Many newbie music creators - and even some veterans - find it challenging to understand how to make money in the industry. From the complicated math behind royalty earnings to the laws governing copyright, the different revenue streams in music (and how they flow) can often appear murky. When you add the complicated payout systems of various music streaming platforms, it gets even fuzzier.
Having a working knowledge of the music industry is necessary for musicians who are looking to make an impression and earn royalties
from their creations. With the right information, understanding it all can become quite easy. This is the beginning of a five-part series that explains how different stakeholders in the music industry make money. There are several different players in music, but we will be focusing on the following four main groups:
- Singers and bands
- Music publishers
- Music labels
How these stakeholders make money from a single piece of music varies considerably. We can begin to understand by starting with the basics. Essentially, a song has two parts - the composition and the master recording. This leads to two separate copyrights being created for each.
While songwriters and publishers primarily make money from the composition rights, labels and singers or bands generate revenue from the master recording rights. The table below offers a further breakdown of the different ways revenue is generated from the two parts of a song.