Chasing the Money: Royalties for Music Makers

by Adam Schumaker

Never in the history of humanity has there been so much music available to us, accessible from our phones. Anyone can record from their bedroom (or closet) and publish an album that can reach fans anywhere in the world. Yet, with all of this accessibility, breaking through the noise has become harder than ever. When algorithms favor only the most popular artists, streaming platforms fill their libraries with in-house music by nameless composers, and only songs with over 1,000 streams are monetized, making money as a recording artist becomes a real challenge.

It is extremely rare to live off of streaming royalties alone. Fortunately, there are multiple ways to monetize your music, and over time with proper fan engagement, those earnings will add up to more than just a latte. First, you must think of your original music as an asset.

An asset, in the simplest terms, is “any useful thing or something that holds value.” Your music holds value because it can generate royalties when properly registered with the right organizations. Each song you write can earn per-use royalties from your distributor, your PRO, the MLC, SoundExchange, sync licensing, and direct-to-fan sales. Let’s explore each of these options.

Streaming royalties (from your distributor)

When you upload your original music to DistroKid or CD Baby to distribute it on streaming platforms, you get paid per-stream royalties. Different platforms have different payout rules. For example, Spotify, with its meager $0.00318 per stream, only pays royalties if a song reaches over 1000 streams per year. You can see the different platforms and their rates in comparison articles such as this.

Streaming Royalty Calculator:

made this with my artist data to show the difference in pay out per streaming platform : r/WeAreTheMusicMakers

Needless to say, if Spotify is the benchmark, only the top 13% of tracks actually earn payouts from streaming royalties. This is not to take away from the fact that music streaming has revolutionized how we consume music—it remains an excellent marketing tool for artists! But streaming royalties are just one small way musicians get paid.

Your music isn’t just art it’s an asset. The more you treat it like a business, the more it can pay like one.

Have you registered with a PRO?

ASCAP and BMI

PROs, or Professional Rights Organizations, should be your next stop when registering your music. The big names are ASCAP and BMI. PROs advocate for performance royalties on behalf of their artist members, collecting payments from:

Live performances (professional and educational)
Radio
TV
Streaming Networks
Digital Platforms

You can read the full list here. I joined ASCAP because my colleagues recommended it, and it operates as a nonprofit. However, all PROs work to ensure artists get paid. Keep in mind that these royalties are separate from streaming platform payments!

When registering with a PRO, make sure to sign up as both a writer and a publisher (if you are self published) to collect 100% of your royalties. The best part? Registration is free!

If your music is being performed in educational or children settings, payouts are often lower—or nonexistent. ASCAP has a complex survey process for such performances. This is where the ASCAP Plus Awards come in. Band composers and other artists can apply for these awards to receive additional earnings based on their performance activities.

Keeping Track of ASCAP Performances | Payment System, songwriting royalties, publishing royalties, metadata

What is The MLC anyway?

In 2018 the Music Modernization Act led to the creation of The Mechanical Licensing Collective (MLC) in 2021. The MLC, a nonprofit overseen by the U.S. Copyright Office, collects digital mechanical royalties, which are separate from your artist royalties (from your distributor) and your songwriter royalties (from your PRO). They have a nice little video about it.

Again, registration is free, so sign up now! The key difference is that the MLC focuses on recorded music. With your PRO, you can register unrecorded works (such as concert compositions) and collect royalties from their performances. The MLC, however, requires your works to have an ISRC (International Standard Recording Code), which is usually provided by your distributor. It also uses your ISWC (International Standard Musical Work Code), which is assigned by your PRO when you register your works. Are the puzzle pieces starting to fit together?

SoundExchange and International Royalties

So far, we’ve covered artist royalties, songwriter royalties for various mediums, and digital mechanical royalties. But what about international music streaming?

SoundExchange describes itself as “The only organization designated by the U.S. government to administer the Section 114 sound recording license.” It collects and distributes digital performance royalties on behalf of 700,000 creators and growing. If you’re into legalese, you can read more about Section 114 here.

What does this mean for you? If you own your master recordings, you can earn royalties through SoundExchange when your recordings are streamed digitally. Unlike PROs, which collect royalties for song compositions, SoundExchange focuses on digital performances of your sound recordings. Independent artists should absolutely register their works through SoundExchange to ensure they receive these payments.

Sync licensing: The Big Money

You’ve made it this far and your music is now covered for streaming, radio, TV, live performances, digital mechanical royalties, and international streams, the next step is to chase down sync licensing.

Sync licensing allows your music to be used in commercials, TV shows, and films. Unlike the previous royalty types, these deals are negotiated independently. The licensing fee is determined by the size, scope, and reach of the project, and payments can range from a few hundred to thousands of dollars per placement.

Additionally, when a song is synced to a visual medium and later streamed or broadcast, the writers receive royalties through their PRO.

Because sync licensing is highly competitive, music supervisors often source songs through music libraries or brokering platforms such as TAXI or Songtradr. While landing sync deals can be challenging, the financial and exposure benefits make it worth pursuing.

Bandcamp and Selling Direct: Where the Profit Margin Is At

After handling all your royalty registrations and database work, it’s time to focus on direct sales—the most profitable revenue stream.

Just because 120,000 tracks are uploaded to streaming services per day doesn’t mean you shouldn’t try for a piece of the pie. Streaming is convenient, but consider this: selling one album for $15 on Bandcamp earns the same as 3,300-5,000 streams on Spotify. That’s a huge difference! While Bandcamp takes a small cut and charges processing fees, they remain the lowest fees in the industry outside of selling directly to fans at live shows.

Should I Put Songs on Bandcamp or Spotify?

This independent, fan-driven model is by far the most lucrative approach. Despite changes in ownership, Bandcamp remains an indie artist’s dream platform, offering a user-friendly interface for selling both digital and physical products with minimal fees. Plus, Bandcamp Fridays allow artists to earn even more by waiving platform fees.

This Is How Much More Money Artists Earn From Bandcamp Compared to Streaming Services | Pitchfork

Crowdfunding and the 1,000 True Fans Theory

Many musicians have successfully funded projects through crowdfunding platforms like Kickstarter. I even ran my own Kickstarter to fund an album. While it shouldn’t be overused, crowdfunding remains a valid way to launch projects and connect with fans.

If you subscribe to Kevin Kelly’s “1000 True Fans” theory, then living off of your music is just 1,000 fans away. However, if you like staying grounded, you should also read critiques of the 1,000 True Fans concept.

Final Thoughts

In today’s music landscape, artists should distribute their music everywhere (because it’s easy), register with all royalty collection organizations (because it’s free), and chase down sync licenses (because they’re lucrative). Diversifying income streams is essential for building a sustainable music career. Most importantly, connect with your fans directly and encourage them to support your work.

So, what’s your next move? Start registering your music and chase the money!

---------------------

Adam Schumaker is an arts administrator, educator, and composer. He currently directs the education programs for The Gilmore Piano Festival where he manages fifteen programs that serve thousands of students. As a regularly visiting professor at Kalamazoo College, Schumaker teaches Arts Entrepreneurship and speaks regularly on the subject of finances in the arts. Schumaker is most recently a W.K. Kellogg Foundation Community Leadership Network Fellow, class 3. His writings have been published by NewMusicBox. In his freetime, Schumaker is working on a full-length indie-rock album of 12 original songs, and composes fresh chamber music for groups like prepared toy piano duo Chromic, Some Assembly Required, pianist Nicholas Phillips, and the new music ensemble What is Noise.