U.S. copyright laws give all songwriters exclusive rights to their work. Music royalties are a percentage of gross or net profit or a fixed amount per sale or use to which a creator of a work is entitled. Royalties are determined by contract between the creator and distributor.
There are 4 different types of music royalties paid to songwriters:
- Mechanical royalties – Mechanical royalties are royalties paid from record companies for records sold based on exclusive rights to reproduce and distribute copyrighted works
- Public performance royalties – Public performance royalties are royalties paid by music users for songs in operation of their businesses and broadcasts based on exclusive rights to perform publicly copyrighted works
- Synchronization fees – Synchronization fees are royalties paid by users who synchronize music with their visual images based on exclusive rights to reproduce and distribute copyrighted works and to prepare derivative works of copyrighted materials
- Print music income – Print music income is royalties paid by music printers for sheet music based on the exclusive right to reproduce and distribute copyrighted works
Songwriters and publishers get the bulk of royalties. For instance, every time a song plays on the radio, the songwriter and publisher are getting a fixed amount for the use from the record company.
A musical performer usually gets royalties from the sale of their recordings on CDs and tapes. This practice is based on copyright law and the fact that radio play generates more sales for the music performer.