Here’s a straightforward and uncomplicated guide to unravel the intricacies of music profits, covering aspects like royalties, sales, publishing, and licensing. I’ll direct you to the various organizations you should register with to ensure you start receiving the earnings you’ve rightfully earned from your music.

Even if you haven’t released any music yet, registering early puts you ahead of the game, ensuring you don’t miss out on potential profits. The profit collection process involves just five categories: sales, mechanical royalties, performance royalties, digital performance royalties, and licensing fees. By understanding these categories and registering with the appropriate organizations, you’ll be well-prepared to maximize your earnings from your music endeavors.

Music Sales (aka streaming and downloads)

Music sales can be online or offline (digital or physical). If a CD, record, or tape is sold, that’s a physical sale. If a song is streamed on Spotify, Tidal, Deezer, or Apple Music, that would count as a digital sale. Each streaming company divides their money up differently, so the value of a stream is slightly different depending on where it was played.

• Who gets paid? The master copyright owner (independent artist, record label or both).
  
• Who pays? The distributor (CD Baby, DistroKid, Tunecore, etc).
  
• How to get paid: You will need to choose a digital distributor (or physical if you want your CDs or records in stores) and release your music through them. Each distributor has its own fees and commissions, but most are reasonably affordable. Personally, I prefer CD Baby, and you can read more about why in an article I wrote. Additionally, your distributor usually handles the collection of YouTube royalties, but it’s always good to double-check.

Mechanical Royalties (domestic)

These royalties are related to music sales, but instead of being paid to the copyright owner, they are paid to the songwriter (or publisher). Whenever a song is sold or streamed, it generates income for the writers in addition to the owners of the recording. This creates a second profit source that many independent artists overlook. This section is specifically focused on collecting in your home country.

• Who gets paid? The songwriters or publishers that hold any percentage of rights to a song.
• Who pays? In the U.S., The MLC (Mechanical Licensing Collective) is responsible for paying these royalties. Outside the U.S., your country’s mechanical royalty organization handles the payments. If you have a publisher or publishing admin company, they may be the ones making these payments.
• How to get paid: If you are a U.S.-based songwriter, you can sign up for The MLC for free. It is a non-profit government organization created to pay artists and publishers directly, without taking a commission.

For songwriters in other countries, you will need to search online for your specific mechanical royalty collection organization. If you are signed to a publisher, they will collect your mechanical royalties and deduct their percentage before paying you.

Independent artists can also have a publishing admin company collect mechanical royalties on their behalf. Some options include CD Baby Pro, Songtrust, Tunecore Publishing, Kobalt, Sentric, and many more.

Mechanical Royalties (global)

These royalties are the same type as mentioned above, but they apply to music sales outside of your home country. Collecting mechanical royalties on a global scale can be a daunting task due to the various organizations handling payouts in different countries.

• Who gets paid? The songwriters or publishers that hold any percentage of rights to a song.
• Who pays? Each country has its own agency responsible for handling royalties. Trying to contact each of them individually can be a significant hassle. Alternatively, you can opt to get paid through a global publishing administrator like Songtrust.
• How to get paid: Sign up for Songtrust. They charge a one-time fee of $100 and a 15% commission on all royalties earned. However, the benefits are worth it as they claim to track down 98% of all royalties across the globe. While other companies exist, Songtrust is widely regarded as the best and most commonly used for this purpose.

Performance Royalties

These royalties are earned when your song is “publicly performed.” If the song is played over the speakers in a restaurant, in an elevator, on a TV show, commercial, on AM/FM radio or even played live in a venue by your band, it is considered a public performance.

• Who gets paid? The songwriters or publishers that hold any percentage of rights to a song.
• Who pays? A PRO (performance rights organization)
• How to get paid: Sign up for a PRO. ASCAP and BMI are among the most popular PROs. Other options include SESAC, PRS, and GMR. Depending on your country, there may be other PROs available. If you’re using a publishing admin company, they should handle this process for you by registering your songs with a PRO. However, it’s essential to check with them to ensure everything is in order.

Digital Performance Royalties

These royalties are often overlooked by independent artists. A recording is considered “digitally performed” when it is played on a non-interactive streaming service (or digital radio station), such as SiriusXM or Pandora.

• Who gets paid? The master copyright owner (independent artist, record label or both) and the featured artists or session musicians on the recording.
• Who pays? In the U.S., SoundExchange is responsible for paying out these royalties. If you’re outside the U.S., your Neighboring Rights Organization handles the payments.
• How to get paid: Set up a free account at Soundexchange. For other countries, you’ll need to search online for your respective Neighboring Rights Organization to ensure you receive your royalties.

Licensing Fees (aka sync)

A sync license is an agreement that allows your song to be used in a commercial work. Some of the most common (and lucrative) placements are in TV shows, movies, commercials and video games. Unlike the other categories in this article, sync licenses are handled directly on a case-by-case basis with the person using your music. There is no organization or government entity keeping track of things.

• Who gets paid? The master copyright owner (independent artist, record label or both)
• Who pays? The entity using your music in their project (movie studio, ad agency, independent filmmaker, video game producer)
• How to get paid: To earn money through sync licensing, strike a deal with someone who needs your music! You will receive an upfront fee or a percentage of royalties for the lifetime of the project, or both. Sync licensing can be quite lucrative.

Professional artists and labels often have a sync agent that helps sell their music to these entities. You can apply to be represented by a sync agency, but usually they’ll approach you if you have the potential to earn them a lot of money.

Never pay an agent for these services. A legitimate sync agent will only take a percentage of the profits from the deals they make for you. Typically a commission ranges from 25% to 50% of the upfront fee. Some agents may also take a percentage of future royalties, but all of this is negotiable when you sign with an agency. So, consider seeking legal advice when necessary!

If you’re a lesser-known artist, you can also apply to have your music placed in a sync library. Audiosocket is an example of this type of company, but there are many more out there. These placements may not make you as much money as a big agency, but they can be a good place to start until Hollywood comes knocking. If a sync library asks you for an upfront fee to join, it’s best to avoid it. Legitimate sync libraries should only take a percentage of the deals they make on your behalf.

Not too complicated

I crafted this guide for all those who have invested countless hours navigating the complexities of collecting their music earnings efficiently. The amount of information can be incredibly perplexing, but rest assured! The information in this article has been diligently sourced from agencies, distributors, and reputable industry experts. With this information, you now know the easiest ways to gather all the money your music has been generating, making the process much smoother and less daunting.

I am a mixing and mastering engineer located in Los Angeles, specializing in remote work for independent artists. If you’re seeking production assistance, feel free to reach out to me. I have collaborated with a wide range of musicians and consistently uphold a rigorous standard of quality. Take a moment to listen to my past projects and read reviews from satisfied clients. If you have any inquiries, don’t hesitate to reach out. I’m here to help!