Music royalties: who gets paid when you press play

The recurring headline is that streaming pays artists a fraction of a penny per play. The figure is roughly right and explains almost nothing, because it treats a stream as one payment when it is at least two, flowing through different systems to different owners under different rules.

Two copyrights, not one

Every recorded song contains two distinct pieces of property.

The composition is the song itself — melody, harmony, lyrics. It belongs to whoever wrote it, usually shared with a publisher.

The sound recording is one particular performance captured. It typically belongs to whoever financed the session, historically a record label.

A cover version is a new sound recording of an existing composition, which is why the original writer earns from it and the original performer does not.

Everything confusing about music money follows from this split. The two copyrights are administered by different organisations, licensed through different mechanisms, and pay at very different rates.

Where the money goes first

The larger share of streaming revenue is allocated to the sound recording, and it goes to the rights holder — which for a signed artist means the label, not the performer directly.

The artist is then paid according to their contract, after recoupment. This is the step that surprises people most. Advances, recording costs and often marketing are treated as loans against future earnings. Until those are recouped, the artist’s royalty share is applied to the balance rather than paid out.

An artist can therefore have a well-known record generating real revenue and receive nothing personally, without anyone behaving improperly. The money is going to the label, which is repaying itself for money it advanced.

The composition side

The composition earns a smaller share, split between two components: a mechanical royalty for the reproduction, and a performance royalty for the public performance.

Performance royalties flow through collecting societies, which license broadcasters and venues and distribute to writers and publishers. Mechanical royalties historically flowed through different channels and have been a persistent source of unmatched and unpaid money, because linking a recording to the correct composition and its writers requires metadata that is frequently incomplete.

The practical consequence for a songwriter: your income arrives from several organisations, on different schedules, and reconciling it is genuinely difficult.

Why the per-stream figure is misleading

Most services do not pay a fixed rate per play. They operate a pool: subscription and advertising revenue for a period is collected, the service takes its share, and the remainder is divided among rights holders in proportion to their share of total streams.

An artist’s payment therefore depends on total listening across the platform, not on their own plays alone. A month when everyone listens more, and revenue does not rise proportionally, is a month when everyone’s effective rate falls.

It also means the quoted average is not a rate anyone is paid. It is total money divided by total streams, after the fact.

Why your subscription does not follow your listening

Under the pooled model, your monthly fee joins a general pot and is distributed by overall market share. If you listen exclusively to one obscure artist all month, very little of your money reaches them — your fee is divided according to what everyone else played.

Alternative models that allocate each subscriber’s fee among the artists they actually played have been proposed and partially trialled. They redistribute meaningfully toward artists with small, dedicated audiences, and away from the most-streamed acts, which is the main reason adoption has been slow.

What this means in practice

• Songwriters and performers earn through different pipes. A writer who does not perform can earn well from a hit they never appeared on.
• Metadata is money. Incorrect or missing credits are a leading cause of royalties going unpaid, and the fix is administrative rather than artistic.
• Recoupment explains most confusing situations. Revenue existing and an artist being paid are separate events.
• Live performance and direct sales bypass most of this, which is precisely why they dominate artist income.

A fairer summary than the headline

Streaming did not create the complexity — the two-copyright structure predates it by a century, and recoupment is older still. What streaming changed was volume: it replaced a small number of high-value transactions with an enormous number of tiny ones, which made every inefficiency in the system, particularly the metadata problem, matter far more than it used to.