I was inspired to write this post after speaking with a recording artist I work with at the studio. No matter how long you've been in the music business, the topic of revenue streams is the most highly talked about and at the same time, misunderstood .
In the past, physical sales revenue were the most sought-after, and artists would unknowingly miss out on other valuable streams of income their music could generate. However, new technology has greatly affected physical sales, and even digital sales are being replaced with subscription-based platforms such as Spotify, Pandora, Tidal, and others.
As a result, many artists are left wondering where their revenue will come from. In this post, I'll explore a few ways that music creators can generate income from their music. It's important to note that these are not the only streams of income your music can make, just a few common ones. And as technology continues to evolve, so will the opportunities for revenue.
Here are some potential streams of income that just one song could generate:
1: Mechanical royalties: These are payments made to the songwriter or publisher for the use of their composition. Mechanical royalties are generated every time a song is sold or streamed, and the amount paid per stream or sale can vary depending on the specific deal that the songwriter or publisher has negotiated..
Mechanical royalties are one of the most important streams of income for songwriters and music publishers. These royalties are generated every time a song is sold or streamed, and they are paid to the person or entity that owns the copyright to the composition. In the United States, mechanical royalties are regulated by the Copyright Royalty Board, which sets the rates that must be paid by digital music services to songwriters and publishers.
The amount of mechanical royalties that a songwriter or publisher can earn from a single song can vary widely depending on a number of factors, including the popularity of the song, the number of times it is streamed or sold, and the negotiated royalty rate. For example, a songwriter may earn only a few cents per stream for a song that is played on a streaming platform, while a hit song that is played millions of times can generate tens of thousands of dollars in mechanical royalties.
One famous example of a song generating significant mechanical royalties is "Happy Birthday to You." This song, which was written in the late 1800s, is still one of the most popular and widely recognized songs in the world. Every time the song is played in a movie or TV show, or is sung at a public event, the copyright owner is entitled to receive mechanical royalties.
In 2015, a group of filmmakers sued the copyright owner, arguing that the song should be in the public domain and that they should not have to pay royalties to use it. In 2016, a federal judge ruled that the copyright owner had never properly registered the copyright to the song, and that it was therefore in the public domain. As a result, filmmakers are now able to use the song without paying mechanical royalties. Another example of a song generating significant mechanical royalties is "All About That Bass" by Meghan Trainor. This song, which was released in 2014, was a huge hit, topping the charts in multiple countries and becoming one of the best-selling singles of all time. According to reports, the song generated more than $2 million in mechanical royalties in the first year after its release, with Trainor and her co-writers receiving a significant portion of that revenue.
In addition to these high-profile examples, there are countless other songs that generate significant mechanical royalties for their creators. For many songwriters and publishers, mechanical royalties are an essential source of income, helping to support their careers and allow them to continue creating new music. By understanding how mechanical royalties work and how to maximize this revenue stream, songwriters and publishers can build sustainable and successful careers in the music industry. QUESTION : Is this the same Revenue My Distributor Collect ?
ANSWER : NO not by default but It's possible that your distributor collects mechanical royalties on your behalf, depending on the terms of your distribution agreement. Some distributors offer publishing administration services, which can include collecting mechanical royalties from streaming services and other digital music providers. However, it's important to review the terms of your agreement with your distributor to understand exactly what rights they have and what types of revenue they collect on your behalf. If you're unsure, it's a good idea to reach out to your distributor directly to ask about their services and how they handle mechanical royalties.
QUESTION: So royalties will also be collected by my Performance Rights Organization (PRO : ASCAP/BMI)?
Answer: Yes, mechanical royalties will be collected by your music publisher, if you have one. BMI is one of the major performing rights organizations (PROs) in the United States that collects and distributes performance royalties to songwriters and publishers. However, mechanical royalties are separate from performance royalties, and are typically collected by mechanical rights organizations or through direct licensing agreements with music services. So, while BMI may not directly collect mechanical royalties, they may be able to provide guidance and support in finding the right channels to collect these royalties. It's always a good idea to discuss your specific situation with your publisher and/or a music industry attorney to ensure you are properly collecting all royalties that you are entitled to.
( More on the subject of Mechanical Royalties will be discussed on another blog)
2: Performance royalties are another important revenue stream for songwriters and publishers. These royalties are generated every time a song is played in a public space or broadcast on the radio, TV, or online. In the United States, performance royalties are collected and distributed by performance rights organizations (PROs) such as ASCAP, BMI, and SESAC. These organizations represent the interests of songwriters and music publishers, and negotiate licenses with businesses and media outlets to ensure that their members are fairly compensated for the use of their music.
Performance royalties that a songwriter or publisher can earn can vary depending on the number of times it is played, and the negotiated royalty rate. .
One famous example of a song generating significant performance royalties is "Empire State of Mind" by Jay Z featuring Alicia Keys. This iconic hip hop song, which was released in 2009, has become one of the most popular and widely recognized songs of its time. According to reports, the song has generated millions of dollars in performance royalties since its release, with Jay Z and Alicia Keys receiving a significant portion of that revenue.
Another example of a song generating significant performance royalties is "Montero (Call Me By Your Name)" by Lil Nas X. This song, which was released in 2021, was a chart-topping hit and gained attention for its controversial music video. According to reports, the song generated over $10 million in performance royalties in the first few months after its release, with Lil Nas X and his co-writers receiving a significant portion of that revenue.
In addition to these high-profile examples, there are countless other songs that generate significant performance royalties for their creators. For many songwriters and publishers, performance royalties are a crucial source of income, helping to support their careers and allow them to continue creating new music. By understanding how performance royalties work and how to maximize this revenue stream, songwriters and publishers can build sustainable and successful careers in the music industry. Note : These royalties are NOT collected by The Distribution company by default .
3: Sync licensing refers to the practice of licensing music for use in visual media such as films, TV shows, advertisements, video games, and more. It is a lucrative revenue stream for artists, as it can provide significant exposure and generate substantial income.
Here are some examples of top hip hop artists and how they made money from sync licensing:
Jay-Z - "Empire State of Mind" was featured in the film "The Great Gatsby" and the TV show "Glee." The song generated millions in sync licensing revenue for Jay-Z.
Kendrick Lamar - "DNA." was used in the trailer for the video game "Need for Speed Payback" and in the film "Black Panther." The song helped Lamar generate significant revenue from sync licensing.
Drake - "In My Feelings" was used in a viral dance challenge on social media, generating millions of views and exposure for the song. The track was also used in an episode of the TV show "Black-ish."
Kanye West - "Power" was used in the trailer for the film "The Social Network" and in an episode of the TV show "Entourage." The song generated significant revenue for West through sync licensing.
Lil Wayne - "6 Foot 7 Foot" was featured in the video game "Saints Row: The Third" and in the film "Project X." The song helped Lil Wayne generate significant revenue from sync licensing.
Overall, sync licensing can be a powerful revenue stream for all types of artists, providing exposure for their music and generating substantial income through licensing deals. Successful artists across various genres, including pop, rock, country, and electronic music, have all benefited from sync licensing.
4: Merchandising: When a song becomes popular, fans may want to buy merchandise related to the song or the artist. Merchandise can include T-shirts, posters, and other items featuring the song or the artist's image, and the songwriter or artist can earn a percentage of the sales.
Here are a few examples of hip hop and R&B artists who have benefitted from merchandising. The popularity of their music has allowed them to leverage their fan base and create successful merchandise lines that generate substantial revenue.
Travis Scott - Travis Scott has become known for his highly sought-after merchandise collaborations, including partnerships with Nike and McDonald's. In 2019, he reportedly earned $58 million from merchandise sales alone.
Beyoncé - Beyoncé's "Formation" tour merchandise reportedly generated over $1.3 million in sales, and she has also released successful clothing lines in partnership with companies like Topshop.
Kanye West - Kanye West's Yeezy brand has become a cultural phenomenon, with fans lining up to buy limited edition sneakers and clothing. In 2020, Forbes estimated that Kanye's Yeezy brand was worth $1.3 billion.
Drake - Drake's OVO (October's Very Own) brand has also become a popular merchandise line, featuring clothing, accessories, and collaborations with companies like Canada Goose.
Rihanna - Rihanna has released successful clothing lines in partnership with Puma and Savage X Fenty, and her Fenty Beauty brand reportedly earned $570 million in revenue in 2018.
5: Cover versions: If a song becomes popular, other artists may record their own versions of the song. The songwriter or publisher will receive royalties for each cover version that is recorded and released.
Here are a few cover versions you may know of :
In 2021, rapper Lil Nas X released a cover of Dolly Parton's "Jolene" as a part of a Spotify Singles session. The original song was released by Parton in 1973, and has since been covered by many artists, including Miley Cyrus and Pentatonix.
In 2020, R&B singer Kiana Ledé released a cover of Outkast's "Prototype" as a part of her album "Kiki." The original song was released by Outkast in 2004, and has been covered by several artists, including Travis Garland and Devvon Terrell.
In 2019, rapper Megan Thee Stallion released a cover of "Realer" by fellow rapper Maliibu Miitch. The original song was released by Maliibu Miitch in 2018, and Megan's cover helped bring more attention to the relatively unknown artist.
In 2018, R&B singer H.E.R. released a cover of Drake's "Jungle" as a part of her EP "I Used to Know Her: Part 2." The original song was released by Drake in 2015, and has been covered by several other artists, including Tinashe and Alex Aiono.
In summary, there are multiple ways for musicians to earn money from their music, including through live performances, digital and physical sales, streaming royalties, performance royalties, mechanical royalties, sync licensing, merchandise sales, cover versions, and sampling. Each revenue stream has its own unique opportunities and challenges, and it's important for artists to understand how to maximize their earnings in each area. However, it's worth noting that at the core of all of these revenue streams is the ownership of copyrights. In our upcoming blog, we will delve into copyrights in more detail, exploring what they are, how they work, and how they can help musicians protect and monetize their creative works.
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