How music royalties work: the 4 royalty types, explained

Here's the short answer: every song you release generates money through four main royalty types — recording royalties (for the master), and three publishing royalties for the composition: mechanical, performance, and sync. No single company collects all four. If you only signed up with a distributor, you're collecting one of them.

The reason this matters: a song is actually two copyrights. The sound recording (the master — the actual audio file) and the composition (the melody, chords, and lyrics underneath it). Each copyright earns its own royalties, from different payers, through different collectors. Labels and publishers built a career out of artists not understanding this. You can understand it in five minutes.

1. Recording royalties (the master)

This is the money the recording itself earns. When Spotify or Apple Music streams your track, they pay the owner of the master. If you're independent and released through a distributor, that's you — the distributor passes the money through, minus its cut.

There's a second recording stream most artists miss: digital performance royalties for non-interactive streaming — satellite radio and internet radio services like SiriusXM and Pandora. In the US, these are required by law and collected exclusively by SoundExchange, a government-designated organization. Your distributor does not collect these. You have to register with SoundExchange directly, for free, or this money sits unclaimed.

If you signed a record deal, the label owns the master and pays you a contractual royalty — usually after recouping its costs from your share. That's the core of why we tell you to keep your masters.

2. Mechanical royalties (the composition)

Mechanicals are paid whenever the composition is reproduced — streamed, downloaded, or pressed to vinyl or CD. In the US, mechanical royalties from interactive streaming services (Spotify, Apple Music, Amazon Music) are collected by The MLC, the nonprofit created by the Music Modernization Act. Streaming services pay The MLC under a blanket license; The MLC pays registered songwriters and publishers.

The key word is registered. The MLC doesn't hunt you down. If your songs aren't in its database, your mechanicals pile up unmatched. A publishing administrator can register and collect worldwide for you, for a commission — more on that in music publishing explained.

3. Performance royalties (the composition)

Performance royalties are earned whenever the composition is performed publicly — radio, TV, bars, venues, and yes, streaming services (a stream counts as both a reproduction and a public performance, which is why it generates both mechanical and performance royalties).

These are collected by Performing Rights Organizations (PROs) — in the US, ASCAP, BMI, or SESAC. You join one as a songwriter, register your works, and the PRO licenses the businesses playing music and pays you your share. PROs have reciprocal deals with foreign societies, so registration gets you global coverage — though a publishing admin typically collects foreign money faster and more completely.

4. Sync royalties (both copyrights)

Sync is music paired with visuals — film, TV, ads, games. A placement pays an upfront sync fee for the composition and a master use fee for the recording, plus backend performance royalties through your PRO every time it airs. Because independent artists usually own both copyrights, sync is one of the few areas where independence is a direct competitive advantage. Full breakdown in our sync licensing guide.

Who collects what: the cheat sheet

Royalty type	Triggered by	Who collects it for you (US)
Recording (streaming/sales)	Streams, downloads, physical sales	Your distributor
Recording (digital performance)	Non-interactive radio (SiriusXM, Pandora)	SoundExchange
Mechanical	Reproduction (streams, downloads, physical)	The MLC / publishing admin
Performance	Public performance (radio, venues, streams)	Your PRO (ASCAP/BMI/SESAC)
Sync	Music synced to visuals	Negotiated per deal + PRO backend

The takeaway

One song, two copyrights, four royalty streams, several doors. The minimum setup for an independent artist: a distributor for the master, SoundExchange for digital performance royalties, a PRO membership for performance royalties, and The MLC (or a publishing admin) for mechanicals. None of this requires a label — it requires an afternoon of registrations. Start with what you actually earn per stream to see how these streams add up.