The music business is a complex and nuanced business that is made up of various roles. Making money off of songs (royalties) is not a straightforward process and does not fall into one category. For instance, there are performance, mechanical, synchronization, print music, and other royalties that relate to one particular song. These royalties then apply to various contributors to the song including but not limited to artists, labels, publishers, songwriters, etc.
Different Types of Royalties
Synchronization: Music is a huge part of media and is commonly used in commercials, movies, and TV shows. A synchronization (sync) royalty is the agreement made to allow a song to be used in other mediums.
Mechanical: A record label has the ability to distribute a copy of a copyrighted song. In recent years, this is mostly seen with streaming services.
Performance: A performance royalty is the money collected for when a song is played live, played in a restaurant, or streamed publicly. Performance rights organizations collect this money and then pass along to those who own the copyright.
Roles and Royalties
Because the music industry is a complex industry that involves various roles and positions, royalty agreements and fees are formulated according to expertise. Some roles involved in royalties include: artists, songwriters, agencies, songwriters, publishers, and record labels. Historically, record labels make the most income from royalties because they are linked to both mechanical and performance royalties. Individual artists make most of their royalty money from live performances of copyrighted songs. Songwriters received income from various avenues of royalties.
Royalties are often complicated and require negotiation. In order to prevent exploitation and secure copyright, legal advice is highly encouraged. Often, royalty income can come from multiple sources based on how a specific song is made, produced, performed and distributed.