Introduction:

In the dynamic world of music streaming, understanding royalties is crucial for artists to maximize their earnings and ensure they receive what they rightfully deserve. Unfortunately, one common issue that plagues the industry is unclaimed “blackbox” royalties. In this blog post, we will delve into the importance of understanding royalties, specifically focusing on the breakdown of royalties for artists on Spotify. We will shed light on how these royalties are distributed between distributors and performance rights organizations (P.R.O.’s) and provide valuable instructions on how artists can claim the royalties that belong to them.

The Spotify Streaming Example:

To illustrate the significance of royalties, let’s explore a hypothetical scenario. Imagine you, as an independent artist, have written, produced, and released a song, owning 100% of the rights. Your creation gains traction on Spotify and reaches an impressive milestone of one million streams. Now, let’s uncover how the royalties generated from these streams are allocated.

Distribution of Royalties:

When it comes to streaming platforms like Spotify, two main categories of royalties come into play: those that go to distributors and those that go to performance rights organizations. Difference is that other is paid for master rights and other one’s are paid for musician or industry worker recording rights. There beneficial user could be in practice a performancer / composer / lyric writer / songwriters / publisher.

This may all seem complex but after all it is a working system which artists, music makers  and labels follows. We have tried to simplify things for you by looking the thing as following:

Mechanical (Distributor) Royalties: As an independent artist, you may choose to work with a distributor who helps get your music on various streaming platforms. The distributor may take a portion of the generated royalties for their services, such as music delivery, metadata management, and content promotion. The exact percentage varies depending on your agreement with the distributor.

Performance Rights Organization (P.R.O.) Royalties:
P.R.O.s play a vital role in collecting and distributing royalties for public performances of your music. These performances include when your songs are streamed on platforms like Spotify. To ensure you receive the royalties owed to you, it’s crucial to join your home country’s local P.R.O. (such as BMI, ASCAP, TEOSTO, and others) and register your works in their system. By doing so, you enable the P.R.O. to track and collect royalties on your behalf.

Unlocking the Royalties:
To claim all the royalties that rightfully belong to you, here are the steps you should follow:

Join Your Local P.R.O.:
Research and join the performance rights organization that operates in your home country. Each P.R.O. has its own registration process, so make sure to follow their guidelines and provide accurate information.

Register Your Works: Once you are a member of the P.R.O., register your original songs in their system and include all relevant details into your announcement. If you work with publisher make sure to communicate with them about announcements, any conflicts in announcements will cause royalties to be frozen untill conflicts are solved.

Conclusion
It is important to be an member of P.R.O.,
You can only get access to your royalties after you have became an member of an P.R.O. and registered your work with them accordingly.
– This is a wake up call for everyone who hasn’t yet registered their work!
If you do still have hard time undestanding, try having a conversation with an industry expert or reach out to your local Perfomance Rights Organization for concultancy.

Good luck with your future earnings!