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Songwriter Royalties – Understand How Songwriters Are Paid

June 15, 2021 • 4 min read

In order to fully understand how the phonographic industry pays songwriters, we need to know what are royalties in music. We’re here to help you with everything you need to know about songwriter royalties so you can confidently handle your own creations. Nowadays, we have many new possibilities to listen to music on the internet. So it may seem harder to identify the ways someone might get paid for their compositions. It is easier to understand how these royalties work if we think about music in physical formats, like CDs and vinyl. But now, the media we use to play music has a direct influence on the profit and on the type of royalty that is generated.

Basically, the industry pays the artist who wrote the song every time anyone other than the music rights owner uses it. Songwriter royalties apply if someone plays your music on a radio station or on TV, or at bars and restaurants. This is true even if it’s in a private session for just one listener. The type of royalty and who gets paid depends on the media and on who is listening to it. It will be different if your listener is playing your song on their headphones or if the song is playing on the radio for more people. Now that you know the basics, let’s dig a bit deeper and understand the different kinds of royalties songwriters can get. 

Mechanical Royalties

Let’s start with the Mechanical Royalties, which are probably the easiest ones to conceive. The word “mechanical” is related to something physical, and this kind of royalty is exactly about that. About the physical copies of your music. So whenever the manufacturer presses a CD, vinyl, cassette tape, etc. someone must pay the Mechanical Royalties. However, now we have the internet and many different ways to listen to music. So this “mechanical” royalty also applies to downloads of the music online and to plays on streaming services. Whenever someone buys a copy of your song or album, it generates mechanical royalties. And the same goes for downloads from the internet, or even streamings. In this case, the record companies are the ones responsible for the payment of the songwriter royalties. The money then goes to the songwriter, the composer, the performer, and also the publisher. 

Performance Royalties

Performance Royalties are another type of royalty you definitely need to know to understand how songwriter royalties work. Every time someone plays a song on the TV or on the radio, it generates royalties. The same goes for live performances or even background music in public spaces. This means that if you are out in public and you hear music, it is probably generating money for the people who created it. That is true for pretty much every place, like cafes, parks and stores. The same goes to live performances and even doctors’ offices waiting rooms. Places that want to legally play music must pay a license fee in order to do so. Even if it’s just one person playing it on their headphones, it is generating performance royalties. These are called “digital” performance royalties. In this case, the songwriter and also the recording artist will get paid. 

Songwriter Royalties and the Performing Rights Organizations (PROs)

Now that you know about performance and mechanical royalties, let’s talk about another very important topic: the Performing Rights Organizations (PROs). By this point, you’ve probably heard of it and it is vital that you understand what it means. You already know that you should receive songwriter royalties every time someone buys or reproduces your music in public places. Or even plays it on streaming devices. But how does that work? How do you get this money? How do you know if you are getting everything you can? Well, that’s actually the PROs job: to collect the royalties and assure it’s going to the right musicians and publishers. It builds a bridge between the writer and whoever is listening to it. 

The Performing Rights Organizations verify where the songs are being played. Then, they divide the royalties between the publishers and the songwriters. They are also the ones who deal with the licenses that establishments need to play music in public spaces, on television and radio stations. The money for the Performing Royalties actually comes from those licenses. Each PRO has their own rules and ways of negotiating. The main PROs in the US at the moment are ASCAP, BMI and SESAC. In order to get all the money from your royalties, it is necessary to register your songs with a PRO. They are the ones that make sure you get everything according to the law. You have to do your research and find the most suitable for you. 

Don’t miss out on your own songwriter royalties

Now that you know these very important topics about songwriter royalties, it’s time you put that knowledge into action. That is the only way to make sure that you are getting everything you can. Magroove can help you with that by managing all your digital platform royalties. This way you can get 100% from Spotify, Deezer and all major platforms. If you wish to keep learning about the music industry and royalties, feel free to explore our blog.

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