Streaming Royalty Payouts, Explained
You get your music on streaming services and hit the threshold to get paid. Congrats! Now what?
When and how you get paid out by DSPs and online distributors is a point of confusion for many artists. Let’s break it down in no uncertain terms.
Here are streaming royalty payouts, explained.
Part One: Streaming Royalties
Types of Royalties
Streams through DSPs generate two different types of royalties:
Performance Royalties, which pay songwriters for the public playback of tracks worldwide (these are collected by a Performance Rights Organization, or PRO).
Recording Royalties, which are generated from the reproduction and distribution of musical compositions. These are paid to recorded music rights holders.
Types of Payouts
Every time one of your tracks is streamed on a DSP, it will generate a recorded royalty.
Those are the royalties you will collect through a music label or digital distributor like TuneCore.
If you’re unaffiliated with a PRO, you may be missing out on the songwriting-driven performance royalties you’re also earning (which is where TuneCore Publishing comes in!)
Part Two: Streaming Payout Thresholds
Some DSPs have a streaming payout threshold, meaning you won’t generate residual income until a track is streamed X number of times.
| DSPs With A Payout Threshold | DSPs Without A Payout Threshold | |
|---|---|---|
| Spotify (>1,000 streams) | Apple Music | |
| Deezer (>1,000 streams, 500 unique listeners) | Tidal | |
| Amazon Music | YouTube Music |
These thresholds aren’t in place to prevent artists from getting paid – they combat fraudulent content generated by AI or propelled to success by bot farms.
To learn more about fighting digital streaming fraud, read our guide about Streaming Fraud and How to Prevent It here.
Part Three: How Royalties Are Calculated
Major streaming services pay out royalties based on an artist’s share of overall streams across the platform, not a fixed per-stream rate.
This is arguably the most important fact to understand about streaming royalty payouts since it directly determines the amount of money a musician receives per royalty payment.
Take Spotify, for example. According to their royalty payout guide, “roughly two-thirds of Spotify’s music revenue (from Premium subscription fees and advertising) is allocated to recording and publishing royalties, with around four-fifths going to recording and one-fifth to publishing.”
From there, Spotify pays rightsholders based on streamshare — their share of total streams in a given month.
If an artist accounts for 1% of all streams in a particular country, their selected rightsholder(s) receives 1% of the recording royalties in that country.
Make sense?
How Royalties Flow From Streaming Platforms to You
When fans stream your music on a DSP, royalties are calculated and paid to rights holders mentioned above.
Once that’s calculated,royalties flow through labels, distributors, publishers, and collective management organizations (CMOs), such as PROs and mechanical agencies, before they ever reach you.
What does that mean?
- 1
You should register with a PRO
if you’re not registered with a PRO, you’re potentially missing out on an entire stream of revenue. TuneCore Publishing can help with that.
- 2
There are multiple channels where payments can be delayed
If any of the financial institutions, streaming platforms or digital distributors partner with experience a bottleneck for any reason, so will you.
- 3
No DSP pays an artist directly
and your payments are based on individual agreements made with other parties.
Knowledge Is Power
We encourage you to bookmark and return to this guide for two reasons.
First: the better you understand how royalties reach you, the more empowered you can be to make strategic financial decisions. You deserve to understand how the system works.
Second: programs like TuneCore Direct Advance, powered by RoyFi, allow you to use that knowledge to your benefit. You can potentially qualify for an advance based on your anticipated future royalties to put towards recording costs, major life purchases, or anything in between.
No matter how you decide to use this knowledge, you’re better equipped to use your royalties well than you were yesterday.