How do royalty rates differ between music platforms?

If you are a musician or a music producer, you probably want to know how much money you can earn from different music platforms. Royalty rates are the percentages of revenue that music platforms pay to the rights holders of the songs they stream or download. However, royalty rates are not the same for every platform, and they depend on various factors such as the type of service, the number of streams, the country, and the type of license. In this article, we will explain how royalty rates differ between music platforms and how they are calculated.

1 Streaming Services

Streaming services are platforms that allow users to listen to music online without downloading it. Examples of streaming services are Spotify, Apple Music, YouTube Music, and Tidal. Streaming services pay royalty rates based on the number of streams that a song generates, and the amount of money that the platform earns from subscriptions or ads. Streaming services also have different payment models, such as pro-rata, user-centric, or hybrid, that affect how they distribute the revenue among the rights holders. Generally, streaming services pay lower royalty rates than download services, but they have a larger audience and more potential for exposure.

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Geovane Bento

Top Voice Linkedin | Sócio e Diretor na LEP Music Brasil | Coolhunter | Estrategista Fonográfico | Membro da Academia do Grammy Latino | Especialista em Diferenciação Profissional | Autor do Livro “Construído Estrelas”.
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Royalty rates vary between music platforms like Spotify, Apple Music, and YouTube, influenced by factors such as business models, licensing agreements, and listener locations. Generally, streaming services pay a fraction of a cent per stream, but rates differ. For example, Spotify and Apple Music have different royalty rates, while YouTube's rates may be lower due to ad-based monetization. To measure your royalties, SoundCamps.com offers a helpful calculator. Understanding each platform's specific terms is crucial for maximizing earnings.

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2 Download Services

Download services are platforms that allow users to buy and download music files to their devices. Examples of download services are iTunes, Amazon Music, and Bandcamp. Download services pay royalty rates based on the price of the song or the album that the user purchases, and the percentage that the platform keeps as a commission. Download services usually pay higher royalty rates than streaming services, but they have a smaller market share and less frequency of consumption.

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Geovane Bento

Top Voice Linkedin | Sócio e Diretor na LEP Music Brasil | Coolhunter | Estrategista Fonográfico | Membro da Academia do Grammy Latino | Especialista em Diferenciação Profissional | Autor do Livro “Construído Estrelas”.
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In addition to download services, another important consideration is the impact of direct-to-consumer sales. Artists can sell their music directly to fans through their websites or platforms like Bandcamp, where they often retain a larger share of the revenue compared to sales made through third-party services. This approach not only enhances royalty earnings but also strengthens the relationship between artists and their fans by offering exclusive products like vinyl records, CDs, and merchandise. Direct-to-consumer sales represent a valuable complementary strategy for artists to explore beyond traditional download and streaming services.

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3 Radio Services

Radio services are platforms that broadcast music over the airwaves or the internet. Examples of radio services are terrestrial radio, satellite radio, and web radio. Radio services pay royalty rates based on the number of listeners that a song reaches, and the type of license that the platform obtains from the rights holders. Radio services have different types of licenses, such as statutory, compulsory, or direct, that determine the amount and the method of payment. Radio services generally pay lower royalty rates than streaming or download services, but they have a wider reach and more influence on the music industry.

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4 Social Media Services

Social media services are platforms that allow users to create and share content that includes music. Examples of social media services are TikTok, Instagram, and Facebook. Social media services pay royalty rates based on the number of views or engagements that a content generates, and the type of agreement that the platform has with the rights holders. Social media services have different types of agreements, such as blanket, per-use, or revenue share, that define the terms and the conditions of payment. Social media services usually pay very low royalty rates compared to other platforms, but they have a huge impact on the popularity and the virality of music.

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Geovane Bento

Top Voice Linkedin | Sócio e Diretor na LEP Music Brasil | Coolhunter | Estrategista Fonográfico | Membro da Academia do Grammy Latino | Especialista em Diferenciação Profissional | Autor do Livro “Construído Estrelas”.
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It is essential for artists to interact authentically with their audience on social media. This includes responding to comments, direct messages, and mentions, sharing fan content, and participating in relevant trends and challenges. By building genuine relationships with followers, artists can increase engagement, strengthen emotional connection with the audience, and boost organic reach of their music on social media platforms.

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5 Licensing Services

Licensing services are platforms that connect music creators with music users who want to use their music for various purposes. Examples of licensing services are SyncFloor, Songtradr, and Musicbed. Licensing services pay royalty rates based on the type and the scope of the license that the user obtains from the rights holder. Licensing services have different types of licenses, such as sync, mechanical, or performance, that cover different uses and rights of music. Licensing services typically pay higher royalty rates than other platforms, but they have a more selective and competitive market.

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Analo Kanga

Musician | Saxophonist | Entertainment Lawyer
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Mechanical Licensing: This type of license grants permission to reproduce and distribute copyrighted musical compositions in physical or digital formats. Synchronization (Sync) Licensing: Sync licensing allows the use of music in synchronization with visual media, such as films, TV shows, advertisements, video games, and online videos. Public Performance Licensing: Public performance licenses authorize the public performance or broadcast of copyrighted music in venues such as concert halls, clubs, restaurants, retail stores, radio stations, networks, and online streaming platforms. Master Use Licensing: Master use licenses grant permission to use pre-recorded music tracks, known as master recordings, in various audiovisual projects.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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How do royalty rates differ between music platforms?

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1 Streaming Services

2 Download Services

3 Radio Services

4 Social Media Services

5 Licensing Services

6 Here’s what else to consider

Music Industry

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