EARNING ALL YOUR ROYALTIES AS A MUSICIAN
Nowadays artists have the power to release music on their own. They can record songs on their phone, laptop or sequencer; and sign up for a distributor and get their music on all major streaming platforms like Spotify and Apple Music without the need of a label or paying large sums of money.
However, if you’ve released music before you probably are aware of the low revenue you earn from streaming. That’s why I want to expand your income possibilities by telling you all of the royalties you’re entitled to as a songwriter. This is how it breaks down:
Your Record
Master Recording
Recording Revenue -- Paid by Distributor
Digital Performance Revenue - Paid by SoundExchange
Composition/Publishing
Performance Royalties
Writer’s cut -- Paid by Collection Society such as BMI or ASCAP in the US
Publisher’s cut -- Paid by Publishing Administrator like Songtrust or any publishing label
Mechanical Royalties -- Paid by Publishing Administrator like Songtrust or any publishing label)
With this concept in mind, in order for you to earn these royalties, you have to sign up for the entities that collect them. If you are an independent artist releasing your music through a distributor like Distrokid, SpinnUp or CD Baby, they will only collect your Recording Revenue, so to get your Publishing income you have to be signed up to both a Collection Society like BMI/ASCAP and to a Publishing Administrator like Songtrust. Lastly, your digital performance royalties are collected by an entity called SoundExchange.
By signing up for all of these companies you’re making sure you get all the income your music is generating. If you take too long to register your income goes to what’s called the “black box” and from there it gets paid out to the highest earners based on the market share.
Collaborations
Now, on another note, let’s talk about collaborating. If you’re making music with someone else, it’s really important to set early on how you’re going to distribute the rights over the song. There aren’t any common % splits because this is a case by case situation. Just make sure to go over this subject calmly and without pressure because these subjects tend to bring tension into the room.
There are 2 types of splits, a songwriter cut and points. A songwriter cut is a % on the publishing (composition) over a song, whereas points are a % on the master recording.
Let’s see a couple of examples:
b) You are a producer and/or mixing engineer and an artist with a low budget is trying to hire you because you’re so good. You agree to work with them only if they give you points over the master recording revenue. They agree to give you 15% of the recording revenue and you do the work with them. After the song is released it turns out to be a hit and they’re estimating to earn 20K on the first month of release from streaming, you get 3k.
a) You and your friend write a song together during a session, she wrote the chords and you did the lyrics so both get 50/50 on this composition. Turns out to be a really good one and your friend ends up finding a deal to sell the rights for it to Justin Bieber. Justin agrees to pay you 500k to make a song with it, each of you gets 250k.
When Justin records the song and releases it, he gets 100% of the master recording revenue and you two earn the % agreed on your writer share.
Something very important to have when you’re doing these agreements is to have it written in a contract, that’s what split sheets are for. This is a document that includes all the information from all the parties so there’s proof that everyone gets the % they agreed to. I’m going to share a template for a split sheet that you can download and use it for your own collaborations
With this information, I hope you’re a bit more informed about how the legal aspect of making music works, and that way you can make music without worrying that you’re not making all the money you’re entitled to earn. Now, go ahead and sign up for all these entities!
Feel free to let me know in the comments if there’s something you’d like to talk about! Thank you :)