If you are an independent musician, by default you are also an entrepreneur, serving as the head of your small business a.k.a your artist project. With that in mind, it's your responsibility to understand where and how you earn income from your music. Music royalties serve as one of the most common sources of artist income, though they are frequently misunderstood.
Fortunately, we have put together a complete guide on royalties so that you can have a stronger understanding of the music industry at large. Below, we'll uncover how music royalties work, define the various types of music royalties, and explain what you need to know to collect your streaming royalties and beyond.
What are Music Royalties?
Music royalties affect recording artists, music publishers, and just about every other arm of the music business since they help distribute value generated by recordings.
In simple terms, royalties are payments made to rights holders in exchange for use of music or a composition. Royalties are distributed to not just the recording artist, but also parties like the music publisher, record company, and multiple songwriters where applicable.
There are several different types of music royalties which we'll detail below, but the process surrounding collecting royalties is relatively consistent throughout.
Essentially, a composition is created. Then, copyright is established and defined. Whenever the music is used in ways outlined in the copyright (purchased, performed, streamed), royalties are collected and distributed back to the rights holders.
Why are Music Royalties Important for Artists?
Music royalties are the lifeblood behind artist's earnings, presenting recording artists with a path to collect income from their licensed works consistently.
As performing artists, it's important to have a firm understanding of how music royalties work and where they are collected and distributed. You will have to frequently negotiate royalty rates over the course of your career whether that's with a record label, collaborators, or other players within the music industry.
There are also several different types of royalties, that you may or may not be entitled to depending on your role in producing a particular sound recording. In short, understanding music royalties is important for artists because it helps them get paid and can pave the path for them to make art on more of a full-time basis.
As we'll discuss, music royalties are certainly not the only form of artist income (and not always the largest piece of the pie) but they are certainly not something you want to leave on the table.
The Different Types of Music Royalties Explained
There are several different types of music royalties depending on the context of the music and royalty collection.
Performance Royalties
Performance royalties are collected whenever a song is recorded, played, performed, or streamed in a public setting. These royalties are broken down into songwriter and publishing royalties, which are collected by Performance Rights Organizations.
Neighboring Rights Royalties
Neighboring rights royalties essentially encompass performance royalty usage outside of the United States' Music Industry. Every country handles its music copyright differently, and so neighboring rights royalties speak to royalties generated through the performance of music outside of the U.S.
Mechanical Royalties
Mechanical royalties are created through the physical sales or reproduction of your works. So, "mechanicals" would constitute CD sales, Vinyl Sales, as well as digital stores like iTunes since the master copy of your music is being reproduced.
Synchronization Royalties
Synchronization royalties are generated through the use of your music in syndication, or licensed for a temporary period or project like a film or commercial. These royalties are paid out when the content is consumed, which are generally provided on top of a lump sum fee for usage.
Print Music Royalties
Print music royalties are royalties generated through sheet music. These types of royalties are more common for composers and are generated by licensing out sheet music to book publishers like Hal Leonard.
Digital Performance Royalties
These are relatively new types of royalties that are generated through digital radio airplay on platforms like SiriusXM, Pandora, and iHeartRadio. This royalty collection is not to be confused with streaming royalties, which are paid out via your distributor and potentially, your performance rights organization or PRO.
Royalty Payments Broken Down by Platform
It's worth noting that royalty payments and rates are not solidified by any means - Royalty rates can change over time and it's worth noting that some streaming platforms have lowered their royalty rates to artists over time.
Keep in mind that record labels, especially the larger conglomerates, have a direct stake in some of these streaming platforms, meaning that they can negotiate higher rates for their artists.
Royalty payments are not set in stone and can significantly fluctuate from one month to the next. Here are the average royalty rates broken down by platform in 2025, assuming that you're creating as an independent artist:
Spotify: $0.00437 per stream
Apple Music: $0.0055 - $0.0078 per stream
Tidal: $0.013 per stream
YouTube: YouTube Music: $0.0007 - $0.0012 per stream
Remember, royalty rates are subject to change and can be held at a threshold as we'll discuss below. Your distribution platform of choice might also limit the rate at which you withdraw streaming royalties, or require you to hit a payment threshold before you can take out your funds.
Understanding Music Royalty Copyrights
In order to understand how music royalties work, you must understand what goes into music copyrights:
Master Ownership
This is reserved for whoever owns the physical or digital reproduction of your song. Master rights holders usually include the artist, along with the record label, if applicable.
Publishing Rights
Publishing rights speaks to whoever helped write the song. This could include the artists themselves, alongside producers, other musicians, and songwriters.
Some artists will provide a larger royalty split to collaborators so that they do not have to pay more fees upfront while creating their music. Every deal structure is different, so it's critical that you outline your roles and royalty rates within a split sheet before officially releasing your tracks as discussed below.
What are Royalty-free Samples?
As the name suggests, royalty-free samples are samples that aren't tied to any music copyrights, granting them for use in a wide variety of productions. If you purchase and use these samples within your music, theoretically, you won't get a copyright claim.
However, there have been instances where algorithms flag songs using identical samples for sounding too similar, so it's best to use royalty-free samples as a foundation for further manipulation in your tracks to be safe. Some common royalty-free sample libraries include Splice and Arcade by Output.
Who Gets Paid Music Royalties?
There are more people than you might expect that are entitled to receive music royalties. Essentially, this can encompass anyone who holds all or partial rights to the master recording or composition of a song. You would expect people like the artist, the record label, songwriters, master rights holders, publisher and potentially publishing company administrators to earn a piece of the pie.
Other parties that might be paid with music royalties include session musicians, artist managers, producers, and even booking agents.
Where Do I Collect Music Royalties?
You collect music royalties from your distributor, as well as your Performance Rights Organization or PRO. In the case of synchronization deals or when working with print music, you'll work directly with the producer of the media or products in question to negotiate and secure a rate.
Independent distribution platforms include sites like DistroKid, CD Baby, and Tune Core. Labels have their own distribution services and will distribute royalties directly to their signed artists.
Signing Up For a PRO
You might already have distributed your music onto platforms like Apple Music and Spotify but make no mistake, you still have to register with what is called a Performing Rights Organization otherwise known as a PRO. We have a complete guide on music copyright here for a more thorough explanation, but essentially, these organizations are exclusively dedicated to helping you collect performance royalties.
I am registered through ASCAP, but you can also use other common services like BMI. If you do not register for one of these services, you're potentially leaving a chunk of money on the table. Performance rights are split up between songwriters and composers of the work.
If you are responsible for both the writing of lyrics and melodies as well as the beat and production behind the song, you will need to register as both the publisher and songwriter on one of these sites to get your full share of allocated performance rights royalties.
Being registered through a PRO can also make it easier for you to hand over necessary rights details when it comes to crafting music for synchronization, for example. Whenever you register through a PRO, you're given a unique identification number which you can pass along to other industry professionals when negotiating splits or licensing out your work to other outlets.
How to Determine Royalty Splits
Royalty splits distinguish who did what in the process of crafting a song. You'll often work with a "split sheet", basically a piece of paper that distinguishes credit for any track whenever you work with collaborators as an artist. The reason why split sheets are so important is that they can drastically affect your streaming rate payout, as well as how much you have to pay upfront during the recording process.
For example, a producer might not charge as much to make a song if he or she negotiated for a bigger pool of royalty payments. Listen to indie artist expert Ari Herstand outline how you might determine your royalty splits with collaborators:
Are Music Royalties Perpetual?
When determining royalty splits and payments within a contract, it's very important to have a clear understanding of the terms surrounding your work. If you're not careful, you can get stuck in an agreement where a company is entitled to earn a percentage of royalties indefinitely, even after you've exited your record deal.
This is why it's so important to hire an independent lawyer (record labels can have backend deals with lawyers within their network with ulterior intentions) whenever you sign anything regarding your music. If you don't protect your art, it is likely to be taken advantage of, especially once you've done the hard work of garnering a following.
Here are some other music contract red flags you'll want to keep an eye out for:
The Challenges of Music Royalties
Music royalties are an amazing tool that can help artists and music industry professionals alike organize payment structures behind sound recordings. However, the music royalty system is not without its faults. It's worth taking stock of the following potential drawbacks that you may encounter with music royalties:
Declining Streaming Royalty Rates
Declining streaming royalty rates might not be the standard across all streaming platforms, but it's worth noting that some artists have experienced declining royalty rates over time.
What's worth remembering is that independent artists have little control over their streaming royalty rates, so these payments are always subject to change. Hence, it's essential to have multiple streams of income as an artist.
Variable Streaming Royalty Rates
Not all streaming platforms payout at equal royalty rates. Record labels have their own royalty rates that they negotiate directly with streaming platforms. Some platforms will pay you more or less depending on the "quality" of the stream, i.e. how long the listener engaged with your work or how actively they're listening.
Generally speaking, you can expect each of the following rates from platforms in 2025, albeit the caveat for Spotify which we'll explain below:
- Spotify*: $0.00437 per stream
- Apple Music: $0.0055 - $0.0078 per stream
- Amazon Music: $0.00402 per stream
- Tidal Music: $0.013 per stream
- YouTube Music: $0.0007 - $0.0012 per stream
- SoundCloud: $0.0025 - $0.004 per stream
- Deezer: $0.0064 per stream
Out of these selected streaming platforms, Tidal has the highest streaming royalty payment rate, with YouTube Music at the lowest streaming payout rate. Spotify comes with a considerable caveat since they decided only to pay artists once each track hits a 1,000 stream threshold . Therefore, musicians will not earn anything from the first 1,000 streams of each track on an annual basis.
Delayed Royalty Payments
Royalty payments are not immediate. They can take months ( Songtrust reports royalties taking between 9 and 12 months to start arriving) to collect and distribute, with not a lot of transparency around the delay in this process. Royalty payments are highly complex and can shift depending on a wide range of parameters set by individual streaming platforms, so getting paid as an artist is at best, unpredictable.
Intellectual Property and Copyright Disputes
There is more music than ever, and still the same amount of limited chords and note combinations that can be used to create a composition. With the advent of sample-sharing libraries like Splice, where producers are frequently pulling from the same sample pool, you could run into issues where the algorithms used to flag content might accidentally confuse one song for the other or vice versa.
Music copyright laws have not developed to fit the fast-paced, changing nature of today's music industry and because of this, artists can find themselves in the crosshairs of copyright disputes or plain old technical difficulties. You don't have to worry about this aspect too much as an artist, but ensure that you're clearing your samples properly to avoid running into any issues or disputes with other artists and labels.
Social Media Royalties
The world of royalties generated from social media is still a bit of a wild west. As we saw from Universal Music removing all music from TikTok via a contract dispute last year , royalty negotiations are constantly in flux. As we continue to develop new social platforms and methods of consuming music, we also have a need to develop the implications surrounding copyrighted music.
In terms of payouts for music used on platforms like Instagram or Facebook, there is no clear consensus around how those payouts are structured and returned to the original artist.
However, many users have anecdotally noted that payouts from social media platforms are even more sparse than that of traditional DSPs, which as you might imagine, is pretty pitiful. Art and content do not always align, but in today's media landscape, it's all but essential to have a presence on social platforms to lead back to your art.
How Do Artists Make Money Outside of Music Royalties?
In most scenarios, artists cannot rely on music royalties alone to make a living.
As I mentioned before, when you're a musician, you aren't just making music. That's the fun part. Instead, it's up to you to run and build your business from the ground up, crafting a career path that makes sense for you financially, while still allowing you the time and space necessary to make music in your off hours.
Keep in mind that not everything needs to be tied to your artistry in order for you to make a decent living within the music business. Just look at the steps and journey production creator and engineer SEIDS took to build her own music business:
There is no one right way to craft a career as a musician. In any scenario, you have to understand that making a living as an artist is not easy or simple. It takes time, flexibility, discipline, and a willingness to learn from the people around you.
Do what's best for you and your business, stay persistent, keep learning and connecting with people around you, and you might be one of the lucky people to secure a spot within the maze that is the music industry.
Understanding Music Royalties as an Independent Artist is a Must
All independent artists (and signed artists, for that matter) should have a firm understanding of music royalties and how they operate to protect their livelihoods as artists. Use these strategies to collect performance royalties, streaming royalties, and any other royalties owed to you as an artist.
After all, to make art you need to be in a sustainable situation, which means keeping tabs on where your money is going. Hopefully, this guide provided you with the knowledge you need to start navigating the complicated world of music rights.
