The Business of Royalties

There’s a reason even seasoned artists squint when you ask, “So… how do streams become money?” In today’s music economy, a single play can ripple through several companies, contracts, and collecting societies before a dollar ever lands in an artist’s account. This guide follows that dollar—from a tap on Spotify or Apple Music, through labels and publishers, across borders and rights types—so you can see how the business of royalties really works.

The Streaming-Era Backdrop

Globally, recorded music is growing again—and streaming is the engine. Industry trade group IFPI reports that the worldwide recorded music market reached $28.6 billion in 2023 (up 10.2% year over year), and then $29.6 billion in 2024 (up 4.8%). Streaming remained dominant, accounting for about 69% of global recorded-music revenues in 2024, with 752 million paid subscription accounts worldwide by the end of that year.

In the United States, the RIAA says recorded-music revenues hit $17.7 billion (retail) in 2024, as paid subscriptions surpassed 100 million for the first time. Vinyl kept rising, but streaming still drove most of the growth.

Those top-line figures matter for musicians because nearly all modern royalty math flows from them. But to understand what any one artist actually earns, you must first separate two copyrights embedded in every song—and the different royalty rivers they create.

Two Copyrights, Two Money Flows

Every commercially released song involves:

1. The Musical Work (Publishing): the underlying composition (melody/lyrics), owned by songwriters and their music publishers.

2. The Sound Recording (Masters): the recorded performance, typically owned by a record label (or the artist, in independent setups).

Different uses of a song trigger different payments to these rightsholders. A public broadcast of a song triggers performance royalties to songwriters/publishers (via PROs like ASCAP/BMI in the U.S., PRS in the UK). A sale, download, or stream also triggers mechanical royalties to the songwriters/publishers. Meanwhile, exploiting the master (e.g., via streaming or a sync license) pays labels/recording owners—who then pay the artist per their contract.

Who Splits What On The Publishing Side?

For performance royalties, U.S. societies like ASCAP split payouts 50% to writers and 50% to publishers (if you self-publish, you can collect both).

In the UK, PRS for Music (performance) and MCPS (mechanical) together manage publishing royalties, with MCPS collecting mechanicals on reproductions across formats (including streaming).

The Five (Plus One) Royalty Types You’ll Hear About

1) Streaming Royalties (Interactive Services)

When you play a track on interactive services (Spotify, Apple Music, YouTube Music, Deezer, etc.), two baskets of royalties are generated:

• Master (Recording) Royalties → paid by the platform to labels/distributors → then to artists per the recording contract.

• Publishing Royalties (both performance and mechanical) → paid via PROs and mechanical agencies/societies (details vary by country).

U.S. publishing mechanics on streams: Since 2021, the Mechanical Licensing Collective (The MLC) administers a blanket license that covers U.S. digital audio mechanicals for interactive streaming. Digital services report usage and pay the MLC, which distributes to publishers and eligible self-administered songwriters. Performance royalties from the same streams still flow through PROs (ASCAP/BMI/SESAC).

Rates are a formula, not a per-play price: The U.S. streaming mechanical rate is governed by the Copyright Royalty Board’s “Phonorecords IV” settlement: by 2027, the “headline” rate rises to 15.35% of a service’s U.S. revenue (with other constraints like “total content cost” and per-subscriber minimums). That percentage applies to the publisher/songwriter side of a stream. The separate master payment to labels is privately negotiated and varies by service and territory.

So what’s the per-stream payout? There isn’t a single number. Spotify’s own “Loud & Clear” initiative stresses that it does not pay a fixed rate per stream; money is pooled and divided by share of listening, with regional pricing, plans, and free-vs-paid tiers impacting the effective value. (Apple and others are also pool-based.) In 2024, Spotify highlighted record publishing payouts and ~1,500 artists generating $1 million+ in Spotify royalties—illustrating how scale, not any single “rate,” determines outcomes.

Recent tweaks that matter:
• Spotify’s 1,000-Stream Threshold: Starting in early 2024, tracks must reach 1,000 streams in a rolling 12-month period to accrue recorded-royalty payouts, part of a broader push against fraud and “functional noise” content.
• Apple Music’s Spatial Audio Bonus: Beginning January 2024, Apple adjusted its royalty allocation so tracks available in Dolby Atmos/Spatial Audio receive up to 10% higher pro-rata weight (effectively boosting their share of the pool).

YouTube’s dual world: Music on YouTube earns through Content ID (ad-share on UGC videos using your music) and via YouTube Music subscriptions. The ad-share mechanics and negotiated rates differ from audio-only services, and effective values per play tend to be lower than subscription audio. (Specific splits vary by partner deals; the headline point is that it’s still pool-based and highly context-dependent.)

2) Performance Royalties (Songwriters/Publishers)

Any public performance of a composition—radio, TV, live venues, streaming broadcasts, restaurants—triggers performance royalties to writers and publishers via PROs.

• U.S.: ASCAP, BMI, SESAC (writer/publisher 50/50 at ASCAP, similar in practice at BMI).

• UK: PRS licenses performances of compositions; PPL separately licenses performances of sound recordings (neighboring/related rights—see below).

Performance royalties are often quarterly and depend on setlists, cue sheets, monitoring, and sampling. Disputes about transparency and admin costs surface regularly—e.g., ongoing UK scrutiny of PRS’s live-performance distributions and “black box” funds shows the stakes for writers when data is incomplete.

3) Mechanical Royalties (Songwriters/Publishers)

Mechanicals are paid for reproducing a composition—pressing vinyl, selling downloads, and also for interactive streaming (yes, streams reproduce compositions on servers and devices).

• U.S. physical/download mechanicals: After being frozen at 9.1¢ since 2006, the statutory rate rose to 12¢ per track in 2023 (with cost-of-living adjustments through 2027). Labels pay these to publishers/writers.

• U.S. streaming mechanicals: Collected via the MLC under the CRB formula (see above).

• UK mechanicals: Collected by MCPS, administered with PRS.

4) Publishing Royalties (The Bundle)

“Publishing royalties” is a catch-all many use for performance + mechanical income paid to songwriters/publishers (and sometimes print and lyric uses). On streams, a single play typically generates both performance and mechanical royalties for the composition, routed through different societies (MLC + PRO in the U.S.; PRS/MCPS in the UK).

5) Synchronization (Sync) Fees (Masters + Publishing)

A sync happens when music is paired to picture—film, TV, ads, games, streaming shows, trailers. There is no statutory rate; fees are negotiated based on usage (duration, prominence, territory, term, platform), and both sides must grant licenses:

• Master Use License (recording owner—label or DIY artist)

• Sync License (composition owner—publisher/songwriters)

One project can involve multiple songwriters/publishers, each requiring clearance. On broadcast/streaming, the sync can trigger back-end performance royalties to songwriters via PROs when the show airs—so a coveted placement pays an upfront fee and a tail. (Specific fee ranges vary widely by context and brand profile.)

(+1) Neighboring/Related Rights (Sound Recordings)

Outside the U.S., most countries pay public-performance royalties for sound recordings—money owed to recording owners and performing artists when a recording is played on radio/TV or in public. In the UK, PPL licenses these uses and pays out to labels and performers (separate from PRS’s song performance royalties). Globally, neighboring rights have become an important revenue stream for recordings.

Follow The Money: From Platform To Artist

Let’s track a typical on-demand stream on a subscription plan:

1. Fan pays the platform (e.g., $10.99/month).

2. The platform creates a royalty pool (after taxes, platform’s margin, etc.).

3. The pool is split across rights pro-rata by share of listening in the territory and plan type.

4. Master share is paid to labels/distributors (who recoup costs and pay recording artists per contract terms).

5. Composition share is divided into:

   • Performance royalties → to PROs (ASCAP/BMI, PRS, etc.) → to writers & publishers (often 50/50 at ASCAP).

   • Mechanical royalties → to mechanical societies (U.S.: MLC) → to publishers & writers.

A single artist can be recipient on the master side (as a performer) and on the publishing side (if they wrote the song)—two different revenue streams.

Why “Payouts Per Stream” Are So Confusing

Listeners often ask: “What does Spotify/Apple pay per stream?” The honest answer: it depends—and it changes month to month and country to country. Key variables:

• Plan mix (student/family/individual) and pricing in each market

• Free vs. paid tiers and ad demand

• Local taxes and exchange rates

• Your share of total listening that month

• Distribution/label deals (indie vs. major; DIY vs. distribution; advances/recoupment)

• Publishing splits (co-writers, admin, etc.)

Spotify’s public stance is that there is no single per-stream rate; money is pooled and allocated by streamshare. In 2024, Spotify emphasized record payouts to publishing rights holders and the growing cohort of six- and seven-figure-earning artists on its platform—again underscoring that outcomes hinge on listener scale and catalog depth.

Two recent policy shifts add more nuance:

• Apple’s Spatial weighting: If your catalog is Atmos-ready, your share of Apple’s pool can rise by up to 10% (because those plays are weighted more).

• Spotify’s 1,000-stream threshold: Ultra-low-stream tracks no longer dilute the pool; their cents are reallocated to tracks meeting the threshold. For mid-career artists, that can slightly raise effective earnings; for micro-releases, it can eliminate tiny payouts.

Why Contracts Matter More Than Ever

Two artists with identical stream counts can take home very different amounts. A few common deal shapes:

• Legacy “royalty” deal (major/large indie): Label owns the master; pays the artist a royalty (e.g., a share of PPD or revenue) after recouping recording/marketing advances and many costs (videos, tour support, sometimes even independent promotion). Royalty escalators and contract carve-outs vary widely.

• Distribution deal (indie/DIY): Artist keeps master ownership; a distributor takes a fee or percentage to deliver the music to services and collect. Net to artist is often higher per dollar grossed, but you finance your own recording/marketing.

• License/net profit share: Artist licenses a master to a label for a term, splitting net profits after defined costs. Split percentages and “net” definitions are critical.

On the publishing side, if you’re self-administered you keep the whole writer share and whatever publisher share you own. If you sign with a publisher, you’re paying for administration and (ideally) creative/services; deals range from admin-only to co-publishing to full assignments. (In ASCAP’s system, performance payouts are 50/50 writer/publisher.)

Beyond Streams: The Other Royalty Rivers

Radio, TV, Venues, and Shops

When a song plays on radio/TV or in a café, songwriters/publishers earn performance royalties via PROs everywhere. For sound recordings, most countries pay neighboring rights to labels and performers when recordings are publicly performed/broadcast (collected in the UK by PPL, among others). Globally, these related-rights revenues have grown into a major line item for recording rightsholders.

Physical And Downloads (Still Alive)

Vinyl’s revival matters for publishing too: the U.S. mechanical on physical/downloads rose to 12¢ per track in 2023 (with inflation indexing through 2027), the first increase since 2006. In high-volume genres and catalog reissues, that adds up.

Sync: The Kingmaker

A prime TV spot, film trailer, or global ad can be life-changing. Sync offers upfront fees (negotiated for both the master and the composition) and back-end performance royalties if the program is broadcast or streamed in licensed contexts. There’s no one “going rate,” but music supervisors pay more for recognizable hits, one-stop clearances, and exclusive use.

How Independent Artists Navigate The System

Today’s independent artists can build businesses with:

• Control of the master (through distribution rather than traditional label deals)

• Direct fan funnels (merch, tickets, memberships, D2C)

• Admin deals for publishing or self-administration (registering with PROs/MLC, accurate metadata)

• Catalog strategy (steady release cadence, audience development)

Indies benefit from owning rights, but must handle metadata hygiene (ISRCs, writer splits, songwriter society registrations) and get set up with the right societies:

• Register compositions with your PRO (ASCAP/BMI/SESAC in the U.S.; PRS in the UK).

• Ensure you or your publisher are registered with the MLC for U.S. streaming mechanicals. 

• For recordings, make sure your distributor delivers clean metadata and that you (or your label) claim Content ID where appropriate.

Neighboring rights add another layer: if your recordings get international radio/TV play, representation with a neighboring-rights CMO (e.g., PPL in the UK) can unlock income that performance and streaming statements might miss.

Global Differences That Change The Checks

Same song, different country, different money. A few examples:

• Collection frameworks: The U.S. separates interactive streaming mechanicals (MLC) and performances (PROs). The UK combines PRS/MCPS on publishing and uses PPL for recording public-performance royalties.

• Neighboring rights: Most countries pay recording performance royalties (PPL in the UK, SENA in NL, etc.); frameworks and splits vary by law and society. IFPI tracks this sector globally and notes its continuing importance to rightsholders.

• Market pricing: Subscription prices, ad markets, and exchange rates shape the value of a stream territory by territory—one reason per-stream “averages” on social media are so misleading.

The Transparency Debate (And Why It Won’t Go Away)

As streaming has matured, pressure around transparency and fairness has intensified:

• Data black boxes: Missing setlists and poor metadata can delay or redirect royalties. UK reporting has called out gaps in live performance tracking and the risk of “black box” reallocations that may advantage larger catalogs.

• Admin costs and distributions: Writer lawsuits and public challenges have questioned how societies allocate costs and negotiate special deals. (E.g., PRS has faced legal scrutiny over policies affecting smaller writers.)

• Platform policies: Spotify’s 2024 changes (1,000-stream minimum; anti-fraud; “functional noise” reweighting) and Apple’s Spatial bonus shift dollars within the streamshare pools—moves cheered by some and critiqued by others as favoring the already-successful.

On the positive side, reforms like the MLC were designed to reduce unmatched digital mechanicals in the U.S., centralize data, and pay songwriters monthly with more clarity.

Practical Math: Turning Plays Into Pay

Because there is no universal per-stream rate, the most reliable way to estimate what you might earn is:

1. Start with real statements from your distributor/label and your PRO/MLC.

2. Segment by territory and tier (free vs. paid) to see how much you net per 1,000 streams on each service.

3. Adjust for your deal (recoupment, royalty rate, distribution fee).

4. Add publishing: performance (PRO) + mechanical (MLC/MCPS), split among co-writers/publishers.

5. Include neighbor/related rights if your recordings get international broadcast/public performance (via PPL or similar).

Over time, you’ll see effective values per stream for your fanbase and catalog—numbers that matter far more than any online “average.”

Case Paths: Major-Label Artist vs. DIY Artist

Signed to a Major (Album Cycle):

• Label funds recording/marketing with an advance → owns masters.

• Streams generate master royalties to label; artist’s royalty applies after recoupment.

• Publishing: If the artist co-writes, their share flows via PRO/MLC (minus any pub-admin shares).

• Upside: market muscle, global teams, playlists/radio, tour marketing.

• Watchouts: recoupment waterfall, cross-collateralization, and long-term ownership.

Indie/DIY (Distributor + Admin Pub):

• Artist pays for recording/marketing; keeps masters.

• Distributor takes a fee % or flat (contract-dependent); artist keeps the rest.

• Publishing: self-admin or admin deal; register with PRO and MLC; keep writer share and some/all publisher share.

• Upside: higher share per dollar, control, speed.

• Watchouts: you’re the label; metadata, marketing, audits, and global registrations are your job.

What About “Royalty Rates” You See On Social Media?

It’s tempting to quote a platform “pays $0.00X per stream.” Treat those as ballpark, not promises. Spotify itself cautions that such figures are misleading because they ignore territory, plan mix, promotions, and the pool math. A viral post might be roughly true for one month in one country, but wildly wrong the next. The best public “figures” to anchor on are the macro ones that demonstrate capacity to pay—like IFPI’s global totals, RIAA’s U.S. totals, and platform-published payout aggregates (e.g., Spotify’s Loud & Clear).

The Artist’s Checklist: Capturing The Money You’ve Earned

• Register everything
  • Compositions with your PRO (ASCAP/BMI/SESAC, PRS, etc.).
  • Compositions (for U.S. streams) with The MLC (or ensure your publisher does).
  • Recordings with your distributor (accurate ISRCs, contributors, splits).

• Use proper splits & credits: Metadata errors are the #1 royalty-killer.

• Claim YouTube/UGC uses: Content ID via your distributor or a rights-management partner.

• Neighboring rights: If you have international radio/TV play, align with PPL or a neighboring-rights agent to collect abroad.

• Audit periodically: Compare statements, check territories, and follow up on missing works or usages.

• Diversify: Build beyond streams: touring, merch, memberships, live content, brand partnerships—and sync.

What’s Next: Three Storylines To Watch

1. Data & Transparency: Expect continued scrutiny of how societies and platforms allocate black-box royalties, prioritize setlist/usage data, and manage admin costs—especially as lawsuits and media probes keep shining light on gaps.

2. Royalty Model Experiments: Streamshare (pro-rata) remains standard, but thresholding (Spotify) and weighting (Apple Spatial) show platforms will keep re-tilting pools in response to fraud, “functional” audio, and product strategy.

3. Global Expansion: As prices, plans, and ad markets evolve worldwide, your territory mix (and the societies you’re registered with) will matter more to your bottom line than any single “rate” screenshot.

Bottom Line

The modern royalty system isn’t one pipe; it’s a network. A single stream can spark two copyrights, multiple societies, and several contracts—and the shape of your earnings depends as much on deal terms, registrations, and catalog strategy as it does on raw play counts.

What hasn’t changed is the core truth: ownership + data + reach drive musician income. Own or negotiate well where you can, keep your metadata impeccable, register with the right societies, and build a fanbase that returns—because in a pool-based world, loyalty compounds.