Music Streaming Royalties

Music streaming now accounts for over 80% of UK music consumption. In June 2021 the UK witnessed its first week when audio streams topped the 3 billion mark, according to figures released by the BPI.

Understanding and securing royalties for artists using music streaming services can be complicated. Improvements and updates on royalties for the linkes of Spotify and other streaming services are limited, with the proposed Copyright Bill amendment facing slow progress. The MU is leading the Fix Streaming campaign in an effort to make streamign royalties work better for musicians.

How are streaming royalties split?

Streaming has become the dominant mechanism for music consumption. As a result, leading record companies have unanimously decided that each stream should be categorised as a sale, which boosts their profits.

At the moment, this allows record labels and publishers to take the lion's share of revenue. When a stream is treated as a sale, the artist only receives between 18% and 30% of royalties. If it were to be considered a licence, artists would be given closer to 50% of the royalties for a song.

The MU is currently campaigning to fix music streaming royalties, aiming for a fair portion of revenue from streaming services paid out to session and 'non-featured' performers. If you become an MU member, you'll be able to get more involved in the action.

How do streaming royalties work?

Streaming royalties are based on the number of times a track is played, and those artists whose work is streamed the most receive a larger portion of a service’s overall revenue. This means that if a user pays a subscription fee, that money isn’t directly distributed solely to the artists they listen to, but is rather paid out across all artists whose work is streamed by users of that service.

In this way, streaming royalties differ significantly from digital downloads.

The royalty rates and the manner in which they are calculated and paid out differ from service to service, and it’s difficult to specify exactly what you might receive from a stream of your work.

How do Spotify royalties work?

Music released on Spotify earns two types of royalties:

• Recording royalties

Recording royalties are the money owed to rightsholders for any of their recordings streamed on Spotify. They're typically paid through a record label, distributor or the relevant licensor that delivered the music

• Publishing royalties

Publishing royalties are the money owed to owner(s) or songwriter(s) of a composition. Payments are made to publishers, agencies and collecting societies

Like other streaming platforms, Spotify pays streaming royalties according to the number of overall streams across the platform by each individual artist. This is known as 'streamshare'.

Net revenue on Spotify is generated and distributed to rightsholders from user subscription fees and adverts. Spotify explains how royalties are calculated and paid to artists.

Do session musicians get royalties?

Revenue from sales and streaming services is collected by the recording rightsholder, usually the label or self-releasing artist. At present, session musicians will not typically receive royalties from these sources, unless it is stipulated in their recording agreement.

Check your contract for royalty rates

If you are signed to a label, check the royalty rate or percentage split set out in your recording contract. It is likely that you will be getting the same split as for physical sales.