Maximizing Your Music Royalties: A Step-By-Step Guide

Every time your favorite track hits the radio, streams on Spotify or cranks up the intensity of a movie scene, it’s not just a vibe—it’s a paycheck. 

With global recorded music revenues reaching a mighty $28.6 billion in 2023, music royalties are how the industry makes sure artists, producers and rights holders get what they’re owed. 

It’s the business side of the beat, and it’s as crucial as the music itself.

If you’re an artist, producer or songwriter trying to carve your space in the industry, it’s vital that you get your head around how royalties work.

From the royalties you earn to the ones you might not even know you’re missing, we’re breaking it all down: what they are, how they work and how to cash in on what’s yours in an industry that never stops changing.

What Are Music Royalties?

Music royalties make sure that creatives are fairly compensated for their work. These payments go to rights holders—such as songwriters, artists, publishers and producers—whenever their music is used commercially.

Whether it’s streaming on Spotify, playing on the radio or enhancing a scene in a film, royalties make sure that the people who write, compose and produce music are rewarded for their efforts, making it possible for them to keep creating the songs we love.

Types of Music Royalties

• Mechanical royalties

Mechanical royalties are earned whenever a song is reproduced, either digitally or physically.

This applies to formats like streaming on Spotify, downloading from iTunes or selling CDs and vinyl. These royalties go directly to songwriters and publishers, not to performing artists.

In the U.S., rates for digital streams and downloads are often set by the government, while for physical formats, they can be negotiated between publishers and labels.

For example, every time someone purchases your song on iTunes, a portion of that revenue is paid to you as mechanical royalties.

• Performance royalties

Performance royalties are earned whenever your music is performed or played publicly.

This includes concerts, radio airplay, TV broadcasts or even as background music in a café. Performing Rights Organizations (PROs) like ASCAP, BMI and SESAC handle the tracking and distribution of these royalties, making sure that songwriters and publishers receive payment for their work.

So, whether your track is played during a live concert or sets the tone for a TV episode, performance royalties make sure you’re paid for its use.

• Sync royalties

Sync royalties are earned when music is licensed for use in visual media like movies, TV shows, advertisements or video games. These royalties often include an upfront licensing fee in addition to ongoing payments, making sync deals a valuable income stream.

For example, if your song is featured in a movie trailer or a commercial, you’ll earn a sync royalty, along with greater exposure to new audiences.

• Digital performance royalties

Digital performance royalties apply specifically to digital platforms like Pandora and SiriusXM. Unlike other royalties, these are paid to featured artists and the holders of sound recording copyrights, such as record labels, rather than to songwriters and publishers.

If your song is played on a digital streaming service like Pandora, you’ll earn digital performance royalties. These payments are calculated based on the number of streams or plays and are typically higher on subscription-based services than on ad-supported platforms.

• Print royalties

Print royalties are earned from the sale of sheet music. While less common today, they remain an important income source for some songwriters and publishers, especially in classical and niche genres.

For example, if a school choir buys sheet music for your composition, you’ll earn a print royalty from the sale.

How are Music Royalties Calculated?

Royalty calculations can be complex and depend on various factors, including the platform, usage type and geographical location.

Streaming platforms like Spotify calculate payouts based on the number of times your song is streamed relative to all other songs on the platform. Subscription-based services generally pay higher rates per stream compared to ad-supported ones.

The type of usage also plays a big role. A sync deal for a commercial or blockbuster film will typically bring in more revenue than a single stream on a music platform. Additionally, rates can vary by country, and artists with well-negotiated contracts often secure better terms.

How to Maximize Your Royalties (and Overcome Common Challenges)

Maximizing your royalties is all part of managing the business side of your career with a solid strategy—and collecting every dollar you’re entitled to. 

But let’s be real: Collecting royalties isn’t always straightforward.

Challenges like incomplete registrations, international complexities and lack of transparency can make the process tricky. With the right approach though, you can overcome these obstacles and make the most of your music earnings. 

Here’s how:

• Register your work properly
  Missing or incorrect metadata is one of the most common reasons for lost royalties.
  
  To avoid this, register every song with detailed and accurate information. Sign up with a Performing Rights Organization (PRO) like ASCAP or BMI to collect performance royalties, and use publishing administration services like Songtrust to streamline global collection, making sure you don’t miss out on international revenue.
  
• Track your music usage
  Keeping tabs on where and how your music is being used is essential. Tools like SoundExchange can help you monitor streams and radio plays, while maintaining detailed records of live performances, sync placements and other usages will make sure you capture all potential royalties. If tracking feels overwhelming, consider investing in tools that aggregate data from multiple sources to make the process easier.
  
• Understand your rights
  Lack of transparency from platforms and unclear contract terms can leave you in the dark about your earnings.
  
  Carefully review contracts, especially for licensing and label deals, and consult with a music lawyer to negotiate better terms. This will help you avoid common pitfalls and secure the best possible agreements for your music.
  
• Address international collection issues
  Navigating royalties across multiple countries can be challenging due to varying rules, collection societies and systems. Partner with publishing administration services that specialize in international collections to make sure you don’t miss out on revenue from global plays and performances.
  
• Stay proactive and informed
  The music industry is a changing beast and staying ahead requires effort.
  
  Monitor your earnings regularly, make sure your registrations are up to date and don’t hesitate to seek professional advice when needed. By staying proactive, you can navigate the complexities of royalty collection and maximize your income.

With a clear strategy, the right tools and a commitment to staying on top of the details, you can turn challenges into opportunities and make sure your hard work pays off—literally.

The Future of Music Royalties

New technologies are always looming, promising to streamline and improve the process.

Blockchain technology, for example, offers greater transparency and accuracy in tracking and distributing royalties, while AI tools can help identify unauthorized use of music more effectively.

Direct-to-fan platforms are also gaining traction, providing artists with new ways to monetize their music without relying on traditional intermediaries.

Understanding how they work and staying proactive about managing your earnings can help you secure a thriving future in the industry.

Ready to take your career to the next level? Explore The Los Angeles Film School’s programs and discover how you can take the next step in your music journey.