HOW ROYALTIES WORK IN THE UK MUSIC BUSINESS

You’ve written the songs, recorded them, maybe pressed a run of CDs, and now people are actually listening. Somewhere in the background, every play is supposed to be generating money for you. So where does that money go, who counts it, and how do you make sure it lands in your account?

This is how royalties work in the UK music business, written in plain English for the artist doing it themselves. Think of it as royalties explained without the legal headache, so you can collect what you’re owed.

From where I sit at CD Unity, I talk to bands every week who’ve already done the hard part. They’ve got a finished master, artwork sorted, a pressing on the way. Then I ask whether they’ve registered their songs anywhere, and I get a blank look. That blank look is costing them money. Music royalties work in a way that’s honestly not that complicated once someone draws you the map, and that’s all I’m doing here.

A royalty is simply a payment you receive when someone uses something you created and own. In music, that “something” is protected by copyright, which is a form of intellectual property. The moment you write and record a song, you own two separate pieces of music copyright, and that surprises a lot of people.

The first is the composition, the underlying music composition: the melody, the chords, the lyrics, the actual song. The second is the sound recording, the specific master you captured. Same song, two copyrights, two income streams. When anyone wants the right to use copyrighted music that you own, whether that’s a streaming platform, a radio station or a filmmaker, they need a licence, and that licence is what generates royalties.

Every time your music is used commercially, a royalty is meant to be paid to whoever holds the relevant right. That’s the whole idea. Your copyrighted music is an asset, and a royalty is the rent someone pays to use that asset. Giving your recordings proper ISRC codes is part of making sure those uses can actually be tracked back to you.

There are several different types of music royalties, and the reason it feels complicated is that different uses of your work trigger different ones. Once you see how the different types of royalties map onto real-world situations, it clicks. Let me break down the main ones you’ll come across.

Mechanical royalties

Mechanical royalties are paid whenever a copy of your song is made. That’s a CD pressed, a vinyl record cut, a download sold, or a stream served. The name goes back to the old mechanical reproduction of music onto a physical format. Every time recorded music is copied, mechanical royalties are due on the songwriting side.

Performance royalties

Performance royalties are generated when your song is performed or played in public. That covers a lot: radio, a pub playing your track, a live gig, a shop’s background music, a TV broadcast. These are sometimes called public performance royalties. There are even specific royalties for radio airplay that flow through this system. Basically, whenever your music is played to an audience you didn’t personally sell to, performance royalties are owed.

Sync royalties

Sync royalties, short for synchronisation royalties, come from your music being synced to visuals. Think film music, adverts, TV and video games. When music is licensed for a scene, that’s a sync, and both the composition and the recording get paid. For a small artist these can be some of the most lucrative income you earn from a single placement.

Print royalties

Print royalties, or print music royalties, are the oldest kind of all. They come from selling sheet music of your song. For most modern indie artists this is tiny, but if a choir buys your arrangement or an education publisher prints your composition, print music applies.

Streaming royalties

Streaming royalties are where people get most confused, because a single stream pays both a mechanical and a performance royalty at once. The digital performance royalties and the mechanical are worked out separately, then combined. This is exactly why performance and mechanical royalties both appear when you stare at a streaming statement and wonder why the maths won’t add up neatly.

Here’s the part that actually gets you paid. You can’t personally chase every pub and platform, so collection societies do it for you. In the UK the two big ones are PRS for Music and PPL, and they cover most of the way music in the UK generates income for the people who made it.

PRS for Music collects on the songwriting and composition side. It licenses the music users, the businesses and platforms that play music, gathers the cash, and pays royalties on behalf of its members. PPL handles the sound recording side. PPL stands for Phonographic Performance Limited, and PPL in the UK collects for performers and record labels when recordings are played publicly. Any business that wants to use the music you made has to be licensed by one or both.

Together, PRS for Music and PPL handle most public performance and broadcast collection in the country. They’re what the industry calls performance rights organisations, or collection societies. In practice they act like a giant music licensing company on your behalf: a business pays them once, and they handle the collection of royalties and pass the money on. Both collect performance royalties, just on opposite sides of the copyright. To collect royalties through them, you first have to become a member, which is where most self-releasing artists slip up by never joining.

Music technology changed how this works over the years, but the underlying logic is old. So how are royalties calculated? It depends on the type. For performance, royalties are generated every time a licensed business plays your track and the society logs it. For streaming, royalties are calculated on a pro-rata share: your streams as a fraction of total streams, times the revenue pot, minus everyone’s cut.

That’s why per-stream figures wobble month to month across the digital music platforms. Music streaming services like Spotify and Apple Music don’t pay a fixed rate per play. They pay out of a revenue pool, so a stream in a busy month with high subscriber revenue is worth more than the same stream in a quiet one. The royalties for artists on the recording side flow through PPL, while the writing side flows through PRS.

One warning worth flagging: some companies will offer to buy your future royalties as a lump sum. It can look tempting, but early in your career you’re almost always better off holding on to that income and letting it build. Getting your release-day admin right is a far better use of your energy.

You’ll hear the term music publishing thrown around, and it confuses people because it sounds like it’s about printing. It isn’t. In the music business, this side is about administering the composition copyright and collecting the songwriting royalties it generates. It’s how songwriters actually get paid for the use of their music.

A music publisher is a company that does this admin for you. The big publishing companies, the likes of Universal Music Publishing, handle enormous catalogues. They register your songs, chase down publishing royalties around the world, and take a share of royalties in return, usually somewhere between 10% and 25%. This is separate from music distribution, which just gets your tracks onto the platforms and doesn’t collect any of this for you.

Here’s the honest bit. When you’re starting out, you probably don’t need one. You can register directly with PRS, and keep your full share of the royalties. A publisher earns their cut once your catalogue is big enough that routing global royalties to the publisher’s systems recovers more than they charge. Until then, you can earn royalties yourself. For example, if another artist covers your song and releases it, they have to pay mechanical royalties to you, and those come through the same system whether or not you have a publisher. On the recording side, these are sometimes called neighbouring rights royalties, and PPL collects them for you.

Once a use is logged, royalties are paid out on a schedule, usually quarterly. Registering also protects your music rights by tying them clearly to your name in the collection system, which matters if a dispute ever comes up. Selling more physical copies at shows is a separate income stream on top of all this, and if you want to grow it, my guide to selling more CDs is a good place to start.

Josh McKenzie

Hello, I’m Josh, and I’ve been honing my graphic design skills for almost 15 years now, catering to the needs of bands and businesses alike. What really fascinates me is the business aspect of the music industry. In addition to my design work, I also happen to play the Hammond organ, and I strive to share my knowledge through helpful articles that I write exclusively for you all!