Royalties are generated every time a song is played on the radio, streamed on a music service, pressed onto a CD or vinyl record, or used in a TV show, movie, or commercial. They are the lifeblood of the music industry, ensuring that artists and songwriters are paid for their work.
The sound recording is the actual recording of the song, which is usually owned by the recording artist and the record label. The composition is the underlying melody and lyrics of the song, which is usually owned by the songwriter and the publisher. Each part has its own rights and royalties, which means that a song can generate multiple streams of income for different parties.
For example, let's say that a song is played on Spotify. Spotify pays a mechanical royalty to the record label for the right to stream the sound recording. The record label then splits this royalty with the recording artist, according to their contract. Spotify also pays a performance royalty to a performing rights organization (PRO), such as ASCAP or BMI, for the right to play the composition. The PRO then distributes this royalty to the publisher and the songwriter, according to their membership agreement.
There are 7 types of music royalties. Learn about them here.
Everything You Need To Now About Music Royalties
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