Royalties refer to the remuneration paid out to a musician for the performance or reproduction (in other terms, exploitation) of the musical work.

As the music industry has transformed greatly through the streaming model, the royalty picture has become a bit more complex than it was before - when, for example, distribution only meant the physical distribution of the CD/Vinyl to record stores.

In order to break down the complexities of this new royalties picture, it is important to distinguish the major elements of the various royalty sources.

*For the purposes of this article, we will assume that the musicians in question are fully independent - i.e. no publisher or label attached to them.

What are some key points to know about royalties?

Firstly, it is crucial to be aware of the distinction of the two different copyrights that a musical work possesses:


The song copyright refers to the composition and lyrics of a musical work. It is, by default, owned by the songwriter(s), and it generates publishing royalties. There are two sub-categories under the song copyright: performing rights & mechanical rights. In Germany, both of these rights are handled by GEMA (Gesellschaft für musikalische Aufführungs- und mechanische Vervielfältigungsrechte). Whereas in the UK, for example, PRS for Music handles performing rights, and MCPS handles mechanical rights.

The recording copyright is, by default, owned by the artist(s) who have performed on the recording of a musical work, and it generates (master) recording royalties.

In the context of broadcasting via radio (non-interactive streaming) and TV, as well as public performance (music played in bars, venues, public places), this is also referred to as neighbouring rights royalties.

This distinction is important because these two different copyrights are managed by different collecting societies - e.g. in Germany, GEMA handles publishing rights whereas GVL deals with the recording rights. And it is helpful for musicians (especially those who write and perform their music) in Germany to be registered with both of these societies in order to receive both types of royalties in the most effective way.

The second key thing to keep in mind is *where* and *how* the musical work is consumed by listeners. The type of platform (streaming, download, radio etc.), the territories the music is consumed in, the total number of subscribers, as well as the subscription model the DSPs offer (ad revenue based tier vs. premium tier etc.) all have an impact on the royalties that end up with the musician.

Where does MusicHub fit in this royalties picture?

As MusicHub is a platform, which distributes the master recordings to the DSPs via distributors, the royalties that MusicHub receives from the DSPs and pays out to its users are the master recording royalties.

Of course, both streaming and download platforms also license the performing and mechanical rights to the song copyright as well - and the „publishing royalties“ that are generated from this use are paid out to the corresponding collecting society that administers the publishing rights, who then pays these out to its members (in the case of Germany, GEMA).

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As a DIY musician, it is quite useful to learn about the complex royalties picture in order to ensure that you receive your due royalties efficiently.

**This article will be routinely updated as we expand the services we offer and the sources of royalties diversify.