What Are the Different Types of Royalties in Music? A Guide for Artists and Songwriters
Updated March 16, 2026
For many artists, songwriters, and producers, music royalties are one of the most important sources of income in the music industry. However, understanding how music royalties work—and the different types that exist—can be confusing. In simple terms, royalties are payments made to rights holders when their music is used, performed, reproduced, or distributed. Because modern music distribution involves streaming platforms, digital downloads, live performances, and licensing opportunities, several different royalty streams may be generated from a single song. In this article, we break down for you, not just “royalties” but other common sources of income generated from the music.
What Are Music Royalties?
Music royalties are payments made to copyright owners and rights holders when music is used commercially. These royalties are generated from activities such as:
streaming music online;
selling digital downloads or physical copies;
broadcasting music on radio or television;
performing music publicly;
licensing music for films, commercials, or video games.
The Two Copyrights in Every Song
In the United States, copyright law protects two primary types of music copyrights. Each copyright can generate different types of royalties, which may be collected and distributed by various organizations in the music industry.
Composition - The underlying musical work including melody, lyrics and musical arrangement. Songwriters and music publishers typically own or control this copyright.
Sound Recording - Commonly referred to as the master, it’s the recorded performance of the composition. This copyright is usually owned by: recording artists, record labels, producers or independent rights holders.
Types of Royalties*
*sources of direct income from the music
1. Performance Royalties
Performance royalties are generated whenever a musical composition is performed publicly. This includes music played on:
terrestrial radio
television broadcasts
streaming platforms
live concerts
restaurants, bars, and venues
retail stores
public events
In the United States, performance royalties are collected and distributed by Performing Rights Organizations (PROs) such as ASCAP, BMI, SESAC. These royalties are typically divided into two shares:
Writer’s share - paid to the songwriter
Publisher’s share - paid to the music publisher
If a songwriter does not have a publishing deal, they may need to establish a publishing entity in order to collect the publisher share.
2. Mechanical Royalties
Mechanical royalties are generated when a musical composition is reproduced or distributed. Historically, this referred to the manufacturing of physical formats such as vinyl records, CDs and cassette tapes. Today, mechanical royalties are also generated through digital downloads and interactive streaming services.
Under the Music Modernization Act (2018), digital mechanical royalties in the United States are administered by the Mechanical Licensing Collective. The MLC collects mechanical royalties from streaming platforms such as Spotify and Apple Music and distributes them to songwriters and publishers. Mechanical licensing services are also administered by organizations such as the Harry Fox Agency, which historically issued mechanical licenses and continues to provide licensing and publishing administration services.
3. Synchronization Royalties (Sync Licenses)
Synchronization royalties, commonly called sync royalties, arise when music is paired with visual media. Examples include music used in: films, television shows, commercials, video games, YouTube videos, streaming content and advertisements. A synchronization placement typically requires two separate licenses:
Sync License - for the musical composition.
Master Use License - for the sound recording.
Sync deals often involve upfront licensing fees, and in some cases additional income if the audiovisual work generates further performances or broadcasts.
4. Digital Performance Royalties
Although the U.S. does not recognize traditional neighboring rights for terrestrial broadcasts, it does recognize a limited digital public performance right for sound recordings. This right was created under the Digital Performance Right in Sound Recordings Act of 1995 and later expanded by the Digital Millennium Copyright Act (DMCA). Under this legal framework, artists and master recording owners are entitled to royalties when their recordings are publicly performed through certain digital audio transmissions. These royalties are often referred to as digital performance royalties.
Digital performance royalties in the United States are primarily collected and distributed by SoundExchange. SoundExchange is a nonprofit collective rights management organization created in 2003 and designated by the U.S. government as the official entity responsible for collecting and distributing digital performance royalties for sound recordings under statutory licenses.
SoundExchange collects royalties from digital audio services operating under statutory licenses, including:
internet radio services
satellite radio
digital cable radio channels
webcasting platforms
certain music services delivered through television providers.
5. Neighboring Rights Royalties
In most countries, neighboring rights represent the public performance right for sound recordings. While songwriters and publishers receive performance royalties when a composition is publicly performed, neighboring rights ensure that recording artists and master owners are also compensated when the sound recording itself is broadcast or performed publicly.
Strictly speaking, traditional neighboring rights do not exist in the United States. In most countries, when a song is played on terrestrial radio, television broadcasts and public venues (bars, restaurants, clubs), both of the following are paid:
performance royalties to songwriters and publishers (composition rights)
neighboring rights royalties to artists and record labels (sound recording rights)
In the United States, however, terrestrial radio stations are only required to pay performance royalties for the composition. Recording artists and record labels do not receive royalties when their recordings are played on traditional AM/FM radio or in most public venues. This places the United States among a small group of countries that do not recognize a full terrestrial public performance right for sound recordings.
In most countries, neighboring rights are administered by collective management organizations, similar to how PROs administer performance royalties for compositions. Examples include:
PPL (United Kingdom)
PPCA (Australia)
GVL (Germany)
SCPP and ADAMI (France).
These organizations collect royalties from radio broadcasters, television networks, public venues, digital music services and commercial establishments playing recorded music. They then distribute those royalties to recording artists, record labels, performers and musicians.
5. Print Royalties
Print royalties are generated when musical compositions are reproduced in printed form. Examples include: sheet music, songbooks, digital sheet music downloads and educational music publications. Although less prominent in the modern digital marketplace, print royalties remain relevant in classical, educational, and instrumental music sectors.
6. Streaming Revenue
Streaming platforms pay licensing fees to record labels or distributors when recordings are streamed. Major streaming platforms include Spotify, Apple Music, Amazon Music and YouTube Music. The revenue generated from streams is typically paid to the owner of the sound recording (often a record label or independent artist) and then distributed according to contractual agreements with artists and producers. Streaming service providers also pay a public performance license to songwriters and publishers.
7. Digital Download Sales
Although streaming dominates today’s market, music can still generate revenue through digital downloads, such as purchases through: Apple Music / iTunes, Amazon Music and others. Download sales generate revenue for the master recording owner, while also generating mechanical royalties for the composition.
8. Physical Music Sales
Physical formats continue to generate income in certain markets. These include vinyl records, CDs, collector editions and merchandise bundles containing music. Physical sales generate revenue for the master owner, and mechanical royalties for the composition.
9. YouTube Monetization
Music creators can earn income through the YouTube Partner Program, including: advertising revenue, Content ID claims, YouTube Music streaming revenue. When copyrighted music appears in user-generated videos, rights holders may claim the video through Content ID, allowing them to collect advertising revenue associated with that content.
10. Social Media
Music used on social media platforms may generate income through licensing agreements with platforms such as: TikTok, Instagram, Facebook, Snapchat. These payments are often administered through distributors, labels, or rights administrators rather than traditional royalty collection societies.
Conclusion
Because music generates multiple royalty streams across multiple rights holders, proper registration and rights management are critical. Creators may lose significant income if they fail to:
register works with performing rights organizations;
register compositions with the Mechanical Licensing Collective;
claim recordings through SoundExchange;
properly manage publishing and master ownership.
For this reason, artists, songwriters, and music companies should work with experienced music and entertainment attorneys to structure ownership, negotiate agreements, administer catalogs and ensure proper royalty collection.
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*This article is provided for informational purposes only, and does not constitute legal advice, counsel or representation.
