statutory license.
These royalties are different from the publishing performance royalties collected by PROs and the digital mechanical royalties administered by The MLC. SoundExchange distributes applicable royalties to featured recording artists and sound recording copyright owners, while statutory shares for eligible nonfeatured performers are handled through designated organizations.
An artist may therefore receive royalties through SoundExchange even while also receiving other revenue through a music distributor, publisher, PRO, or other collection organization. Each organization administers different rights or revenue streams.
This distinction is important because registering with one music royalty organization does not automatically register or collect every type of royalty a rights holder may be entitled to receive.
Why am I not receiving all of my music royalties?
Music royalties can go unpaid, unmatched, delayed, or unclaimed for many reasons. Common problems include missing or inaccurate registrations, incomplete songwriter or publisher information, incorrect ownership shares, inconsistent metadata, conflicting claims, missing identifiers, changes in rights ownership, or failure to register with the organizations responsible for particular royalty streams.
Royalties also travel through different collection systems. Master revenue, performance royalties, mechanical royalties, digital performance royalties, and international publishing royalties may be administered by different distributors, publishers, PROs, mechanical licensing organizations, collection societies, and other entities.
Accurate and consistent rights information is therefore important. Rights holders should regularly review their registrations, royalty statements, ownership information, catalog data, and applicable collection relationships to identify missing or conflicting information.
Receiving royalties from one source does not necessarily mean that every royalty generated by the music is being collected.
How long does it take to receive music royalties?
Music royalties are generally not paid immediately after a stream, performance, sale, or other use occurs. Reporting and payment schedules vary depending on the type of royalty, digital service, distributor, publisher, collection society, territory, and other organizations involved.
Before a royalty reaches the rights holder, usage may need to be reported by a digital service or licensee, matched to the correct recording or composition, processed by the appropriate distributor or collection organization, included in an accounting period, and then paid according to that organization's reporting schedule.
Some organizations operate on relatively frequent cycles. For example, The MLC receives usage data and applicable mechanical royalties from participating DSPs monthly and distributes matched royalties to its members monthly. Other royalty sources may involve longer reporting cycles, particularly when multiple organizations or international territories are involved.
For that reason, there is no universal payment timeline for all music royalties.
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