How Spotify Streams Turn Into Royalties

24 Oct

 

Collect royalties from Spotify with Songtrust

Since its recent launch in the US, Spotify has left listeners elated, with unprecedented open-access to tracks from independent and major labels. But if you’re an artist or songwriter, you may be wondering how those Spotify streams turn into royalty payments and ultimately end up in your back pocket.

There are music publishing royalties generated from each stream on Spotify. Capturing each of these will help maximize your earnings.


Songtrust gets you paid all your Spotify money. Find out how!


Performance Royalty

The public performance or broadcast of a musical work generates a performance royalty for the songwriter and publisher. These royalties are collected by performing rights organizations (PROs) – ASCAP, BMI, SESAC. Your songs must be properly registered with a PRO to be paid this royalty. For those new to the music biz and yet to register with a PRO, Songtrust can streamline the process and maximize your relationship with each.

Performance royalties are based on each songwriter’s ownership share of the song. For example, if you play in a guitar-and-drums garage rock duo, and both members contributed equally to the song, the ownership shares would be 50% and 50%. However, the ratio can vary depending on an agreement between songwriters to weight the shares in favor of a primary writer.

The performance royalty is also split and distributed equally between the songwriter(s) and the publisher(s), with each being allocated 50% of the performance royalty pie.  Depending on what type of deal you have with your publisher (administration, co-publishing, income particiapation) you may actually only see a portion of those performance royalties.  Songwriters that handle their publishing rights through Songtrust will see 100% of the publisher’s share of performance royalties distributed back out to the writer(s).

Mechanical Royalty

These royalties are generated when your songs are reproduced, retransmitted or rebroadcasted.  This occurs when outside parties license your songs for physical albums, digital downloads and interactive streams. In the case of Spotify, the Harry Fox Agency (HFA) provides customized administrative services and issues mechanical licenses on behalf of its 45,000+ represented music publishers.

HFA collects the mechanical royalties owed by Spotify to the publishers for the use of their music on the service, and then pays that money to each publisher. If your songs do not have a publisher, Songtrust is able to collect on behalf of songwriters without a publishing company – saving money, time and hassle. Alternatively, you can start your own publishing company and register with HFA to collect mechanical royalties.


Songtrust can collect Spotify royalties and much more. Get started!

14 Responses to “How Spotify Streams Turn Into Royalties”

  1. Lucas Lessa November 1, 2011 at 10:44 pm #

    2 Questions about HFA mechanicals:
    – Are HFA mechanical royalties always paid for every stream on spotify? or are they paid only for cover songs?
    – Are HFA mechanicals paid in addition to public performance royalties paid to PROs (ASCAP/SESAC/BMI)??

    • Jane November 2, 2011 at 3:16 pm #

      Hey Lucas! 
      To answer your questions: 
      – Yes, but the song/publisher info would have to be properly set up at HFA in order to receive these royalties. 
      – Yes, there are 2 components when it comes to Spotify publishing royalties: HFA pays interactive mechanical royalties while the PROs pay the performance royalties. 

      • Info January 8, 2013 at 7:07 pm #

         Jane, as the owner of a record label and publishing company that either publishes or administrates most of our catalog of over 1k songs for over 30 years,  I think you seem to miss the point that HFA has forced themselves onto small publishers with regards to Spotify and now Google Play. In order for me to collect any mechanical revenue due my publishing company or those I administrate for, I am FORCED to make an “administrative” agreement with HFA. And, HFA has had their agreement with Spotify for over a year now are I have never been approached by them regarding any revenue that might be due my company. So, in fact, HFA is only distributing revenue they collect from Spotify for HFA affiliated publishers. That means they are holding onto all the rest and forcing us to go to them. It’s ridiculous and should be illegal and imo is ripe for a lawsuit against HFA!

  2. Colin November 13, 2012 at 5:23 pm #

    How much does the artist get for one song played once on Spotify?

  3. teddy November 14, 2012 at 10:44 pm #

    If I pay the annual fees to the PROs, can I then use spotify in a bar or restaurant? 

  4. Ellenshipley November 16, 2012 at 12:16 am #

    How do you withdraw your permission as the songwriter of songs being used by Pandora and Spotify? They are greed SOBs and I don’t want my music being used by them a minute longer!

    Sincerely,

    Ellen

  5. iamthegif March 31, 2013 at 2:30 am #

    Great post. I have a question. 1. Does the performance royalties & mechanical royalties from a Spotify stream come from the revenue generated by the stream or is it something added on top of that, like if a song earns $0.007 for stream does the royalties come from that?

    • Joe Conyers III April 1, 2013 at 10:25 am #

      Hey Iamthegif,

      Royalties are reported to us per stream at the micro penny level. So for say 20 plays we will see some fraction of fraction a penny.

  6. Anonymous June 29, 2014 at 8:20 pm #

    If one has a distribution agreement via CDBaby (non-Pro), is registered with a PRO (ASCAP) as both writer and publisher, and is also registered with SoundExchange, then one is still not getting all Spotify income due??

    • Ken Consor June 30, 2014 at 10:04 am #

      Hello,

      Although ASCAP collects performance royalties, you are still missing out on mechanical royalties generated from Spotify.

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