How to Monetize Your Music: How the music industry work

What Are Music Copyrights?

Music copyrights are the earnings received by music creators when their compositions are used by third parties. When your music is played on streaming platforms, radio stations, or TV channels, you should receive the corresponding copyright royalties.

Producing music requires significant time and resources, so it's important to understand the various income sources available in the music market. Opportunities range from streaming and radio to TV, online purchases, synchronization, and related rights. Let's explore what they are and how to collect royalties.

Streaming Platforms

Streaming platforms have revolutionized the way we consume music: music streaming has become the predominant method of listening.

One of the most popular ways for artists to monetize their music is through streaming platforms. Services like Spotify and Apple Music allow users to listen to music, generating revenue for artists through ads and paid subscriptions.

Artists earn a share for each play, with amounts varying based on the platform and the type of listener subscription.

According to the IFPI Global Music Report, streaming revenues accounted for 62.1% of the global recorded music industry revenue in 2020, while the share of earnings from downloads is decreasing.

Digital Downloads

Digital downloads have been a significant source of revenue for the music industry, marking a new era by offering artists and record labels a new way to monetize their music.

One of the advantages of digital downloads is the ability to reach a global audience. However, with the introduction of streaming platforms, the popularity of digital downloads has declined. Streaming services offer users access to a vast music library for a monthly fee or with ads, leading to a decrease in digital download sales.

Despite this, some artists choose to release their music exclusively through digital platforms, allowing them to maintain control over distribution and potentially earn higher royalties.

Physical Sales and Mechanical Royalties

Physical Copy Sales

In recent years, the sale of physical copies, especially vinyl records, has made a comeback, turning physical music into collectible items with nostalgic and cultural value.

CDs, vinyl records, and cassettes generate mechanical royalties every time they are produced and sold. Artists earn based on agreements with labels and distributors, generally between $1.50 and $2.00 per CD sold.

Mechanical Royalties

Every time a CD, vinyl record, or cassette is produced, compositions are reproduced, as well as for downloads and digital plays. Each reproduction of a track generates mechanical royalties, destined for songwriters and publishers. These royalties are collected by collective management organizations such as GEMA, SIAE, SUISA, and others like the Harry Fox Agency.

Public Performance Royalties and Synchronization Licensing

Public Performance Royalties

Each public performance includes royalties for the composition (e.g., live performances) or for both the recording and composition (plays on TV, radio, or DJ events). Practical examples are live shows during concerts or festivals, where authors often need to provide a tracklist to organizers to collect royalties. Plays on TV, radio broadcasts, or background music in restaurants, shops, bars, and nightclubs are also considered public performances. For these activities, you can earn royalties through your Performance Rights Organization (PRO).

Synchronization License Fee

Synchronization, or "sync," involves matching your music with moving images and other audiovisual products like TV shows, movies, Netflix series, advertisements, video games, TV programs, DVDs, and Blu-Ray. The audiovisual content producer needs a license to use your music, often paying an upfront fee and, in some cases, a percentage of sales, depending on the licensing agreement. This payment constitutes the so-called synchronization license.

The earnings vary based on the context in which your music is used. For example, a deal for a Netflix series can yield around $50,000.

To maximize earnings, it's crucial to have good agreements with labels, publishers, and sync agencies, and to register with collective management organizations. Knowing the different income sources and how to collect royalties can make a significant difference in an artist's economic sustainability.