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Music royalties are increasingly more popular in the streaming age. Here are some tips on how to collect royalties online.

How to Collect Your Music Royalties Online?

Life as an indie artist sounds rather difficult to most and it’s certainly got its challenges. It’s not just the question of how much money you’re making. For example, you need life gigs to earn some cash. Getting the chance for live performances can be tricky though. Since the entertainment industry has mostly shut down during the pandemic, indie artists had to become creative in terms of generating an income. 

Since everyone’s been stuck at home, what do you do? Exactly, you create more music. And how do you bring it to your fans? With digital distributions companies. They’re also the key to collecting all of the royalties online. Check out a comprehensive review of the different digital distribution companies.

Royalties Via Your Label

If you have a record deal, you will receive your royalties automatically. However, quite a few record labels only pay every half year, annually, or even only every two years. If that wasn’t enough, quite a few fees are deducted from your royalties. 

These include costs for promotion offers, recording expenses, expenses to create physical records, artwork, and even a breakage fee. That breakage fee has been around since the 1950s. It basically means to compensate for any physical record that might get damaged during transportation. While it was sensible in the old times, it isn’t anymore. Moreover, why should you cover transport damages? Either way, let alone that fee comes at a rate of a whopping 20 %. 

On the bottom line, you’ll only receive about 15 % of your royalties from record deals. It may sound convenient not having to hunt for your royalties, but the price seems rather high. Plus, there are a couple of strings attached like you don’t have any rights to your own music. 

It doesn’t seem surprising that indie artists prefer to remain indie artists and look at digital distribution companies.

Royalties for Indie Artists

As an indie artist, you will have to hunt for your royalties on your own. This can be a rather tedious task you don’t really have the time for. There are agencies who’d do this job for you, but you’ll have to wave goodbye to up to 50 % in commission for your royalties. Of course, such agencies don’t work for free. Maybe you’re lucky that they don’t make as much commission. If you still choose to do it all on your own, you need to know which royalties you can demand by whom or rather which platform.

There are, of course, physical royalties. This only applies if you’ve recorded a CD and actually produced a physical album or single. Each shop selling your CD would owe you royalties. You can already guess how tedious following those royalties will be. As most indie artists don’t produce physical records anymore, we can probably skip this step.

With the approach of the digital era, music has digitalized, too. Fewer CDs are sold since everyone can buy music to download or from several shops like Apple Music, Spotify, Soundcloud, etc. 

Streaming royalties

Each time someone streams your music, you’re entitled to royalties. People usually pay a monthly fee to use streaming services and depending on how often people listen to your music, it means cash time for you. Streaming has somewhat replaced the download of music as streaming platforms work similarly to a radio. In exchange for a monthly fee, listeners can stream as much music as they want. Whenever they don’t renew their subscription, they cannot listen to their playlist anymore. 

Download royalties

Similar to streaming royalties, you’re entitled to download royalties each time someone downloads your songs. Instead of someone buying your actual CD and going through the hassle of transferring the data to their computer and then a USB drive, downloads appear a lot more convenient. While they don’t have a physical CD, they’ve got the digital version of it. Consequently, they can listen to your music as much as they desire.

How to Distribute Your Music Digitally

There are hundreds of outlets in the entire world where you can potentially contact the platform and upload your music. It used to be possible with Apple or also Spotify, but those platforms were completely overwhelmed. While each platform has its own rules to offer your music on their platform, it will result in terrible hassle for you as well as the platforms. 

Since it resulted in too much paperwork for music platforms to deal with royalty payments, they don’t do it anymore. If you put yourself in their shoes, you’d understand why. Firstly, there are thousands, if not millions of indie artists. Imagine each of them was putting music online to stream or download – even half of it would easily result in chaos. 

Next, these indie artists may not be located in the same country as the music outlet. This doesn’t only create a hassle with taxes, but also with processing payments. 

Digital distribution companies offer themselves as a perfect solution. Not only do they forward your music to hundreds of outlets within a few days. They also collect royalties from each outlet for you. The huge advantage for you is, above all, less stress and less hassle. 

Digital distribution companies know which formats are required by each outlet. Additionally, they may offer additional services such as making your music available at TikTok or Instagram. When someone creates a video and chooses your song for the video, you can earn additional royalties. A lot of them also offer YouTube monetization so you don’t have to deal with it either. 

Parting Words On Digital Distribution Companies And Royalties

The only question that remains is, how much do distribution companies chunk off? For digital distribution, a lot of companies don’t take any commission at all. However, they only pass on a commission, if you subscribe to their services for a fee per year or single/album. They often take an additional commission for YouTube monetization, but it usually remains at a low percentage while some do it for free. Many digital distribution companies don’t require you to reach a certain threshold. You will receive your royalties weekly, monthly, or when you withdraw them manually.

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