Music Royalties Explained: The Different Types of Music Royalties and Rights Associated with a Song

Just as is the case with video, it takes a lot more than just a solid idea to turn a piece of content into something that actually makes a creator money. And, unlike film and video, which have only been around for just around a century, music’s financial history is much longer and—at times—a more complicated process.

So, for those curious about how common rights and different types of royalties in music work, let’s explore the question: “How does music make money?”

Plus, as an added bonus, we’ll explain a bit more about how Soundstripe is able to support the musicians who make our music as well as provide video content creators, podcasters, and other creatives with quality royalty free music which comes from these talented artists.

How does a song make money?

As we’ve covered in the past exploring how sync licensing rights work and the two sides (master rights and common rights) to every song, there’s simply a lot of variables and nuances to how music licensing works.

That being said, the basic principles remain the same. Musicians write music. Musicians perform music. And despite there being different stakeholders in the mix, at the end of the day content creators can’t just use any music for their videos or other forms of media without properly licensing the rights to use a song.

If you’d like to explore some more helpful articles about how music licensing works, here are some great resources:

Common Types of Music Rights and Royalties

Now, let’s dive in a bit deeper and look specifically at what common rights and royalties are associated with a song—and more specifically—why you need to be aware of these different rights and royalties when looking to license music for different purposes.

Mechanical

Let’s start with the most complicated one. Mechanical rights and royalties are the most complicated because they come from a bygone era. This type of royalty is paid when a copy of a song is created and sold. For example, when a CD is manufactured, a vinyl record is pressed, or a digital file is downloaded.

In our modern times though, this is the royalty which covers streaming. Simply put, everytime a song is streamed this type of royalty is paid by Digital Service Providers (DSPs) like Spotify, Apple Music, etc…

Performance

This next type of royalty is paid whenever a song is played in public. The most classic example of this would, of course, be a radio play. However, performance royalties should also be paid by the end broadcaster (like NBC, CBS, etc… for example) when a band plays a song in a restaurant or bar or when a song is used in a movie or TV show.

Sync

Alongside performance royalties, sync royalties are paid anytime a song is used in any visual medium. Again, this covers TV shows and movies, as well as video games, television advertisements, and many other examples.

And, as we’ve covered in our guide to sync licensing, it’s not just one but two “upfront” fees that need to be paid. One fee is paid to the master owner, and then another fee is paid to the publisher, with each of these fees typically being the same amount. These fees are paid by the producer of the film, TV or advertisement.

Takeaways about music rights and royalties

We hope that now your basic questions about the different types of music licenses, rights and royalties are explained. This is also a primer for content creators, as to why they should be very careful not just about where they license music from—but also how they use said music.

If you’re looking to license music for various uses or are interested in how to license music for video, we’re, of course, here to help you on your journey.

If you’d like to learn more about Soundstripe’s music for video offerings, check out our guide on how to use Soundstripe here. If you’d like to speak to a sales representative about more nuanced music licensing opportunities, please contact us.