have you always wondered how your favorite artists generate an income when you're listening to their music on a streaming platform? we're here to break down the complicated world of the music industry's royalties, rights and streams.
when a song is streamed, it generates royalties. these are divided into master and publishing royalties. master royalties are tied to the song recording (what you actually hear) while publishing royalties are tied to the composition (lyrics & melody). here’s an example to illustrate: you make a cover version of a famous song and release it on spotify. when your cover is streamed you receive all of the master royalties because you made the recording, but none of the publishing royalties because someone else created the composition. if you both composed and recorded the song yourself, you receive both master and publishing royalties.
master royalties are generally paid out to record labels, artists and musicians while publishing royalties are generally paid out to publishing companies, songwriters and producers. most of the money (about 85%) is paid out in master royalties, while the rest is paid out in publishing.
to complicate things further, both master and publishing royalties are split into different subcategories (see pictures below). as you can see it’s an intricate system with a lot of different rights and royalty types.
to keep things simple and to make it easier to track a song’s performance as well as how much royalties will be paid out, we have decided to only focus on streaming royalty rights, connected to the master recording. focusing on streaming royalties has a lot of benefits. it’s more transparent, easier to collect and gives you, the buyers, more power to influence the song’s performance (we will provide you with tips on how to positively affect the number of streams of a song in another post).
to summarize, there are different types of royalties generated when a song is streamed. at anotherblock, we focus on streaming royalties from the master recording to make things as simple, transparent and straight-forward as possible.
that’s all for now. and remember – YOU make music come alive.