Royalties Explained

Royalties are simply a means to pay someone for the right to use their intellectual property or work (these could be compositions or sound recordings or other mediums too). But in order to receive these royalties you have to be listed as the owner for these works or be the rights owner.

Now as an additional layer of complexity you get many different types of royalties namely: Public Performance Royalties, Mechanical Royalties, Digital Performance Royalties, Master Recording Royalties, and Synchronization Royalties.

The important thing to point out is that royalties are split into two families: Composition Royalties and Master Royalties. Now a simply way to differentiate the two is really who gets the money, its either the publisher/song writer or the record label/recording artist

When it comes to YouTube royalties the important ones to be aware of are Digital Performance Royalties, Synchronization Royalties and Mechanical Royalties

Digital Performance Royalties

Performance royalties are basically a form of royalty that’s non-interactive, and these are usually paid out to the recording artist from digital streaming platforms/services.

• Performance Royalties are paid to the relevant PRO (Performing Rights Organisation) in each respective country, for example APRA AMCOS in Australia and New Zealand receives both mechanical and performance royalties – APRA AMCOS grants licences for the live performance, broadcast, communication, public playing or reproduction of its members’ musical works.

APRA AMCOS is the trading name of Australasian Performing Right Association Limited (APRA) and Australasian Mechanical Copyright Owners Society (AMCOS)

• These laws and structures are different for every territory, depending on the copyright law for that respective country. For example, BMI and ASCAP collect performance royalties in the USA.
• The rate for performance royalties is substantially lower than what is paid out for mechanicals, which is not collected unless you have a direct publisher.
  In the US, statutory royalty rates are set by the Copyright Royalty Board.

The current statutory mechanical royalty rate for physical recordings (such as CDs) and fixed digital downloads is 9.1¢ for recordings of a song 5 minutes or less, and 1.75¢ per minute or fraction thereof for those over 5 minutes.

Mechanical Royalties

Mechanical Royalties (US revenue paid to the MLC – Mechanical Licensing Collective) – this includes royalties on YouTube art tracks/YouTube Music uploads, as it is not classed as a synchronization.