If you write songs, and your songs are sold, downloaded, streamed or used in many other ways, they\u2019re generating songwriter royalties for you.\u00a0 Awesome, right?<\/p>\n
Nowadays, the types of songwriter royalties earned fall into two buckets: Physical\/Analog Songwriter Royalties (generated from old school music industry), and Digital Songwriter Royalties (generated from the modern digital music industry).\u00a0 With all of the different ways your compositions can be used in both industry models, there\u2019s a good chance your songs are generating money you\u2019re not even aware of, which means you\u2019re missing out on collecting your money, and that ain\u2019t cool. So, to make sure that stops now, we\u2019ve outlined 13 ways that your songs make you money.<\/p>\n
But one note before we begin: each income stream and type of royalty explained below is generated from both the original recording of a song or \u201ccomposition\u201d (i.e. the Beatles\u2019 version of \u201cYesterday\u201d), and off of a cover of the song.<\/p>\n
Physical\/Analog Songwriter Royalties & Revenue<\/p>\n
#1. Mechanical Royalties<\/p>\n
If you\u2019re serious about getting your music out there, you\u2019re probably selling physical products like CDs, LPs or cassettes (someone<\/i> must still listen to cassettes\u2026right?).\u00a0 Every time a unit is sold or manufactured, you earn a mechanical royalty, generated from the reproduction of your song.\u00a0 Record companies or other entities manufacturing products with your song\u2014like The Gap, W Hotel, Putumayo\u2014pay this royalty.\u00a0 If the reproduction is in the U.S., the royalty rate is $0.091 per reproduction for songs under five minutes. \u00a0 A formula rate kicks in set by the U.S. Government for songs over five minutes.\u00a0 Outside of the U.S., the royalty rate is typically 8%-10% of the list price.<\/p>\n
#2. \u2019Analog\u2019 Public Performance Royalties<\/p>\n
Every time there\u2019s a \u201cPublic Performance\u201d of your composition, you make money.\u00a0 Public Performances happen all the time\u2014you play a set at the local pub, your song gets radio play, you hear your track as background music in a restaurant or hair salon\u2014and each time, the songwriter earns money.\u00a0 So who pays up? AM\/FM radio, network TV, bars, restaurants, airplanes, offices, movie theaters\u2026you get the point.\u00a0 Both in the U.S. and outside the U.S., the royalty rate is determined by a one-to-one negotiation between the Performing Rights Organization (PRO) and the entity where the performance occurred.<\/p>\n
#3. Synchronization License Royalties (from the \u201cDistribution\u201d Copyright)<\/p>\n
If a film or TV studio, production company or someone else wants to use your composition in a TV show, movie or commercial (hooray!), they need to pay for the synchronization license.\u00a0 The license fee (both in and outside of the U.S.) is a one-to-one negotiation usually based on several things like the length of the use, how it\u2019s being used (background or up front), the format and the popularity of the production.\u00a0 Because of all these factors, the fee can range from a few hundred dollars to hundreds of thousands of dollars.<\/p>\n
#4. Mechanical Synchronization Royalties<\/p>\n
Let\u2019s stay on the topic of Sync for a moment, as there\u2019s also a mechanical royalty generated from the \u201cReproduction\u201d copyright.\u00a0 All that publishing lingo means that there\u2019s a per unit royalty payment owed to the songwriter based on the number of units manufactured that include the song (like a greeting card, toy, video game, etc.).\u00a0 Depending on the type of unit manufactured, entities like Hallmark, toy companies, or video game companies generate and pay this royalty, and the value worldwide is usually based on initial manufactured units.<\/p>\n
#5. Print Royalties<\/p>\n
As the name suggests, this royalty, generated from the Public Display copyright, has to do with printed materials\u2014lyrics, sheet music, tablature, etc.\u00a0 When music publishers like Hal Leonard or Alfred Music Publishing create sheet music, or a company prints t-shirts with lyrics on them, they are required to pay a print royalty.\u00a0 There\u2019s no government rate for this royalty\u2014it\u2019s a one-to-one negotiation.\u00a0 If we\u2019re talking sheet music, the royalty is usually 15% of retail price, and\/or a one-time fee for pressing is negotiated.<\/p>\n
Digital Songwriter Royalties & Revenue<\/p>\n
#6. Digital Download Mechanical Royalties<\/p>\n
If you write a song and distribute it to download music services like iTunes, Amazon, or Google, you\u2019re owed a royalty for every unit of your music that\u2019s downloaded.\u00a0 This royalty type comes from the \u201cReproduction\u201d and \u201cDistribution\u201d copyrights, and the royalty payment mirrors physical reproductions: $0.091 per reproduction in the U.S., and generally 8% \u2013 10% of the list price outside the U.S.<\/p>\n
#7. Streaming Mechanical Royalties<\/p>\n
Streaming is the name of the game these days, and if you distributed your music to digital stores, it\u2019s likely that you chose a few interactive streaming services like Spotify, Rhapsody or Rdio.\u00a0 In case you\u2019re not familiar with the term, \u201cinteractive\u201d means that the user can choose songs, stop, go backwards, create playlists, etc. As was the case with digital downloads, a songwriter is owed a royalty (from the \u201cReproduction\u201d copyright) for every stream of his or her song on an interactive streaming service.\u00a0 In the U.S. there\u2019s a government-mandated rate of around $0.005 per stream (expected to grow!), and outside of the U.S. the royalty is typically 8% \u2013 10% of the list price.<\/p>\n
#8. Digital Non-Interactive \u201cStreaming\u201d Public Performance Royalties<\/p>\n
We talked \u201cinteractive,\u201d and now we\u2019re talking \u201cnon-interactive.\u201d\u00a0 A non-interactive streaming service is one through which you can\u2019t pick songs, create playlists, or otherwise \u201cinteract\u201d with the music, kind of like AM\/FM radio.\u00a0 A non-interactive stream is a \u201cPublic Performance\u201d and therefore generates a songwriter royalty, paid by the streaming service, like Pandora, Slacker, iHeartRadio, Sirius XM Satellite Radio, cable companies, and thousands of other entities.\u00a0 Worldwide, the royalty rate is determined by a one-to-one negotiation between the PRO and the other entity (generally based on a % of the entity\u2019s Gross Revenue).<\/p>\n
#9. Interactive \u201cStreaming\u201d Public Performance Royalties<\/p>\n
When someone streams your song on an interactive streaming service like YouTube, Spotify or Rdio, it also counts as a \u201cPublic Performance,\u201d which means you\u2019re owed additional songwriter royalties. There\u2019s no set government rate in or outside the U.S.\u2014it\u2019s determined individually by the PRO and the other entity, once again usually based on a % of the entity\u2019s gross revenue.\u00a0 A few formulas and calculations from the PRO later, and you\u2019ve got a royalty.<\/p>\n
#10. Digital Synchronization License<\/p>\n
Sync also applies to the digital world.\u00a0 We all know it\u2019s common for people to create YouTube (or Vimeo) videos that use someone else\u2019s music in the background.\u00a0 In slightly more technical terms, what\u2019s happening here is that the song is being synchronized with a moving image, and when this happens, a per use license payment is required.<\/p>\n
As far as the royalty rate goes, there is no government rate, just a one-to-one negotiation that sets the per use royalty rate.\u00a0 It\u2019s typically a percentage of Net Revenue as generated by advertising dollars.<\/p>\n
#11. Digital Print<\/p>\n
Google any song and you\u2019ll immediately find dozens of sites with the song lyrics, sheet music, or tablature available for your use.\u00a0 The use of the music on these sites is yet another form of public display, and the lyric sites, musician sites, and even sites with avatars wearing virtual t-shirts with song lyrics (yup, those count) all generate and pay this songwriter royalty.\u00a0 Once again there\u2019s no government rate set worldwide, and the rate is typically a fee for a specific period of time, and\/or a percentage of the site\u2019s gross revenue from paid subscriptions or advertising.<\/p>\n
#12. Mechanical Royalty for a Ringtone\/Ringback Tone<\/p>\n
Ever purchase a ringtone? Or distribute your own to the iTunes store on your phone?\u00a0 Whenever a ringtone or ringback tone is purchased for a mobile device, a royalty is owed (it\u2019s generated from the \u201cReproduction\u201d and \u201cDistribution\u201d copyrights).\u00a0 Music services and telecoms like AT&T, Verizon, T-Mobile, Cricket, Vodafone and more are required to pay mechanical royalties to the tune of $0.24 per ringtone (in the U.S.) and a percentage of gross revenue (outside the U.S.).<\/p>\n
#13. Public Performance Royalty for a Ringtone\/Ringback Tone<\/p>\n
In addition to the royalty generated in the purchase of a ringtone\/ringback tone, a songwriter royalty is owed from the public performance that occurs when someone plays the tone outside of the U.S. Once again, the telecoms and music service need to pay up, and the rate is determined by a one-to-one negotiation.<\/p>\n
Exhausted from reading this but ready to get the money you\u2019re owed from the use of your compositions? That\u2019s the right attitude! When you get a publishing deal with a publishing administrator, the publishing administrator will license and collect for you worldwide all of the royalties that should be coming to you, the songwriter, and nobody else.\u00a0 It\u2019s a good idea to get in the know now, because as the music industry landscape keeps evolving, there\u2019s no doubt you\u2019ll soon have more royalties to collect.<\/p>\n