How Much Do Musical Artists Make In Royalties?

If you are curious how the payout of music royalties works, Trqk presents an overview on how these valuable income streams work in the music industry. 

At some point, we’ve all dreamed of starting a band, touring the world, and making the big bucks. For most of us, that vision is both the beginning and end of our musical career. But for the few that transform their rockstar aspirations into tangible records, the practicalities of actually making money come into view. While there are several income streams available to music pros, royalties are one of the best. 

But how much are music royalties? If you're curious about the payout music royalties can offer, read on. This article is your guide to how passive income works in the music industry. 

Want to brush up on the fundamentals? Check out Music Royalties: The Ultimate Guide

What are music royalties?

Music royalties are payments made to whoever owns the rights to a piece of music for the ability to use that music in some manner. Royalties are often paid for the right to perform a song, use a score in a film, or even play a hit in a coffee shop. Recording artists, songwriters, and anyone else responsible for the production and distribution of the work are frequent recipients of music royalties. For more about what music royalties are, check out this in-depth blog on the topic.

There are two kinds of musical rights: composition rights and master rights. Many different parties can claim one of these types of rights, including the songwriter, performers, publisher, and more. How much they get depends on the terms of their contract and who they are in the chain of production. 

How much are music royalties?

Music licensing and royalties can be a convoluted business, so the answer to how much music rights holders get paid is anything but straightforward. An essential factor in the payment’s size is how the music is being used. Royalties for physical copies, performances, or streaming are all determined and paid out differently. There are other types of royalties paid (some of which we’ll cover later), but these are some of the most important. 

Mechanical royalties used to be the industry term for the royalties paid on purchases of a physical copy of a given piece of music, but it has grown to include digital copies. There are legal standards for how much composition owners — usually songwriters — get paid that are updated periodically. Right now, that rate is approximately 9 cents per copy physically bought or digitally downloaded, but it’s important to remember that these payouts are often funneled through labels and/or publishing companies who take a cut of the proceeds.

Performance royalties include the royalties paid whenever music is performed on stage, played on the radio, or used in a TV show. It also includes streaming, but we’ll explain that below. The size of payment varies greatly depending on the size of the audience that will hear the work. For big shows, royalties can be in the thousands per airing. Sync and master use license fees are also paid for music in TV and other media. They’re usually bought together in a package known as the “licensing fee.” 

Streaming royalties are the most recent of the royalty types and are a combination of mechanical royalties and performance royalties depending on whether the music is played interactively or non-interactively. While digging into the precise breakdown of the payout deserves an article all to itself, streaming royalties vary by platform. Spotify shells out between $.003 and $.005 per stream whereas Apple Music pays creators around $0.01 per play. 

How much do artists get in royalties?

So, how are artists’ royalties determined for performers? Let’s dive into the wider market figures to understand how much artists actually get in royalties and where the industry is going. The worldwide music market reached $21 billion in revenue in 2019, and it’s estimated artists took about 30% of that massive number home as royalties. If you don’t have a calculator handy, no worries: That breakdown leaves $6.3 billion to the creators. 

Outpacing the growth rate of the total music market by approximately four times, the independent artist market has exploded in recent years. This once niche market is estimated to have grown 32% from 2019 to 2020, with artists generating $1.6 billion for their master recordings in the former year and $2.1 billion in the latter. While artists don’t take home all these earnings — distributors and other services take their cut — it’s great to see this sector on the rise. 

How much are music royalties for tv shows?

There are two kinds of fees paid for music in shows: the licensing fee and the performance royalty. 

The synchronization, or sync licensing fee, is paid immediately to the rights-holder(s). It varies relative to the notoriety of the rights holder — Beyonce, for example, would command top dollar —  and the show’s creative budget. Depending on this negotiation, sync licensing fees can range from a few hundred to many thousands of dollars. In short, the more well-funded the show and the more famous the artist, the higher the licensing fee. It should be noted that both the composition and the recording are eligible for a separate and distinct sync license fee. Recording artists earn sync royalties for the use of the master recording, while songwriters earn them for the use of the composition.

Performance royalties work a bit differently, as they are based on a show’s audience size. As you might expect, the larger the audience, the higher the performance royalty. Unlike the licensing fee, performance royalties are paid whenever a program airs. Because even a single airing on network TV can net a few thousand in these royalties, it’s understandable to be envious of whoever owns the rights to any music used on Friends, Seinfield, or The Office. But that cost can actually prompt some startling changes, as you may have noticed the music in some classic shows can get swapped.  

In music, it pays to have an experienced partner 

We hope you’re closer to understanding the answer to the question, “how much are music royalties?” As you probably know by now, it’s not an easy one to answer. 

While sorting through the details of the music business can be challenging, it’s vital to know what you deserve for all your creative work. And one of the best things you can do to make sure you’re getting paid is to find a trustworthy partner. 

At Trqk, our charter is to help deliver transparency and fairness to the music creator economy because we’re musicians and music execs ourselves. We use data science and business intelligence to provide a holistic view of your performance royalties to highlight trends and new opportunities while our powerful audio content recognition (ACR) system detects on-air works the PROs might have missed. Get in touch to learn more about what Trqk can do to help you unlock new revenue streams and grow your business!