Updated: Mar 14, 2021
Top 3 ways to make money from streaming music | Royalty streams from music distribution. In this video, we break down the main 3 ways you make money from streaming music. They happen to be the only 3 royalty streams of revenue from streaming music collected by your distributor and you as a self-published DIY artist.
Sales form your sound recordings
This is the number one revenue earner out of all of your copyrights. No other copyright will return as much money as this one. The sale of your sound recordings comes from the distribution to digital service providers. Digital service providers or DSPs are services like Apple Music, Spotify, Google Play, or Tidal. Sales are produced through the usage of playlisting within the platform and on social media using backlinks. Sales can also be produced through means of word-of-mouth and other methods such as live performances, music videos, and tools like QR codes.
Now, this is not the only way to make money from your sound recording copyright. This is the main way to make money from it. All other means of income parallel the publisher's methods of making revenue from your copyright. In other words, after this point, your sound recording copyright and your composition copyright make money from the same sources. Even though the publisher does make money from the sale of the sound recording they don’t make as much let us go into our next revenue source in order to explain it further.
The major source of income for the composition side of the copyright is the mechanical royalty. They come from the reproduction of the composition copyright in the tangible form of a sound recording streamed or sold. The royalty rate set by Congress in this current date and time is 9.1 cents per sale of the song or 1.75 cents per minute of playing time for compositions over five minutes. This means that each time a record is streamed on Apple Music or Spotify a royalty is owed to the publisher or owner of the composition. Even though the rate is set at 9.1 since that is only for physical CD and record sales, for streams goes something like this…
The average per-stream royalty for both the composition and recording on Spotify is a little less than half a penny. The sound recording average is about $0.0038 per stream. That leaves $0.0012 to the composition, which is then split 50/50 between performance and mechanical royalties. Using this figure, it would require approximately 1.6 million on-demand streams to earn $1,000 in streaming mechanical royalties.
The mechanical streaming rate is about $0.06 per 100 streams, or $0.0006 per stream.
Performance Rights Royalty
One of the biggest sources of royalty income for writers and publishers is the performance rights payments from BMI, ASCAP, SESAC, GMR as well as some affiliate aided performing rights organizations in foreign countries. The license fees collected by these organizations are distributed to the writers and publishers whose works are performed. The performance right is one o