Step by Step Process on How Songwriter Royalties Work
You’re an independent songwriter. You have an entire catalog full of songs that you’re currently shopping. The only difference between a professional songwriter and yourself is they’re already working in the music industry. Other than that you know all the same attributes. You understand music, melody, chords, how to write a catchy hook, how to studio record, etc? However, as an indie songwriter or aspiring songwriter there’s one more thing you need to know. You need to know how the music business work. You also need to know how songwriter royalties work. A lot of people songwriters and non-songwriters are familiar with songwriter royalties. Everyone’s heard of the term “music royalties” before. However, do you really know how they work? A further important question concerning songwriter royalties is how can you really get paid off of them? There’s so much speculation and heresy regarding songwriter and music royalties, many may ask “can you really get paid with them?” Here’s a step by step music royalties breakdown.
What are songwriter royalties?
In order to understand songwriter royalties and how they work you must first understand what they are. Songwriter royalties or music royalties are payments made to the songwriter(s) and other copyright holders for the use of his or her songs. Any financial gain or monies made from the song, the rightful percentage should be paid to the songwriter(s). Nine times out of ten there are more than one songwriter who wrote a song. This is why majority of the time you see music royalties being split amongst a group of people. Any person or party who had anything to do with the creation of the song is entitled to ownership. This means they’re entitled to songwriter royalties and song splits. You also have to be aware that there are multiple different types of songwriter royalties. You have mechanical royalties, performance royalties, Youtube royalties and many more.
How do songwriters get paid?
Now you know what songwriter royalties are? With that being explained it’ll be easy to understand how songwriters get paid. Due to the fact that the business side of music can be completed, it’s better to break these methods down into steps. The first thing any aspiring songwriter must know about music royalties is how song splits and credits work. You have to know who’s entitled to ownership of a song. This way you can know who is suppose to even receive songwriter royalties. The most important thing to remember is royalties are paid after the song is released and makes a profit. For anyone who wants to know “do songwriters get paid upfront?” The direct response to that is no. However, once you make a name for yourself and you’re a top songwriter, you may be able to negotiate advances. But as of now if you’re an independent songwriter you don’t get paid upfront. If you do chances are it’ll be a very small amount. The largest percentage comes from the actual royalty checks. Figuring out your percentage depends on how many people wrote the song with you. Writing a song doesn’t only apply to lyrics and melody. If you’re a songwriter, meaning you wrote the lyrics to a song but worked with a producer, that producer is now listed as a songwriter. Creating the beat is considering creating a part of the song. This means the producer rightfully gets songwriter credits, song splits and will receive songwriter royalties. If you work with more than one producer, he or she also gets songwriter credits. If you on the lyrics with a partner he or she is entitled to song credits as well. The more people that chime in with the creative process (writing, producing or composing) are rightful songwriters and owners of the song. You now have to split the song credits equally amongst every creator involved. You can either split the percentages equally or go by who put in the most work. Whatever route you decide to go with agree on it before the song is finished. Also make sure you all fill out a song split sheet. Now to figure out exactly how much money you’ll get paid as a songwriter is the most important part.
Songwriter royalties rate
If a song that you wrote gross 1 million dollars, unfortunately you don’t get 1 million dollars from it. Even top paid songwriters don’t get paid with this method. Each type of songwriter royalties have what is called a royalty rate. A royalty rate is the determined percentage or amount you get each time your song is used. Meaning if your song is played on a platform that falls under “performance royalties” and the rate for performance royalties are 10 cents, you would receive 10 cents each time your song is played. Each royalty type has a different rate. This is where it gets tricky. The best way to narrow it down and figure out how much do songwriters make per song is to know the amount of each royalty rate. You then have to know how many times the average hit song is played or used on each platform. You then have to know split the total based on how many songwriters are involved.
Different type of songwriter royalties:
- Mechanical royalties -applies to cd, download, ringtone. > 9.1 cents ( arguably the most important type of music songwriter royalties).
- Streaming royalties – applies to music streams > $0.0017
- Performance royalties – can vary depending on radio, your PRO (performing rights organization), etc.
- Youtube royalties – applies to Youtube views > $0.00175
Average downloads, streams, etc. of a hit song:
-Say you write a hit song that goes to #1 on the Billboard charts. There are many different avenues your song would be played on. Here are the percentages for each type of royalty revenue for the average hit song.
- Average mechanical sales for a hit song – 100,000 copies sold = $9,000 approximately (due to calculating 100,000 divided by 9.1)
- Average streams for a hit song – 25.6 million streams = $234,880 (keep in mind this amount can vary due to different streaming services have different royalty rates. Spotify, Tidal, Apple, Google Play, etc. all have different royalty rates).
- Average Youtube views for a hit song – 210 million views = $368,200
- Performance royalties – can range depending on how many times your song is played on the radio, inside public places such as stores, restaurants and how much the agency pays your PRO to use your song.
Average grand total for a hit song:
This total includes the amount for all songwriter royalty types mentioned above. Keep in mind this amount can be larger due to the varying of public performance royalties, TV royalties and more. This amount can also be smaller due to the fact that there’s no exact way to know how well your song would do.
Amount = $612,080
Also keep in mind if you have other songwriters listed on the credits you would have to split this grand total. Meaning if you and a producer worked on your hit song together you would have to split this total in half between the both of you.
-Total = $612,080
-Your share > 50% as a songwriter (lyrics and melody) = $306,040
-Producer share > 50% as songwriter (harmony and beat) = $306,040
*If there were 3 songwriters listed total the grand total of $612,080 would have to be shared 3 ways, if it was 4 songwriters it would be split 4 ways and so on.
How often do songwriters get paid?
Another important factor to know when learning about songwriter royalties is how often do you get paid. Songwriter royalties don’t come every two weeks like the average job. Most music royalty companies that handle payouts have a system. Songwriter royalties are paid quarterly. About every 3-4 months if you’re owed royalties as a songwriter you receive your rightful pay. Once again the amount can vary. It depends on how well your song does during the quarterly periods. If your song generates the grand total of $612,080 mentioned above within a year you’ll get that amount split into 4. This means you get $153,020 every 3 months. This is because you’ll get your royalties quarterly (4 times out of the year). If your song generates $612,080 or more within 6 months you’ll get half of that total for the first quarter (3 months). If you ever want to calculate how much you’ll get each quarter just remember a quarter of a whole year (12 months) is 3 months.
So to answer the infamous question, “can you really get paid being a songwriter?” The answer is yes. The part people are leaving out is how hard you have to work to make sure the song becomes a hit. The only way you’ll see 5-6 figures as a songwriter is if the song is a major hit. The issue isn’t if you’ll actually get paid a large amount of money with songwriter royalties. The issue is how do you make the song a major hit, where the songwriter royalties will be large. However, don’t get discouraged. Have faith in yourself. Have faith in your talent as a songwriter. Never think your songs aren’t good enough to generate 200 million hits, views or streams. Also never bank on making money off of 1 hit song or working with 1 artist. Always plan on having more than 1 successful song. Yes it’s very possible to generate substantial income from songwriter royalties.