How Music Royalties Work

Mechanical, performance, sync, and master royalties explained in plain English.

There Are Four Types of Music Royalties

Most artists think royalties just means "money from streams." That's actually only one small slice of the pie. When your music earns money, it earns from four distinct revenue streams — and most independent artists only collect one or two of them.

Understanding all four is how you capture 100% of what your music generates.

1. Mechanical Royalties

Mechanical royalties are paid every time your song is reproduced — whether that's a physical CD pressing, a digital download, or a stream on Spotify. In the US, the rate is set by the Copyright Royalty Board (CRB). For streaming, the current rate is approximately $0.0115 per stream — but that's the total mechanical royalty, which gets divided between everyone involved.

On streaming platforms, mechanical royalties are paid to the rights holders of the composition (the songwriters and publishers), not the master rights holders.

Who collects it: Your PRO (partly) and the Mechanical Licensing Collective (MLC) for US streaming.

2. Performance Royalties

Every time your song is publicly performed — on the radio, in a restaurant, at a concert, on TV — a performance royalty is generated. These royalties are split between the songwriter and the publisher.

Your PRO (ASCAP, BMI, or SESAC) is responsible for collecting performance royalties. They have agreements with venues, broadcasters, and streaming services, and they distribute what they collect to their registered members.

Who collects it: Your PRO distributes it to you (songwriter share) and to your publisher (publisher share).

3. Sync Royalties

A sync license is paid when your music is "synchronized" with visual media — a movie, TV show, commercial, YouTube video, or video game. Sync deals are negotiated case by case, and there's no set rate. A national commercial can pay $50,000 to $500,000 or more. A small indie film might pay $500.

Sync royalties are split between the master recording owner (usually the label or the artist) and the composition owner (the publisher/songwriter).

Who collects it: Directly negotiated. Music licensing platforms like Musicbed, Artlist, and Marmoset can help independent artists get into this market.

4. Master Royalties

Master royalties are paid to whoever owns the master recording — the actual audio file. When your song streams on Spotify, Spotify pays a royalty to your distributor, who passes it to you (minus their cut). If a label owns your masters, they receive this payment and pay you a royalty rate (typically 14–25% of net).

Who collects it: Your distributor pays you if you're independent. The label pays you (at your royalty rate) if they own the masters.

The Key Insight

Most independent artists using DistroKid, TuneCore, or CD Baby are only collecting master royalties from streaming — because those platforms pay the master side.

To collect performance royalties, you need to register with a PRO. To collect mechanical royalties in the US, you need to register your songs with the MLC. To collect worldwide mechanicals, you need a publishing administrator.

The artists who capture all four streams earn significantly more from the same number of streams.

Key Takeaways

There are four types of royalties: mechanical, performance, sync, and master
Streaming pays both master royalties (to your distributor) and mechanical royalties (to the MLC)
Performance royalties require PRO membership — ASCAP, BMI, or SESAC
Sync licensing can be extremely lucrative — a TV placement can pay more than millions of streams
Independent artists often miss out on mechanical royalties by not registering with the MLC

Glossary

Mechanical Royalty: A royalty paid each time a song is reproduced — via physical media, digital download, or streaming.
Performance Royalty: A royalty paid when a song is publicly performed or broadcast on radio, TV, streaming services, or in public venues.
Sync License: A license that grants permission to use a piece of music synchronized with visual media such as film, TV, or advertising.
MLC (Mechanical Licensing Collective): The organization designated by the US Copyright Office to collect and distribute mechanical royalties from digital music services.
Master Rights: Ownership of the actual sound recording — the specific audio file. Separate from the composition rights.