Traditional Songwriter Revenue Streams
In the short history of recorded music, American songwriters have been entitled to certain revenue streams. I believe that all songwriters who seek to make songwriting the primary economic engine of their life, must have an understanding of the different revenue streams that songwriters collect on. Today I present you with a listicle defining the classic revenue streams for songwriters and how that money is collected: mechanical royalties, performance royalties, sync fees, print royalties, and writer’s fees.
1. Mechanical Royalties: compensation paid to the copyright holder of a musical composition for the authorized reproduction and distribution of that composition. These royalties are generated when a third party, such as a record label or digital streaming service, manufactures and distributes physical copies of a song (e.g., CDs, vinyl records) or when the song is digitally downloaded or streamed. The payment is based on a statutory rate per unit (e.g., per copy sold or per stream).
Example: When an artist records and releases a cover or their own version of your song, you earn mechanical royalties for each sale or stream. For instance, when other artists cover “Yesterday,” McCartney earns mechanical royalties for each copy sold or streamed.
Payout Mechanism: Mechanical royalties are often paid out through performance rights organizations (PROs) like ASCAP, BMI, or SESAC. Record labels or distribution platforms pay these organizations, which, in turn, distribute the royalties to the rightful songwriters based on established formulas and agreements.
2. Performance Royalties: compensation paid to the copyright holder of a musical composition for the authorized public performance of that composition. These royalties are earned when a song is performed or broadcast in public settings, including on the radio, in live concerts, on television, in clubs, and through digital platforms
Example: Each time your song is played on the radio, performed live, or streamed on platforms like Spotify, you earn performance royalties.
Payout Mechanism: PROs play a crucial role in collecting and distributing performance royalties. They monitor and report the public performances of your music and ensure you receive fair compensation. Live performances are often tracked through setlists and venue reports.
3. Sync Fees: Compensation for a synchronization license, which is a legal agreement that allows the licensee (typically a filmaker, producer, or ad agency) to use the song in conjunction with visual conten such as films, television, commercials, video games, or other audiovisual products.
Example: Getting your song featured in a hit TV series can lead to a sync deal, bringing in revenue and increasing exposure.
Payout Mechanism: Sync fees are negotiated and paid upfront, typically through music publishers or licensing agencies. Additionally, performance royalties may be generated each time the synced content is broadcast or performed.
4. Print Royalties: While less lucrative in the age of online guitar tabs, print royalties are earned from the sale of printed sheet music or lyrics.
Example: If your song becomes popular, printed sheet music featuring your composition may be sold, and you receive print royalties for each sale.
Payout Mechanism: Music publishers often handle print royalty payments. The royalties are calculated based on the number of copies sold and are typically paid on a quarterly or semi-annual basis.
5. Writer's Fees: Like a producer’s fee, writer’s fees are payments received by songwriters for their creative work during a collaborative writing or recording session.
Example: If Sia Furler is hired to write with an artist, they may pay her in advance of her session.
Payout Mechanism: These fees are negotiated and paid upfront, often through agreements facilitated by managers, agents, or music publishers. The payment terms and structure depend on the specifics of the collaboration and the parties involved.
