The music industry relies on royalties as a primary form of payment to musicians but what’s the difference?
Mechanical Royalties vs Performance Royalties…Let Us Explain!
The four main royalty types include mechanical, public performance, synchronization, and print music.
Whilst many artists are aware that performing live shows or selling CD’s can bring in some money for doing what they love most, there is a multitude of other potential revenue streams that are a little less clear cut.
In the music business, publishing royalties can make up a significant part of your income.
It’s important to know about the different royalties that you can collect and also how to collect them.
When you’ve completed a song and it’s finished, whatever part you played be it the writing, production, or composition, the next step is to start to distribute it.
In doing so, there’s the potential to earn royalties from the use of your composition – more precisely, performance and mechanical royalties.
There are two main ways to generate mechanical royalties for your music:
According to the Recording Industry Association of America® (RIAA) – a trade organization that represents the recording industry in the United States, their 2018 year-end music industry revenue report stated:
Getting your track onto an online streaming platform such as Spotify, Pandora or Apple Music, is a good 1st step.
Here, users of the streaming service are able to choose the songs they listen to.
The subscription fee they pay is part of the performance royalty and so each time someone chooses to listen to your song, you earn mechanicals.
Other, often overlooked, ways to earn yourself mechanical royalties include:
All music retailers are required to pay mechanical licensing societies roughly 9% of revenue earned from every download.
In the US, these royalties are paid directly to publishers.
Outside of the States, these royalties go through the designated copyright collection society in whichever territory your music is being played.
These royalties often just sit there until a songwriter has their publisher collect them, meaning they are in danger of ending up in ‘The Black Box’ category.
If you don’t know what that is, make sure you read our article ‘Black Box Royalties Explained’.
Performance royalties are generated from any public performance, like playing a live gig, music playing in bars or restaurants, or when your music is broadcasted on radio or TV.
Other ways you can earn performance royalties include:
These royalties are collected and paid out by Performing Rights Organisations (also know as PRO’s).
PRO’s license the songs in their catalogue for use and use performance data to allocate the money to publishers and writers – to better understand this check out our article ‘Performing Rights Organisations 101: All About PRO’s’ and also make sure you check out this video from AdELA Music:
As middlemen including labels, radio companies, and streaming services all step in to sell and distribute your music, they each take cuts of the profits, siphoning revenue away from your income stream.
If you don’t want to stop learning and wanna get clued up read our next article How To Avoid a Scam Music Contract and always remember…
Keep Making Great Music ✌️
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Andrea graduated from Roehampton University and The BRIT School, whose globally recognized alumni include Adele, Katy B, Ella Eyre, FKA Twigs, Jessie J, Leona Lewis, Katie Melua, Kate Nash and the Rizzle Kicks. She takes her love of the arts and entertainment industry to provide useful information to upcoming musicians, helping them navigate the industry and avoid making costly mistakes. She actively mentors our current contributors. Andrea has qualifications in Content Marketing and also manages our collaborative playlists for independent artists