Indie Artists: Streaming Royalty Rate Increase

Streaming Royalty Rate Increase: What It Means for Indie Artists

With the CRB recent music stream royalty increase indie artist and songwriters must understand how it works for them.

If you’re an indie artist meaning singer, songwriter, rapper, etc. then I have great news for you. The copyright royalty board (CRB) has just announced it’s royalty increase rate for songwriters in regards to music streams. This means if your song is streamed on any of the music streaming platforms, the most popular being: SpotifyAppleMusicPandoraTidal, etc. your royalty rate for your songs being streamed will now be increased. This is a big achievement for all songwriters and also a big achievement for indie songwriters. This means if you are an indie artist who writes his or her own songs this recent increase also benefits you. However, if you are an indie artist meaning an independent songwriter you may want to know exactly how this royalty increase benefits you. For the longest time royalty percentages and rates were largely benefiting the record label. Now that this increase has been raised by the CRB how does it affect indie music artists (songwriters)?

Songwriter rate increase

In January 2018 it was officially announced that the copyright royalty board ruled to increase the music streaming rate for songwriters’ This means songwriters will essentially be paid more based on their songs being streamed. This new rate will be based on percentage of revenue or total content costs (which ever one is greater). However, this new royalty rate doesn’t include per streams. Meaning you as the songwriter, when a song of yours is streamed the royalty rate of each stream still stays the same. What does increase is the songwriter’s percentage of of revenue received from music streaming. There are other assets you as a songwriter receives from this new streaming royalty increase. Some of them include:

  • The removal of caps such as TCC (total content cost) which songwriters were originally forced to encounter are now eliminated.
  • Songwriters whether mainstream or indie can benefit off record label deals.
  • Digital music services that pay songwriters for their streams now have to give songwriters their payout sooner.
A visual graph of how music streaming royalties are distributed. Graph courtesy of Techdirt.

What exactly are these new songwriter royalty rates?

Now that you know all about the music streaming royalty rate increase for songwriters you may be asking how much is it? Exactly what is the amount of these new royalty rates? You may also be asking how much will my actual payout be. Especially if you’re an indie artist/ songwriter you may really want to know what the bottom line is. As stated earlier your rate per stream doesn’t increase. What does increase is your revenue percentage of music streams as a songwriter. The original royalty rate revenue for songwriters were 10.5% of the streaming services revenue. As of January this year the rate is now 15.1%. This means the songwriter royalty streaming rate has increase a whooping 44%. This is the largest royalty increase in music history. In layman terms for ever $3.82 the record label makes off of a song, the songwriter makes a $1 of that amount. This isn’t an even split but it’s definitely a long way from what it use to be. This increase will take place within the next 5 years from 2018-2022. Now you have to understand what all this means to you as an indie artist or indie songwriter.

What these increases mean for the indie artist

Whether you’re an indie pop artist, indie R&B artist or apart of a indie band, if you write your own songs then you’re also an indie songwriter. If you’re not the actual artist singing the songs but write songs for other artists independently then you too are an indie songwriter. Just because you’re not signed to a label doesn’t mean these royalty increases doesn’t affect you. You too need to know what these new streaming rates mean for you as an indie artist. If you’re an independent songwriter this means you write songs but you’re not signed to a record label. This have pro’s and con’s attached to it. How it targets your royalties depends on who you write for and how well the song does. For example if you write a song for a fellow indie artist you’re more likely to get a smaller royalty stream payout. If  you’re an indie songwriter but write a song for a mainstream artist then chances are your song stream payout will be larger. This is due to the fact that the song of yours recorded by a mainstream artist has the power of a record label behind it to promote it and make it a mega hit. The bigger the song is the more times it’ll be streamed. The more times it’s stream, the higher your royalty check for music streams will be. This isn’t to say a song recorded by an independent singer can’t become a mega hit. However, it will be harder since there’s no corporate company pushing it towards success. The good thing is these new royalty rate increases can only help you as an indie songwriter whether the artist you write for is mainstream or independent.

Although not an indie artist successful singer and songwriter Ne-yo is a great example of a songwriter who would greatly benefit off the new royalty rate increase due to the popularity of his songs written.
  • Scenario 1 > Indie Songwriter/ Indie Artist – is an indie artist who writes his or her own songs and is completely independent. Not signed to any record labels or music publishing companies. With the new streaming royalty rate as an indie songwriter in this scenario you’ll receive all the songwriter royalties payout. You won’t have to worry about waiting for a record label to pay you. You also won’t have to worry about a music publisher getting 50% of your shares as a songwriter. However, in order to get your songs on these streaming platforms as a solely indie artist you will have to go through a digital distribution company where most of them take a certain percentage of your royalties. These digital distribution companies fees and percentages varies. Which company you decide to go with is completely up to you. A few of these companies are CD Baby, TuneCore, Ditto Music, LANDR and many more.
  • Scenario 2 > Indie Songwriter for Mainstream Artist – is an indie songwriter who writes for mainstream artists. This songwriter is still completely independent because he or she isn’t signed to a record label or music publishing company. Therefore the songwriter still receives both royalty shares as the songwriter and music publisher. This is because as a songwriter if you’re not signed to a music publisher you’re automatically your own music publisher. However, in regards to master (sound recording) of your song more than likely it’ll be owned by the recording artist and record label. This means you as the songwriter won’t receive many royalties for the sound recording. You’ll receive most of your royalty payout from the song (composition) which covers the lyrics and melody of the song.
  • Scenario 3 > Indie Songwriter for Indie Artist – is an indie songwriter who writes for fellow indie artists. The artist the songwriter is writing for is solely independent themselves and isn’t signed to a label. In this scenario the indie artist who records the song owns the master (sound recording) and receives royalties regarding the master of the music. The indie songwriter owns the actual song (composition) and acts as the songwriter and music publisher. This means the songwriter receives royalties relating to the composition of the music. The songwriter receives royalties as a songwriter and music publisher. The song is placed on music streaming platforms by the indie artist (recording artist) through one of the popular digital distribution companies.

In all of these scenarios the songwriter will be paid a higher royalty payout due to the recent increase for streaming royalty rate. How much you’re paid as an indie songwriter varies depending on these scenarios and the success of your song you’ve written.

How to benefit off this increase as an indie artist

Now that the average revenue for music royalty streams have increased for songwriters the question is, how do songwriters benefit off of this increase? Especially if you’re an independent songwriter with no major company backing you. How do you benefit off this increase? Although this royalty increase is a major accomplish for songwriters and music publishers the reality is it doesn’t apply to per streams. The average amount a rights holder is paid per song streamed is $.0037. That’s less than 1 cent. This means if you’re an indie songwriter or signed songwriter and your song is streamed 1 million times your payout ranges from $3,800-$15,000 depending on which streaming platform you’re referring to. Then if you share the rights to your song with a co-writer you have to split that amount with him or her. This amount isn’t “peanuts” but it’s not enough to make you rich as a songwriter. With that being said you have to find other ways to benefit off this royalty rate increase. Since the increase lies in your revenue percentage and other songwriter deals you have to target these avenues to benefit off the new royalty rate. For example since you’re revenue percentage increased write more songs than you usually do and add them to all major streaming services. This way you’re not just waiting on 1 method of payment from 1 or 2 songs. Another way to make this new increase work for you is utilizing how it affects the business side of music. You now have more leverage when dealing with record labels and mainstream artist. Use it to your advantage.

As an indie artist you have to find ways to monetize your newfound success of music streams royalty rates being increased.

The new music streaming royalty rate increase has many pro’s but a few disappointments for songwriters. As a songwriter we didn’t get the per stream increase we were looking for which is arguably the most effective aspect of streaming. However, there was a victory. You as an indie songwriter and indie artist have to learn how to make this newfound victory work for you.

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