4 Types of Music Royalties Every Artist Must Know

Kristian Gorenc Z

Oct 5, 2025

If you write, perform, or produce music, royalties are the backbone of how you get paid. They ensure that everyone involved in creating or recording a song receives compensation when their work is used. Yet, royalties can often feel complicated because there are different types, and each follows its own rules. Understanding how they work is essential if you want to protect your rights and build a sustainable career in music.

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In this article, we’ll go through the 4 types of music royalties that every artist, songwriter, and industry professional should know. By the end, you’ll see how these revenue streams fit together and why paying attention to them is critical.

Mechanical Royalties

Mechanical royalties are among the oldest forms of royalties, dating back to the time when songs were pressed onto vinyl or CDs. They are generated whenever a song is reproduced in a physical or digital format. If your track is sold on a CD, downloaded from iTunes, or streamed on platforms such as Spotify, it generates mechanical royalties.

The money flows to the songwriter and the publisher of the composition. This is because the right being licensed here is the right to reproduce a musical work. Streaming complicates things slightly since it involves both reproduction and performance, but mechanical royalties remain an important part of the revenue mix. If you write songs, understanding mechanical royalties ensures you don’t miss out on a large piece of your income.

Performance Royalties

Performance royalties are earned when music is played or performed in public. This includes obvious scenarios like live concerts or radio airplay, but it also covers less obvious situations such as music playing in a bar, restaurant, or even a gym. Streaming services also trigger performance royalties because music is being broadcast to the public.

These royalties are collected by Performance Rights Organizations (PROs), which operate on a national level. In the United States, the most well-known PROs are ASCAP, BMI, and SESAC. In other countries, organizations such as PRS in the UK or GEMA in Germany handle the process. PROs track performances and distribute royalties to the songwriter and publisher. For anyone writing songs, registering with a PRO is a fundamental step to make sure you receive your fair share.

Synchronization (Sync) Royalties

Sync royalties come into play when music is paired with visual media. This could be in a blockbuster movie, a Netflix series, a YouTube video, a video game, or a television commercial. Unlike mechanical or performance royalties, which are often standardized and collected by intermediaries, sync royalties are usually negotiated directly.

When a company or creator wants to use your music in a visual project, they negotiate a one-time sync fee with you or your publisher. That fee gives them the right to “synchronize” your song with their content. However, the revenue often doesn’t end there. If the show or commercial is later broadcast on TV, you can also collect performance royalties on top of the sync fee. For many artists and publishers, sync licensing is a highly valuable source of income, not just for the money but also for the exposure it provides.

Neighboring Rights Royalties

Neighboring rights royalties are often confused with performance royalties, but they are not the same. While performance royalties apply to the song itself—the composition written by the songwriter—neighboring rights apply to the sound recording, also called the master. These royalties are paid to performers and record labels when the recording is broadcast or performed publicly.

If your recorded track is played on the radio, streamed on digital platforms, or used in a TV show, neighboring rights royalties are generated. For example, when a radio station plays a song, the songwriter receives performance royalties, while the artist who performed the track and the record label receive neighboring rights royalties. This system ensures that the creative contribution of performers and the investment of labels are fairly compensated alongside the work of the songwriter.

Why These Royalties Matter

Understanding the 4 types of music royalties is more than just a technical exercise. They represent the lifeblood of the music industry, flowing money back to the people who create and produce music. If you are an artist, songwriter, or producer, recognizing the difference between mechanical, performance, sync, and neighboring rights royalties helps you track your revenue streams and prevents you from leaving money on the table.

For example, a songwriter who doesn’t register with a PRO may never see the performance royalties they are owed when their music is played on radio or streaming platforms. Similarly, a performer who ignores neighboring rights might lose significant income generated from their recordings being broadcast internationally. Even sync royalties, which can feel like a bonus at first, are often negotiated without a clear understanding of their long-term value.

Royalties can sometimes seem complex because different organizations, contracts, and laws apply depending on the country. However, the principle behind them remains simple: music has value, and those who create it deserve to be compensated whenever it is used.

Final Thoughts

The music industry thrives because royalties reward creativity and investment. Mechanical royalties compensate for reproductions, performance royalties pay for public plays, sync royalties reward placements in visual media, and neighboring rights royalties ensure that performers and record labels share in the value of the recordings. Together, these streams form the foundation of how music creators earn a living.

If you work in music, take the time to learn how each type functions and how to register properly to collect them. Missing even one of these revenue sources can mean losing income that rightfully belongs to you. By staying informed and proactive, you can ensure your music continues to generate value long after it’s created.

Source of music data: Viberate.com