Time to Get Royalty-Savvy: How your Music can Make you Money while you Sleep

Gone are the days when you can only listen to artists on the radio or in a packed out concert arena. First it was Napster and YouTube, then software development and entrepreneurial creativity brought us Spotify, SoundCloud, Pandora and BandCamp, to name a few. So, in an age where music can so readily be legally (and illegally, unfortunately) streamed and downloaded, what’s in it for the musicians?
 
1. Big Platform, Small Royalty
Taylor Swift’s notorious move to pull her entire catalogue of music from Spotify in November 2014 merely drew attention to what had already been an issue facing musicians. Additionally, whilst many people will reel off Pharrell’s Grammy nominations for ‘Happy’, what most don’t know is that 43 million Pandora streams of Pharrell’s ‘Happy’ only resulted in US$2,700 in publisher and songwriter royalties (obviously, Pharrell made a tad more than this through performance rights royalties!). In short, whilst platforms such as Spotify and YouTube have undeniably helped discover much new talent, musicians should start getting ‘stream’ savvy and assess which online music platforms will reap the best rewards.
 
For example, a musician’s royalty rate for a single stream depends on various factors. Some countries’ streams will be markedly worth more than others. In the United States of America for example, an average stream can be anywhere between sixth tenths to eight tenths of a Cent. Yes, of a Cent. Therefore until you’ve got a fee paying fan base the size of a large city, you’ll need to hold off on making it rain like Wolf of Wall Street in the famous money chucking scene on Leo’s yacht.
 
2. Online Streaming, please could I have my monthly cheque now?
With so many platforms to choose from, which one(s) do you go for? Interactive or non-interactive (e.g. Pandora, an internet radio)? Downloads or streaming? Paying subscriber or free service? And, with some record companies now using multiple platforms especially when ‘windowing’ releases (e.g. launching first on iTunes followed by uploading on Spotify two weeks later), which do you choose?
 
BandCamp hase been praised for being artist-friendly and is favored by smaller bands and labels – it enables the artist to set the price of any download, upload music with ease and flexibility, and costs a grand total of £0. Unfortunately, artists don’t receive any revenue from album streams. Subscriber streams such as SoundCloud on the other hand, are not as accessible for smaller bands and requires paid subscription before uploading. Once subscribed though, artists can use its social media platform to upload blogs, podcasts and interviews to build a strong following, and the platform API enables easy sharing of content through mobile devices and embedded widgets. High five!
 
Spotify, the leading platform for music streaming, costs nothing to put music online, but this can often be more difficult for smaller bands without a label or distributor. Once an artist has uploaded content, the platform allows paying users access to mobile downloads along with offline mobile access. As it is a streaming music service integrated with social sharing, many artists with a broad fan base enjoy the large exposure. Artists can then collect royalties directly from Spotify, or from royalty collection agencies such as SoundExchange.
 
3. Royalties, royalties, royalties
Online audio streaming and download platforms aside, what other royalty creating avenues are there? Plenty! As a first pit stop, companies such as Sound Check and Missing Link specialize in digital royalty collection for artists, so be sure to collect your paycheck if you find that you are owed royalties. Secondly, get your affairs and documents in order. If your song appears in a videogame, commercial, TV show or movie, make sure your publisher or record label makes you a stellar deal and that you get a drop dead amazing licensing royalty fee for using your music.
 
And for artists who don’t have music to claim royalties on yet: did you know you can claim someone else’s royalties? And yes, legally. In order to raise money during an estate sale (of a deceased artist), heirs to the deceased artists sometimes auction part or all of the percentage of the deceased artist’s song to raise money. Indeed, some auctions are even by living artists seeking to raise funds if they need the money. Keep an eye out for royalty auctions, as once you get a percentage of ownership of the song, you will be entitled to a steady pay check until the copyright expires on the song. In the meantime, you can then start working on your next royalty producing gem!