Royalties
Payments made to rights holders for the use of their intellectual property, particularly musical works.
Definition
Royalties are ongoing payments made whenever copyrighted music is used—streamed, broadcast, performed, reproduced, or licensed. Different royalty types flow from different uses: mechanical royalties from reproductions, performance royalties from broadcasts and streams, sync royalties from visual media placements.
The royalty system involves multiple parties including labels, publishers, PROs (performing rights organizations), and digital distributors, each handling specific royalty streams.
Why It Matters
Royalties represent the ongoing income stream that makes music careers sustainable. Understanding royalty types and collection mechanisms ensures artists and songwriters capture all earned income.
In the streaming era, royalty structures have become more complex, making proper rights registration and multiple income stream optimization critical for music professionals.
Examples in Practice
A streaming hit generates royalties from multiple sources: the label receives recording royalties, the publisher collects publishing royalties, and PROs distribute performance royalties to writers.
Unclaimed royalties totaling billions sit with collection organizations because rights aren't properly registered, highlighting the importance of administration.
A catalog audit reveals missing royalty payments from foreign territories, recovering substantial back payments through proper claims.