How Royalties Work

July 6, 2020 | By ae4y49e2 | Filed in:

How Royalties Work (money counting machine whir) – [Narrator] You've got a million reasons for making music: passion, self-expression, creativity, and, yeah, makin' money's part of it too, right? Okay, let's talk royalties. – Royalties, yes. – That's how you get paid. – Make it rain. – Yeah. – [Narrator] This is Darren, – Hi. – [Narrator] From our legal department, and Alan, from our licensing team here at Spotify. – Royalties mean money.


And that's money you get paid for work that you create. If you own copyright in a song or composition, people generally have to pay you to play or record that. There are two types of royalties.

Two types of royalties

There's the recording royalty, and publishing royalty. – [Narrator] Publishing royalties relate to a song you've written, while recording royalties are for the recording itself. – You can get paid these royalties every time someone performs your work, be it on a service like Spotify, or at a football game, or in a bar. – And if someone else wants to record your song, you can get publishing royalties for that too. – [Narrator] Musicians Matt and Kim, (imitating beeping) have those royalties on lock. – I even did finger guns, I don't know. Our royalty income comes from like mainly streams, something from playing on the radio, there's– – Commercials. – Commercials are a big one for us. – [Narrator] Panamanian artist, Cienfue, – Hola – [Narrator] gets his royalties from some unexpected places. – So I collect royalties for anything you can think of, like, the internet, cruise ships, hotel plays, festivals where you play at. – [Narrator] Sheryl Crow, what you got to say about that? – You should always follow your royalties. Look at your royalty statements, and know where you're money's coming from. And make sure that the moneys that are being collected, wind up coming to you. – [Narrator] And something else to consider.

You'll have different agreements, depending on whether you're signed to a label, or if you're an independent artist. – Keep in mind, each agreement will impact the size of your royalty payments, and the timing. (ringing) – So, with a record label, typically, artists will sign over the rights to their work, or the exclusive rights to their work, in return for label support, like marketing, and promotional support, maybe a royalty advance, and then royalties into the future. But not everybody goes the label route. Some artists like to handle distribution on their own. – [Narrator] Alright guys, any more fun facts about royalties? – You used 'em all up in the first part – I did, I used 'em all up. – [Narrator] Okay, just remember.

You have options when it comes to distributing your music. – There's no one way to play it, just keep learning, and figure out what's best for you. – [Narrator] Right on. So that's it on royalties. See ya next time.


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