Music royalties are payments made to the people who own the rights in a song and in a recording whenever that music is reproduced, streamed, broadcast or performed. A single play can trigger several separate payments to different people.
This guide breaks those payments down for independent artists, and it sits within the wider picture of how the music industry works, where labels, publishers and collection societies each play a part.
Why one play creates several payments
Most recorded songs contain two layers of rights. The first is the musical work, meaning the composition and lyrics. The second is the sound recording, meaning the specific recorded performance. The US Copyright Office describes its licensing rules in exactly these terms, referring to musical works and to the sound recordings in which the musical works are embodied.
Different people often own each layer. Songwriters and publishers typically sit on the composition side, while artists, labels and distributors sit on the recording side. Because the layers are licensed and collected separately, a single stream can feed several royalty streams, each handled by a different organisation.
The rest of this guide follows those streams in turn: mechanical royalties for reproducing a composition, performance royalties for playing it in public, and neighbouring rights for the recording side of public performance. Which organisations collect depends on the country, so the examples below are mostly American with a British comparison.
Mechanical royalties
A mechanical royalty is owed to the owners of a composition when it is reproduced and distributed, whether on a physical copy or as a download or stream. In the United States, the Copyright Office explains that the Music Modernization Act replaced the song-by-song compulsory licensing structure with a blanket licensing system for digital music providers, covering digital phonorecord deliveries such as permanent downloads, limited downloads and interactive streams. The older song-by-song notice system remains in place for non-digital uses such as CDs and vinyl.
The body that runs the blanket licence is The Mechanical Licensing Collective. According to The MLC, it administers blanket mechanical licenses for eligible streaming and download services in the United States, collecting the royalties due and paying self-administered songwriters, composers and lyricists, music publishers and administrators, and collective management organizations.
The process described on The MLC’s home page is straightforward. Streaming and download services send usage data and royalties to the collective each month. The MLC then matches the reported streams and downloads to the songs registered by its members and calculates the royalties owed, and it distributes them to members on a monthly basis.
The practical lesson sits in that word “registered”. The MLC states that anyone entitled to receive digital audio mechanical royalties for use of their music in the U.S. should become a member. The Copyright Office adds that where the collective cannot match a work to its owner, it can distribute the unclaimed royalties to copyright owners identified in its records, based on relative market share. Songwriters who skip registration risk leaving money to be shared out among others.
Songs usually reach the services through digital music distribution, but delivering a recording to a store is a different task from registering the underlying composition for mechanical royalties. They are separate steps with separate organisations.
Performance royalties
Performance royalties are owed to the owners of a composition when it is performed in public. That covers radio and television broadcasts, streams, concerts, venues and shops. In the United States, performing rights organisations such as ASCAP and BMI collect on behalf of their members. BMI says it ensures songwriters, composers, and publishers get paid when their music is publicly played.
The way these societies pay out is worth understanding. ASCAP explains that it operates on a not-for-profit basis and distributes every dollar it collects, less operating expenses, back to its members as royalties. It pays on a follow-the-dollar basis: the money received from radio stations is paid out for radio performances, and the money received from TV networks is paid out for TV network performances.
Registration comes first here as well. ASCAP’s help page says the most important step is to register your music, and that it can only pay royalties if the music appears in its performance surveys. It also notes that, for radio, a label or distributor may need to upload the audio file to a detection service so that plays can be tracked. For songs placed with film or television, the society asks for cue sheets for the projects that include the music, a point that connects to sync licensing.
Foreign plays matter too. BMI states that it represents music creators affiliated with collective management organizations abroad through reciprocal and unilateral agreements, so a home society can pass on money earned overseas. The details of joining differ between societies, so it is worth reading each one’s own terms before signing up.
Neighbouring rights and the recording side
Neighbouring rights, sometimes called related rights, belong to performers and to the owners of sound recordings rather than to songwriters. They are paid when a recording is publicly performed or broadcast, so they mirror performance royalties on the composition side.
In the United States, the digital version of this is handled by SoundExchange, which describes itself as the only organization designated by the U.S. government to administer the sound recording license that covers digital performance royalties.
In the United Kingdom the equivalent collecting body is PPL. PPL says it licenses and collects royalties for a range of uses of recorded music in the UK, and that membership is open to anyone who performs on, and/or owns the rights to, recorded commercial music. That means session musicians and self-releasing artists can claim a share alongside labels.
The difference with performance royalties on the composition side is who is paid. A songwriter collects through a performing rights society, while the people who played on the recording collect through a neighbouring rights body. An artist who writes and records their own music often has a claim in both places and needs to register in both.
Royalty types at a glance
| Royalty | What triggers it | Who is usually paid | Example collector |
|---|---|---|---|
| Mechanical | Reproducing a composition as a download, stream or physical copy | Songwriters and publishers | The MLC for US digital services |
| Performance | Public performance or broadcast of a composition | Songwriters and publishers | Performing rights organisations such as ASCAP and BMI |
| Neighbouring (recording) | Public performance or broadcast of a sound recording | Performers and recording owners | SoundExchange in the US for digital, PPL in the UK |
The descriptions in this table draw on The MLC and SoundExchange, with the performance row based on the BMI and ASCAP pages cited above.
What independent artists can do about it
Royalties are not paid automatically to whoever deserves them. They are paid to whoever has registered the right songs and recordings with the right body, so the work is mostly administrative.
- Register compositions with a performing rights society, since performances can only be paid when the work is on file.
- Join The MLC if you are the songwriter or publisher and your music is streamed or downloaded in the United States.
- Register recordings with the neighbouring rights body for your territory, such as SoundExchange or PPL, both as owner and as performer where relevant.
- Keep consistent song titles, writer names and ownership splits across every registration so uses can be matched.
- Check who holds each right before signing a publishing, distribution or record deal, because a contract may assign the right to collect.
Rates, thresholds and rules vary between countries and change over time, and the answers depend on the contracts a creator has signed. This article is general information rather than legal advice, and a qualified music-industry adviser can confirm what applies in a specific case.
Frequently asked questions
Do I need to register with both a performing rights society and The MLC?
They cover different uses. A performing rights society collects when a composition is performed in public, while The MLC administers the blanket mechanical licence for eligible US streaming and download services. A songwriter who wants to be paid for both generally registers with both.
What are neighbouring rights in music?
They are the rights of performers and recording owners to be paid when a recording is publicly performed or broadcast. PPL in the UK and SoundExchange in the US are examples of the bodies that collect them.
Does my distributor collect all my royalties?
Not necessarily. A distributor delivers recordings to services, while composition royalties such as mechanical and performance payments are registered and collected through the bodies described above. Check the distributor’s terms to see what it does and does not handle. ASCAP does note that a label or distributor may be the party that supplies audio files for radio tracking, as its help page explains.
How often are royalties paid?
It depends on the organisation. The MLC distributes to its members on a monthly basis, while other societies publish their own distribution schedules, and there is often a delay between a play and the payment.
Can I collect royalties on my own songs?
Yes, a self-releasing artist who writes and records their music can usually register as both songwriter and performer. The MLC notes that it pays self-administered songwriters directly, so a publisher is not always required.
