By Chris Robley of CD Baby's The DIY Musician.
Are you collecting all the royalties you’re owed from Spotify? If you don’t have a publishing administrator working on your behalf, the answer is probably NO.
But I should make it clear upfront that this isn’t Spotify’s fault. It’s not like they’re holding out on you! It’s just one of those crazy things about how the world of music publishing works (or doesn’t) for indie artists.
So which monies have you been missing out on? Read on to find out…
Four ways you can make money through Spotify
1. The regular ‘ole payment for the stream —
Some folks call this a “master use royalty;” others call it the “sound recording royalty;” others call it the “artist royalty;” technically, it’s a payment for streaming a licensed sound recording.
If your music is currently available on Spotify, this royalty is already being paid to you (or your label) through your distributor (CD Baby, Tunecore, etc.) for each time your music is streamed.
2. Mechanical royalties —
Services like Spotify and Rdio owe you a mechanical royalty every time your music is streamed. Sadly, mechanical royalties aren’t paid directly to independent songwriters. Spotify pays your mechanical royalties to agencies such as HFA (in the US).
But HFA doesn’t work directly with individual songwriters. In order to collect this money, you must be represented by a publishing rights administrator who works with HFA (or similar agencies).
Long story short, if you have a lot of plays on Spotify, these mechanical royalties are adding up AND going uncollected.
3. Performance royalties —
You’re also owed performance royalties for the usage of your music on Spotify. If you’ve registered yourself as both a songwriter AND a publisher with a performing rights organization such as ASCAP or BMI, that P.R.O. will collect all the performance royalties you’re owed from Spotify.
However, it’s important that you remember to register ALL of your songs with that performing rights organization.. P.R.O.s aren’t psychic, and they can’t collect money for songs they don’t know exist — so make sure to take care of your song registration BEFORE you start distributing a new album or single.
4. Performance royalties for the master recording —
Traditional music publishing is concerned with the song itself — NOT any particular recording of that song. And traditional publishing royalties are only paid to songwriters and publishers. So what about the people who own the sound recording that is actually getting played? What about the people who performed on that track? That’s where a company called SoundExchange comes in.
SoundExchange is now authorized to collect performance royalties on behalf of the folks who helped create a particular sound recording – including session players, record labels, etc. Spotify pays these kinds of performance royalties to SoundExchange for “non-interactive” plays via Spotify Radio (though NOT for on-demand streams).
To collect them, register with SoundExchange today.