How Radio Royalties Work

When a company like SoundExchange claims that they have over $1,000,000 in unclaimed royalties owed to CD Baby artists alone, it really makes you realize how little most musicians know about how radio pays them. By law, whenever music is being performed (played) on the radio, money is owed to someone in the way of royalties. The calculations to determine how much is due can get complicated, but if you’re getting significant airtime, radio royalties can make you a pretty penny.

The Players

To really understand who gets paid and how, you need to understand all the parties involved.

  • Songwriter – The songwriter is the person(s) that wrote the song. If you write all of your own music, that’s you. If you are covering a Pink Floyd song, one or more of the members of Pink Floyd are the songwriter(s).
  • Publisher – The publisher is the person that promotes or funds the song. Sometimes it is a publishing company that is selling a songwriter’s song to a recording artist. Sometimes it is the record label you are signed to. For most independent artists, you are the publisher. If you are funding everything yourself and haven’t signed a contract with a publisher, then you are indeed your own publisher.
  • Recording Artist – The recording artist is the person/group that actually records the song. Not everyone writes their own music. Some people, such as Justin Bieber, often times are recording songs that someone else wrote. He would be classified as the recording artist on any such songs.
  • Sound Recording Copyright Owner (SRCO) – The SRCO is the person/company that actually owns the recording of the song. For a signed band that would usually mean the record label. For independent artists, they are their own SRCO. Remember, this is the recording, not the actual notes and lyrics of the music.
  • Performance Rights Organizations (PROs) – These are companies that license the public performance of music on behalf of the copyright owners. For our purposes here, they are the companies that collect the performance royalty money from radio and give it to you, the musicians. In the US there are three PROs – BMI, ASCAP, and SESAC. The royalties they collect are for the copyright of the musical work (lyrics and notes).
  • SoundExchange – Much like a PRO, SoundExchange is an organization responsible for collecting royalties from your radio airplay and giving it to you. However, they are collecting royalties for the sound recording on non-interactive digital radio. That’s the actual recording, not just the notes and lyrics.

Kinds Of Radio

Radio comes in all shapes and forms. Each one has their own rules and regulations that determine what royalties they pay. Let’s start by explaining what each kind is:

  • Terrestrial Radio – These are AM/FM stations. They come in the form of Commercial, Classical, College, National Public Radio, and Non-Commercial.
  • Internet Radio – Radio broadcasts transmitted via internet. There are many different kinds of radio, but the big difference you need to understand is selective vs. non-selective. If you can choose when and what song you want played (i.e. Spotify, YouTube), it’s selective. If you don’t choose exactly which song is going to play, it’s non-selective (i.e. Pandora, Live365).
  • Satellite Radio – Radio stations that are transmitted via satellite (i.e. Sirius, XM).
  • Clubs/Restaurants/etc. – Restaurants, clubs, hold music, and all public performances of music are required to pay royalties.

When Do I Get Paid?

For almost any kind of radio, royalties are supposed to be paid to someone. Here is a chart that can help you figure out who gets what:

You might be asking, “Why are there question marks in the chart?” That’s because selective internet radio is paid on a per-contract basis. As mentioned before, Spotify is an example of a selective internet radio. At the moment BMI (one of the PROs in the US) has no deal with them requiring them to pay royalties for their streams. That means that all the money they pay to the artists is handled outside of royalties. Each PRO and each selective internet radio will have to work out their own rules and fees.

Aside from that, it should be fairly straight forward. Look at what kind of radio just played your song. Then look at what ownership you have over the song. You will get paid separate amounts for each check mark that applies to you. For example, if your music is played on a Satellite radio station and you are the songwriter, publisher, SRCO, and recording artist, you will receive 4 different payments. On the other hand, if your song is played on terrestrial radio and you are the recording artist, performer, or SRCO, you won’t get paid at all.

How Much Will I Get Paid?

I wish that I could give you an easy answer as to how much you will get paid each time your song gets airplay. Much to my dismay, I have no way of telling you that. The actual dollar amounts you receive are determined by numerous factors, including but not limited to:

  • What kind of radio is playing your song
  • How long your song is
  • What time of day your song is played
  • Whether it was a feature performance or not
  • What kind of deal the PROs make with the radio station

It gets complicated very quickly. For whatever reason these numbers are kept secret, and as a result we have no real way to find out how much we are owed. We have to trust in the PROs and SoundExchange. Obviously there are faults in the system, but this isn’t the time or place to discuss it.

Making Sure You Get Paid

Hopefully by now you can see that if you’re getting any radio airplay, then there’s money owed to you. To make sure you get your paycheck you will need to register your songs in the following places:

  1. SoundExchange – It’s free, it’s easy, and there’s absolutely no downside. Just head over to their website to start your registration process.
  2. PROs – You only need to choose one PRO to register with. They all serve the same function, but each one has their own benefits to choosing them. Don’t be afraid to take a look at all of them and see which one you prefer. If you’re in the US, the three companies are BMI, ASCAP, and SESAC.
  3. Tunecore’s Songwriter Service – As of recently, TuneCore launched a new program that was put in place to collect on royalties that you may not otherwise receive. They claim they can serve as a replacement or supplement to any PRO. Since it’s new, I can’t speak as to whether or not it can fully replace a PRO, but I can tell you from first-hand experience that they will indeed find you royalties that would have otherwise gone unclaimed. I highly recommend at least using them as a supplement to any PRO. Click here to check them out.

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One comment on “How Radio Royalties Work

  1. Excellent info. I registered for sound exchange a while ago because I’m a writer and they also pay into a fund for session musicians.

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