[FAQ]

Hi everyone,

I’m an independent artist who writes all my own songs, and I’m trying to get a better handle on the business side of things. I’m just a bit confused about how the money from a single stream is divided.

I keep seeing the terms ‘master recording royalties’ and ‘publishing royalties’. I understand that one is for the sound recording itself and the other is for the underlying composition or lyrics. But how does Spotify actually separate these? When someone plays my song, does Spotify pay these two royalties to different people?

My distributor pays me, but I also have a PRO. I want to make sure I have everything set up correctly to collect all the money I’m owed. Any clear explanation on the difference and who collects what would be a huge help.

[Jeff Bullas]

This is the most important financial concept for a songwriter to understand.

Short Answer: Master royalties are paid for the use of the specific audio recording and go to the owner of that recording, like a label or distributor. Publishing royalties are paid for the use of the underlying song composition and go to the songwriter and publisher via collecting societies.

Think of it this way: every piece of audio content on Spotify is actually two different assets combined.

First, you have the master recording, which is the actual audio file of your performance. Your distributor or record label controls this asset, and Spotify pays them a master royalty for its use. Second, you have the composition, which is the intellectual property of the song itself—the lyrics and melody you wrote. For the use of this asset, Spotify pays a separate publishing royalty to collecting societies like your PRO and mechanical rights organisations. These societies then pay the songwriter and publisher. So for one stream of your audio, two distinct royalty payments are generated and flow through completely different channels to different rights holders before any money gets to you.

Cheers,

Jeff

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