How do you split the royalties on a track?

In the music world, it can be hard to tell where friendship ends and professional collaboration begins, especially when starting out.

Making music with a group of people is exciting, but you must consider the business side. Whether you are in a band or teaming up with others on a song, it is important to talk openly about money and responsibilities.

Regarding the business side, it is all about figuring out who does what and how much everyone gets paid. These conversations might feel uncomfortable, but they are necessary to avoid confusion later. To make the process easier for you, we will explain the distinct roles people can have, how to split the money, and who owns the rights to the music.

What roles can you take on when creating a track?

Various roles are involved in music creation, but we will focus on the two main groups. Remember that individuals may wear multiple hats within each group, and several people can fill the same role.

The composition team

Typically, a song begins with a musical composition and possibly lyrics. The individuals involved here are the songwriters, who are protected and compensated through copyright. You are part of this group if you contribute to the lyrics, melody, or composition. The same goes for beatmakers and arrangers who tweak the composition or adaptors who revise the lyrics.

When composers decide to commercialize their work, they often enlist the help of publishers. These publishers seek out musicians interested in performing the composition. This collaboration is formalized through a buy-out agreement that outlines how copyright is divided between the parties.

The performance team

At this stage, the song comes to life through performance—played, sung, and recorded. The performers are those involved, who are protected and paid through master rights. You are part of this team if you sing in the chorus or play an instrument. Think of the musicians on stage during a concert (excluding dancers).

During this phase, if a producer is involved, they handle financing, often by providing access to a recording studio. The collaboration between performers and the producer is governed by a recording contract that specifies how royalties are distributed among them.

How do you split the income between the contributors?

The division of income varies depending on the circumstances. Suppose you and your collaborators work with a publisher and producer. In that case, everything is typically outlined in your publishing and recording contracts. However, if you are self-produced, you are responsible for discussing and deciding.

While it is impossible to cover every scenario, we will provide examples to give you an idea. We will share one scenario with figures drawn from industry professionals to serve as a general guide.

The Pieces

Let us consider a band signed to a label, The Pieces. The band members include:

Axel: Vocals and lyric writing
John: Chorus vocals and co-writing lyrics
Mary: Keyboard and beatmaking
Anna: Guitar, who assisted Sara with the composition

They have signed an artist contract encompassing an exclusive recording agreement, publishing (or licensing) contract, and distribution contract. They negotiated to receive 15% of the revenues generated by their song. In return for the remaining 85%, their label covers expenses such as recordings, marketing, and promotion—everything outside the creative process.

In practical terms, they divide the remaining 15% equally among themselves. Why? Because each member contributes to both the songwriting and recording processes.

From the Earth

Let us explore the scenario with an independent band, From the Earth. The lineup remains the same as in the previous example, but without label support or a publishing contract.

Axel and John decide on copyright royalties based on their contributions: Axel, as the chorus writer, receives a larger share than John, who adapted lyrics. Mary, having initiated the composition, is considered on par with Axel. Consequently, Axel and Mary split 80% of the royalties for their involvement in writing lyrics and composition, while John and Anna each receive 10%.

For master royalties, they opt for an equal split. Despite John's lesser presence on stage, his contribution—providing his home studio for recording—is recognized. Here are how the numbers play out six months after their song's release on streaming platforms and a tour of indie festivals:

40% for Axel: $4,000
40% for Mary: $4,000
10% for John: $1,000
10% for Anna: $1,000

Master right royalties generated: $40,000

25% each: $10,000 per person

As a result, Axel and Mary each earned $14,000, while John and Anna each received $11,000.

How do you receive your shares?

For Streaming

If you are signed with a label, they handle the distribution of royalties and pay you according to the agreed terms.

For self-production, you can follow From the Earth's example and sign up on platforms like Bridger to collect your copyright royalties. You will get master royalties from your digital distributor.

For TV, Radio, and Public Venues

To receive master royalties for broadcasts in public places, on TV, or on radio, you must register with a Collective Management Organization (CMO) dedicated to performers. This applies to Europe but not the United States, where master rights are not collected for TV, radio, or public venues.

Registration with a CMO handling songwriters' rights is necessary for copyright royalties.

Open discussions about finances and roles are crucial in music collaboration, whether you are in a band or working with others.
Music creation roles usually fall into two groups: songwriters and performers.
Royalty distribution varies based on label involvement or self-production; independent artists may manage royalties independently through platforms like Bridger for copyright royalties and digital distributors for master royalties.