What You Need to Know About Streaming Royalties

What are Streaming Royalties’?

Despite a past reluctance amongst the industry ranks towards music streaming, the blinders are off with a general shuffling along the pew to make room for a medium which has grown to be of great significance to both artist and songwriter careers.

For artists, streaming is how the majority of listeners are consuming music today and for songwriters, although the debate continues on the efficiency and reasonableness of revenue via streaming royalties, it is a revenue nonethless. (Read CEO, Paul Wiltshire’s interview on streaming and some of its problems…)

Before we get to royalties, let’s take a broad look at streaming and the types available to music consumers.

Interactive vs. Non-interactive

Interactive Streaming, also known as “on-demand”, provides users complete flexibility to choose what content they would like to play at a time of their own choosing, essentially “interacting” with the service provider. Interactive Streaming services include Spotify, Apple Music, Tidal, Google Play, and now Amazon with their Amazon Unlimited Music offering.

Non-interactive Streaming, also known as “internet radio”, provides pre-determined programming, much like listening to traditional broadcast radio where users can select the type of provider or style of music, but do not have control over specific content. Services that offer non-interactive streaming include Pandora, SiriusXM, and Last.FM.

Now to Royalties

What royalties are paid out from Interactive and Non-interactive Streaming?

Both Interactive and Non-interactive Streaming services pay streaming royalties to songwriters and publishers.

Non-interactive Streams generate Performance Royalties.

Performance royalties are paid out whenever a composition is broadcast or performed publicly. Performing rights organizations (PROs), like ASCAP, BMI, and SESAC collect and distribute these royalties to songwriters and publishers.

Interactive Streams generate Performance Royalties and Mechanical Royalties.

Mechanical royalties are paid to songwriters whenever a copy of their composition is produced via CD, vinyl, tape, digital download, or streamed. In the US, mechanical royalties are collected and distributed by the Harry Fox Agency. However, mechanical royalties are handled differently from country to country, so if your music is available internationally and you anticipate collecting mechanical royalties in different territories, you must register with the appropriate collecting agency in each country.

Keep in mind, PROs do NOT collect and distribute mechanical royalties. So you MUST be registered with an agency that specifically works with mechanical royalties.