What are the different types of Streaming  Royalties?

What are the different types of Streaming Royalties?

Music royalty is the payment music artists receive when their music is played for commercial use. If you’re a music artist and a member of PROs, you are eligible for royalty.

Based on the type of use, there are different types of royalties.

Streaming royalty, is basically paid to artists when their music is streamed on another platform. There are 2 major types of streaming royalty.

Streaming Performance Royalty and Streaming Mechanical Royalty.

What is Streaming Performance Royalty?

Streaming Performance Royalty is generated for every time a song is streamed online. In most cases, these royalties are collected and paid out by the different Performance Royalty Organizations, also known as the PROs. IPRS, PRS, ASCAP, SOCAN, etc are some of the prominent ones.

There are many streaming platforms, some larger than others. Each has a unique take on the threshold of Performance Royalties that they pay out to the artists.

The rates fall anywhere from artist-friendly to not-so-friendly. Some give out more money per single stream but at the same time have a lower user base. While some give out very less money but have a larger user base (cough….Spotify...cough).

In fact, there are rate variations even within a single streaming platform. For example, Spotify (Ads supported) and Spotify Premium (ad-free), both have different rates.

As per Bobby Owsinski’s Music 4.1, here is an infographic about 5 cases where the performance royalty rate might vary.

What is Streaming Mechanical Royalty?

On-demand music streaming services like Spotify or Apple Music generate an additional royalty on the songs called Streaming Mechanical Royalty.

This type of Mechanical Royalty is comparatively new and was created on the lines that on-demand streaming runs closely parallel to the permanent download because the users hold a high level of control over their music.

In the United States, when the Copyright Rate Board ruled in 2008, it mandated that the streaming mechanical rate would be around 21 percent of what’s paid to the record label for the sound recording if paid directly to the publisher, or around 18 percent if paid to the record label (depending on a set of variables too deep to get into here).

This means that the average streaming mechanical rate per stream is somewhere around $0.0067, according to the digital music accounting firm Audiam. As a general rule, the owners of a sound recording often end up with five or six times more revenue than the owner of the musical composition on a particular song stream.

Which one is better?

Even though the yield from any single of these platforms may be insignificant, the fact that a song is doing good on one platform, it’s probably doing good on other platforms too. This means the Author, Composer and Publisher are receiving revenues from various other sources too, both in India and abroad.

Revenue from one source fails to even put a dent on ones earning, but a consolidated revenue from multiple sources can be a significant boost an artist requires that will help him getting paid in a fair manner.

Not only this but with the internet and mobile phones getting more affordable, there is a whole new wave of music composers that are increasing multiple folds every month! Let's see, a few years ago 1 million streams was THE THING but these days there are songs that gross over a billion in a matter of weeks.

To put it simply, Downloading is to ask your dad to catch a fish for you, while Streaming is to learn to catch the fish yourself.

About Joshua Royalties

Joshua Royalties was created with the sole purpose of helping music artists get hassle-free royalties for their work.

All you need to do is get in touch with us and we’ll do the rest.

We register your work, amend the work already in the PRO databases, manage cue sheets, and keep track of royalties. With Joshua Royalties, you need not to worry about PRS, IPRS, GEMA, SOCAN or ASCAP. Wish to know more about our services? Here’s what Joshua Royalties does.

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