Royalty types
Lesson time: (1min 20sec)
Judge Jules explains the typical royalty rates artists can expect, using streaming income to show why labels often keep the larger share.
Course preview
This lesson is part of the course Legals & Deals: The Basics of The Music Industry
Watch a preview of the full course below.
Lesson transcript:
Understanding Royalties in Music
Royalties are paid to artists for the exploitation of their tracks. Let's take a closer look at how this works, especially in the context of streaming.
Streaming Revenue
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A Million Streams: Rounding the figures up, this generates about $5,000.
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Royalty Rates: Many record labels operate on a 20% to 30% royalty rate. This means:
- If you achieve a million streams, you will earn 20% to 30% of $5,000.
- The record company retains the remainder.
The Argument for Lower Shares
The argument is that record companies have taken more risks with you, hence, you receive less , the "cub's share" of the royalties, as opposed to the "lion's share."
Smaller Labels
Some smaller record labels work on a more straightforward profit-sharing basis, often referred to as a net receipts basis.
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Profit Share Model:
- Smaller labels typically invest less in the release of the record.
- They may not even provide an advance against your royalty.
- This model often entails a 50/50 split:
- All costs are deducted from the top, and what remains, if anything, is divided equally between the record company and the artist.
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Typical Models:
- The 20% to 30% royalty model is generally applicable to medium-sized labels and certainly to the majors.
About the instructor
Jules O'Riordan has over 30 years of experience across the entire spectrum of the music industry. This includes nearly a decade as an A&R for the Universal umbrella of labels, 15 years as a presenter on BBC Radio 1, over 150 record releases and remixes in his own capacity as a recording artist, plus a 30-year career as one of Britain's best-known, globally-travelled DJs (Judge Jules), with over 5000 gigs under his belt, plus extensive experience as an event promoter and artist manager at the highest level. Suffice to say, Jules knows the music industry inside-out, and his clients regard him as a trusted advisor for whom no legal or business affairs challenge or problem is too large or small. Jules has been a lawyer for 10 years. His practice takes in the entire breadth of the music-focused entertainment industry. His legal and deal expertise includes management, recording, publishing, distribution and label services, music-based apps, games and tech projects, production deals, producers, featured artists, endorsements, merchandising, neighbouring rights, TV/film scores, live performance, events and venue agreements, plus copyright and rights infringement and many other disputes. Jules's clients include artists, management companies, record labels, songwriters, event promoters, producers, music tech businesses, production companies, live agents, music publishers and DJs. He has spoken on many panels and seminars including ADE, Brighton Music Conference and AIM events, and has been a guest speaker on legal issues across a number of on and off-line media outlets, including BBC Radio 5 Live, BBC Introducing, Financial Times, The Sun, The Times and Mixmag. Jules speaks fluent Spanish. Who better to demystify the contracts and deals every musician eventually faces? In his course, Jules turns three decades of hard-won industry knowledge into plain-English guidance, so you can understand the business side of music and protect your work long before you sign on the dotted line. read more