What are the Different Types of Royalties in Music?

As a performing singer and songwriter, I know royalties are important but they seem too complex to navigate - so I decided to do some research and simplify royalties in music once and for all.

There are four types of royalties in music; mechanical royalties, performance royalties, print music royalties, and sync royalties. In some instances, like digital streaming, artists will be paid multiple royalties.

As you can imagine, each royalty type is buried in nuance, but critical for all artists to know. Below, you'll find the legalese of music royalties translated into a language we can all understand. If you need a refresher on royalties, no worries, at the bottom of this article I've dropped in a Music Royalties 101.

To start though, let's dissect and simplify the four music royalty classifications.

How are the Four Types of Music Royalties different?

1. Mechanical royalties focus on the reproduction of music, for instance in CD or vinyl, or streaming via a service like Spotify.

2. Performance royalties are earned whenever music is performed in public, for example in a concert, on the radio, or streamed online.

3. Print music royalties are royalties paid for the use of sheet music, whether it’s for a performance, teaching, or practice.

4. Sync royalties are royalties earned when music is used in synchronization with visual media, like in a film, TV show, or video games.

There are far more details involved in each, so let's dig in a bit more.

1. What are Mechanical Royalties?

A mechanical royalty is paid to a songwriter or composer when their musical composition is reproduced and distributed.

What are Examples of Mechanical Royalties?

In the physical world, this meant royalties were generated whenever a CD or vinyl was pressed and sold. With the advent of digital music, mechanical royalties have exploded from streaming platforms.

Mechanical royalties for streaming are generated every time a track is downloaded or streamed online. So Apple Music, Spotify, YouTube Music, Amazon Music - all of those streaming platforms are subject to mechanical royalties for the trillions of streams that happen every year.

Who Collects Mechanical Royalties?

The Harry Fox Agency and the Mechanical Licensing Collective are the two main organizations responsible for collecting royalties on behalf of songwriters and composers in the United States. Globally, mechanical royalties are typically going to be managed by publishers.

If you'd like more info on how MROs work, I've dropped some details towards the end of this article.

There are a lot of parties involved. You and I (the artists), the publishers, the organizations that collect and distribute. So as you can imagine, mechanical royalties can take a while to trickle down through all the organizations - it's a pretty long process.

And in most cases, for something like streaming, fractions of a penny will make it down to the artist per stream. Plus your ability to earn on each of those platforms per stream and whatever arrangements you have with your team means this monetary figure varies quite a bit.

Which Streaming Platform Pays Artists the Most per Stream?

Apple Music pay significantly higher than YouTube, Amazon, and Spotify, on a per-stream basis. Mechanical and performance royalties both contribute to how a streaming platform distributes royalties.

There are a lot of fine details on music streaming platforms, far beyond revenue per stream, which is why I wrote a whole article that breaks down how Apple, Spotify, YouTube, and Amazon pay an artist per stream, and what type of listener is on each platform.

In fact, the way the Spotify handles streaming royalties is a subject worth diving into, especially since it covers mechanical and performance royalties.

2. What are Performance Royalties?

A performance royalty is paid to artists, musicians, and songwriters when their work is performed publicly.

What are Examples of Performance Royalties?

In the physical world, performance royalties are generated whenever a song is played on the radio, in a bar, in a restaurant, or in any other public setting.

Streaming has turned this on its head though, there are cases where your music can be classified as a performance royalty too. Just think radio in the digital age - Pandora or Spotify.

So for streaming your music on Spotify for instance, you would be due royalties for both performance and mechanical.

Who Collects Performance Royalties?

The PROs (Performing Rights Organizations) then go through and collect on behalf of the songwriter and the publisher, and distribute the proceeds. A few noteworthy PROs in the US include ASCAP, BMI, and SESAC.

SoundExchange is another organization that collects royalties, but they focus solely on the digital world - so Spotify and SiriusXM are good examples of channels in the SoundExchange remit. They don't handle royalties for terrestrial radio (AM/FM), whereas an organization like BMI could handle both terrestrial and digital radio.

3. What are Sync Royalties?

A sync (synchronization) royalty is paid to artists, musicians, and songwriters when their musical composition is used in a film or other forms of video media.

What are Examples of Sync Royalties?

Historically, royalties in this category were commonly generated whenever a song was used in a movie, TV show, or commercial.

Sync royalties have also been upended by the Internet and the momentous growth of gaming. Any time you hear a song on Netflix, Hulu, and Amazon Prime Video, this would be classified as a sync royalty.

"Running Up That Hill..."

If you watched the latest season of Stranger Things on Netflix, you'll know "Running Up That Hill" by Kate Bush. Her song, which was originally recorded in 1985, was played at a powerful moment in the show. Viewers went wild for it, and the show introduced this song to a new generation.

After airing during the show, everyone took to streaming this song and revived the popularity of "Running Up That Hill." Kate Bush's song broke three records in the UK as a result: the longest time to reach No.1 from the time of release, the oldest female artist to hit No. 1, and the longest gap for a single to hit No. 1 twice.

Kate Bush would receive sync royalties from her song being used on the show. Plus, the song shot up the charts on Spotify and other platforms, meaning she will be owed mechanical and performance royalties.

I'm sure Kate is having a good year, all thanks to one show reviving her 1985 classic.

Sync Royalties Apply to Video Games

The gaming industry is massive. In the US video games generate more revenue than movies and sports combined. The video game industry shows no signs of slowing down either, and gaming continues to popularize music for artists, earning sync royalties as a result.

Even from 90's video game consoles like N64 or PlayStation 1, titles like Tony Hawk's Pro Skater, Crazy Taxi, and FIFA 98 exposed a whole generation to music from Goldfinger, The Offspring, and Blur.

Gaming will continue to be a way for artists to grow their fanbase, expose their work, and generate sync royalties.

Sync Royalties for Tik Tok

Tik Tok is all over the place, and it's been instrumental in building artists' careers - look no further than Lil Nas X or Lizzo. Tik Tok, and other platforms that play short videos or content created by users in a short format, are part of a group called Micro-Sync Royalties.

Who Collects Sync Royalties?

The sync license is actually between the copyright holder of the song (usually the artist or their record label) and the company that wants to use it. After the sync license is agreed upon, the royalties are typically paid out by the production company using the song.

4. What are Print Music Royalties?

A print music royalty is paid to artists, musicians, and songwriters when their musical composition is printed and sold. Print music royalties were the first music royalties on the scene, but are the least common music royalty today.

And that's part of the reason I'm talking through this as the last royalty - it's just not all that prevalent for most of today's artists. Important to know, sure, but most likely not something you'll need to use any time soon.

What are Examples of Print Music Royalties?

In the physical world, this meant royalties were generated whenever sheet music was sold, or when your tab books were laid out for purchase at Sam Goody.

Thanks to a whole host of ways to learn music online, like YouTube and apps like Ultimate Guitar, this is a rarely used royalty for most artists.

Who Collects Print Music Royalties?

The printer will typically collect and distribute print music royalties.

Know Your Royalties Rights

You work hard to create unique music - so you should be rewarded for that work. It's not as complicated as all the acronyms and legalese swirling around these four royalties seem.

Each has made the process pretty simple for the artist, which is great.

For example, the MLC has a super simple 5 step process of how everything works - from the moment you register to the moment you get paid. And the best part is you are only responsible for two of the five steps.

It's worth sitting down and looking at your work, deciding which royalties apply to what you've made, and then making sure you are set up for success - aka, getting paid what you are owed.

FAQ

What are Royalties?

Royalties are payments to artists for the use of their intellectual property - in our case, that's music.

What Royalties are Paid for Streaming?

Streaming music, say on Spotify or Apple Music, pays two types of royalties; a performance royalty and a mechanical royalty.

How do I Get Paid Music Royalties for Streams?

To collect royalties, you must first register your songs with a Performing Rights Organization (PRO) and a Mechanical Rights Organization (MRO.) There are quite a few names and even more acronyms to know on this, but below, you'll find a few of them listed and what each does.

What is a Performing Rights Organization (PRO)?

A PRO is an organization that collects royalties on behalf of artists and distributes those royalties to the appropriate party. They oversee performance royalties, which are earned when an artist's music is played publicly.

Public performances happen in quite a few settings - streaming (which I mentioned above, but still, find a bit unexpected), concerts, radio, and even when you hear music in the background at a local restaurant. his can be quite a few settings - usually the artist or songwriter. In the US, there are four PROs you should know - ASCAP, BMI, SESAC, and SoundExchange.

What are ASCAP and BMI?

ASCAP, which stands for "American Society of Composers, Authors, and Publishers" is a massive membership organization of songwriters, composers, and music publishers. Very creative name, right?

What's cool about ASCAP though is it's entirely operated by actual composers, publishers, and writers. And it's all a not-for-profit.

Broadcast Music Incorporated (BMI) is a performing rights organization that represents more than a million songwriters, composers, and music publishers in the US. It is a non-profit as well.

What is SESAC?

The name is a bit misleading, but SESAC stands for the Society of European Stage Authors and Composers. SESAC is a for-profit PRO that's quite a bit smaller than the other two - it represents about 30,000 artists.

What is SoundExchange?

SoundExchange is a bit of an outlier as it's not technically a PRO. Instead, it's a non-profit performance rights organization that collects royalties on behalf of artists when their music is played on digital and satellite radio.

Pretty much any time you hear music on Pandora, Sirius XM, or iHeartRadio - royalties are being collected by SoundExchange. It was important to add though because SoundExchange focuses only on digital performances - which is obviously an important area that's growing.

What is a Mechanical Rights Organization (MRO)?

A Mechanical Rights Organization (MRO) is in charge of collecting royalties for the reproduction and distribution of copyrighted musical works. In simpler terms, they make sure you're being paid when your song is sold, streamed, or reproduced.

Something is considered mechanical rights when it's “fixed in a tangible medium of expression.” That means if your song is reproduced in some way - on a CD, vinyl, a digital download, and of course streaming - you're owed royalties.

In the US, there are three MROs you should know about - the Harry Fox Agency (HFA), Music Reports Inc. (MRI.), and the newly established Mechanical Licensing Collective (MLC.)

What is The Harry Fox Agency?

The Harry Fox Agency is the largest provider of mechanical licensing and royalties services in the US. They hold the keys to the doors of the biggest music publishers you can think of.

What is Music Reports Inc.?

Music Reports Inc. (MRI) is a bit different in that it's not just an MRO, but also a provider of royalties technology and administration services. They work with all the major digital service providers - think Spotify, Apple Music, and Amazon Music - to help make sure royalties are being paid out correctly.

What is Mechanical Licensing Collective?

The Mechanical Licensing Collective (MLC) is the newest MRO on the block, having only been established in January of 2021. The MLC was created as part of the Music Modernization Act - I'll spare you all the details - and its main purpose was to make sure that music copyright was protected as all the different formats become digital.