How To Make Money Collecting Music Royalties

How To Make Money Collecting Music Royalties.

Are you trying to figure out How To Make Money Collecting Music Royalties? This step-by-step guide will show you how to start collecting streaming royalties, performance royalties, digital performance and all types of other royalties.


You’ve just completed your first EP and want to share it with the world. So… uh, what is the first step? So… This is a common stumbling block for artists. You have some music that you are very proud of, and it looks professional, so how are you going to make money off it? This guide will show you how to file your artist alias as a registered company and begin earning money from it.

Let me begin by stating that I am not a lawyer and that if you are not happy registering your business yourself, you should give a lawyer a one-time fee to do it for you. However, the procedure is straightforward.

1. Registering Your Business

You’re getting ready to start earning a lot of money from music. The first step is to create an agency from which to do business. By registering your business with the government, you will receive a business number that will allow you to open a bank account for your company, apply for loans, receive future supplier discounts, and recruit employees.

It depends on your personal case whether or not you ought to file as a business; it somewhat varies from one state to another and should be discussed with a lawyer.

How each province or state needs you to report your business is somewhat different. When you live in the United States, starting a company is easy. You will take care of the whole procedure with a website like ZenBusiness. Alternatively, by submitting the appropriate document, you can register your company with the government directly.

There are many kinds of companies. Some of the most popular are sole proprietorship, partnership, corporation, and LLC. The kind of company you like is dependent on the position in which you are in most cases. Let’s look at some of these various kinds of companies quickly.

Business Ownership

How To Make Money Collecting Music Royalties

Sole Proprietorship: The sole property registration ensures that you are the only owner of your business. Your personal assets are in this situation linked with your business. For example, if you produce music alone and starting just off, I would suggest this.

Partnership: Registering as a partnership means you are one of many owners of a company. Your personal finances will be bound up with your company in this case. I would suggest this if one or more people produced music, and you just started.

Corporation: By incorporating, you totally remove your personal assets from your company. If an individual took you to court, they could sue the company to the bone, but your personal finances would be out of the question. The disadvantage of running an incorporated business is that you must pay tax on what the business generates and then pay tax again on what you pay yourself. It doesn’t make sense to file your business as a company unless you have a significant sales stream and many employees.

Limited Liability Company (LLC): A limited liability company, or LLC, offers the assets security of a business as well as the tax classification of a sole proprietorship or partnership. In addition, you will benefit from “pass-through” taxation, in which the LLC does not pay corporate taxes. Rather, you pay personal income tax on the business’s earnings and file a personal tax return. The explanation you would choose a sole proprietorship or partnership to an LLC is that registering as an LLC is usually more costly.

How To Make Money Collecting Music Royalties

2. Open a bank account

You’ll get a business tax ID that enables you to open a business bank account when you register your business. A business bank account would allow you to separate your business funds from your personal funds.
When it is time to pay your taxes, having the assets separate would make the task a lot easier.
Hold receipts in the year for all the money you spent on music.
You will subtract these costs, which can minimize the money you have to spend on taxes while the tax season is rolling. You can do this by using an online service like Quickbooks or hiring an accountant.
You’re ready to set up your revenue streams now that you have a bank account.

3. Establish Your Income Sources

When you release a song, you are entitled to various royalties, including:

•  Streaming Royalties

Earned when your music is streamed online.
Example: When people stream your music via DSPs like Apple Music, Spotify, Amazon Music, and iHeart Radio.
Collect Streaming Royalties in the USA and Canada: Sign up for Distrokid or TuneCore.

If you release numerous singles during the year, using Distrokid to upload your songs to streaming sites would be less expensive. However, since each provider offers different benefits, it’s always worth looking at a benefit analysis.

•  Performance Royalties

Earned when your music is performed publicly.
Examples: Music aired (recorded or live) on radio, television, or the internet. This involves hearing it performed at live gigs and music festivals.
Collecting royalties in the USA: Register with ASCAP or BMI.
Collecting royalties in Canada: Register with SOCAN.

Mechanical Royalties

Earned when a physical copy of your records is sold.
Example: When a CD, vinyl, cassette, or other format of your song is sold.
Collecting royalties in the USA: Register with The Harry Fox Agency.
Collecting royalties in Canada: Register with CMRRA.

D. Digital Performance Royalties

Earned when your songs are played through non-interactive transmissions.
Example: When your song is played on cable TV music channels, satellite and internet radio.
Collecting royalties in the USA and Canada: Register with SoundExchange.

•  Sync Fees

Earned when you (the holder of the copyright) get paid to synchronize your music with visual media.
Note: In Canada, you own the copyright by default if you have created the song
Example: When a TV show, movie, ad, video game, and so on pays to use your song in their project.
Collecting royalties in the USA and Canada: Register through CONNECT (You don’t need to go through them, but they likely help you find people willing to license your music)
How This Traditionally Works: Usually, a project (like a film) hires a person known as a music supervisor to find music for his movie. This music supervisor calls several music publishers to locate music for their project. You get part of the sync fee if the publishing company pitches your songs, and they say they’re going to use it! A decent portion of this fee will be paid to the editor for the contract. Sync deals should be set up separately, so there is no need for a publisher.

How To Make Money Collecting Music Royalties

These five revenue streams guarantee that all the royalties you are eligible to receive are collected. So be sure to register it with the companies listed above any time you release a new album. There are many ways of making money as a music artist, so you should make sure that you capitalize on what you owe with little effort.

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