Episode 98: Music Royalties Explained - Distribution vs Publishing

Confusing distribution with publishing is one of the fastest ways to lose time, miss money, and second guess every release decision you make. I’m Jonny Amos - host of The Music Business Buddy and I’m stripping it back to basics so you can clearly separate what a music distributor does from what a music publisher does, without the jargon and without the myths.

We start with the core distinction the industry actually cares about: the sound recording (master rights) versus the underlying song (composition copyright, meaning lyrics, melody, and harmony). From there, I explain how music distribution works in practice, from getting your recorded music onto Spotify, Apple Music and other streaming platforms, to why accurate metadata, credits, artwork and scheduling affect how you appear in searches, libraries and playlists. Distributors may offer extra services, but their main job is access and reporting for the master side.

Then we move to music publishing, including why it’s even called “publishing” in the first place, what publishers do for songwriters, and why collection societies and PRO systems do not always catch everything without help. I break down the key publishing income streams, especially performance royalties and mechanical royalties, and I clarify the part that trips people up most: where streaming royalties sit, why both your distributor and PROs can be involved, and how the typical 80/20 split between recording and songwriting tends to work.

If you found this useful, subscribe, share it with an artist friend who’s about to release music, and leave a review so more creators can find the show. What’s the one part of distribution or publishing you still want unpacked?

Transcript

Welcome And What We Do Here

SPEAKER_00 0:16

Welcome to the music business, buddy, with me, Johnny Amos, podcasting out of Birmingham in England. I'm the author of the book, The Music Business for Music Creators. I'm a music creator myself. I'm an industry consultant, an artist manager, and a senior lecturer in both music business and music creation. Wherever you are, whatever you do, consider yourself welcome to this podcast and to a part of this community. I'm here to try and educate and inspire music creators from all over the world in their quest to achieve their goals by gaining a greater understanding of the business of music.

The Big Confusion Explained

SPEAKER_00 0:52

Okay, so a little bit uh kind of back to basics on this week's episode, everybody. I have noticed uh so much confusion on the subject of distribution and publishing, right? So the goal of today's session is this. I'm gonna simplify the massive differences between music distributors and music publishers and then explain what rights they collect on. And I'm doing this because, and I know I've mentioned this on the podcast before, actually, but I just wanted to kind of touch on it again because it's been a while since I've talked about it, and I see so much confusion uh when people, uh music creators talk about the idea of going, who shall I publish my music through, or who should I distribute my music through? And is it the same thing? And my message to you today is this no, it is not the same thing. They are two completely and utterly separate things, right? So I'm gonna go into what they are. I'm just gonna start off with a very, very quick breakdown. So a music distributor works with recorded music. So the songs are recorded and then they're delivered to the stores, right? That's recorded music, and that's what a distributor will do. A music publisher will work on the songs. So let's say, and I know sometimes as an artist it might feel like, well, that's the same thing, and it's not. In terms of intellectual property and the way that these things are seen in the music industry, they are completely separate things. The song and the recording of the song, right? So the recording of the song, that's the master rights, the copyright, the sound recording, that is what you deliver to the stores, to the download stores, the streaming stores, the fixed digital, etc. That's where people access the recordings of those songs. But the songs themselves, that can doesn't have to, but can sit with the music publisher, right? And the idea of a music publisher is very, very different from what a distributor does. Now I know it's confusing because actually the word publish is to prepare to distribute something, right? We know that that's what that word means, right? Like, like a book, like my book or any book for that matter, right? That's what to publish means, right? So don't beat yourself up if you've got confused about this, because loads of people, thousands of people get confused by this subject every single day, somewhere, somewhere at this point right now, someone is confused about that, right? So the goal of this right now is for me to try and just give you a slight education lift on it so that you see them as two completely different things.

Where Publishing Got Its Name

SPEAKER_00 3:15

First of all, where on earth did the name publishing even come from? Well, we have to go, I'm just gonna go quickly on this, right? Just so you can see what the history is, because there is a reason why it's called publishing, even though music publishers don't actually publish music, right? So, all the way back in the 19th century, there was a bohemian village in New York City called Tinpan Alley, and these were the kind of the first people to kind of break away from doing songs of either a classical or of a religious realm, and kind of started to create songs. Now, the the way in which people would record music then was very different from now, right? They didn't have the portable technologies, commercial recording studios, anything like that. So instead, the music would be notated in sheet music and then published. And unfortunately, the name has stuck ever since. And I wish with all my heart that the name would have changed a really long time ago because, well, I wouldn't be doing this episode now if it hadn't. It does cause a lot of confusion. So the idea today is to kind of separate those two things completely out and then look at the income streams from them so that you can get a better idea as to how different they actually are.

What Music Distributors Actually Do

SPEAKER_00 4:18

Okay, so let's go into music distribution. A music distributor is a company or a service that delivers recorded music from artists and labels to digital platforms and physical retailers perhaps as well. Now, it's available for the public. That's the idea, right? The primary role is to ensure that that music reaches outlets such as streaming services and download stores, maybe physical shops as well, in the correct format with accurate metadata. In the digital era, distributors also act as a bridge between creators and platforms like Spotify, like Apple Music, Amazon, etc. They upload tracks, they manage release schedules and ensure all the information like the artist names, the credits, the artwork is all properly formatted and it helps music to appear correctly in searches and playlists and libraries. Distributors also handle royalty collection and reporting of analytics. So they gather revenue generated from streams or downloads, perhaps even sales, and then pass those earnings on to the rights holders, so the artists or the labels or both, typically taking a percentage or instead charging a fee for that service. Now, many modern distributors also provide very, very, very up-to-date analytic tools, um, allowing artists to kind of track performance across different markets and different platforms. Some distributors offer additional services such as marketing support, playlist pitching, rights management, um, maybe even collecting on neighboring rights, things like that. But their core function remains logistical rather than creative. So, unlike record labels, they usually do not own the music that they actually distribute. So, overall, a music distributor ensures that recorded music is accessible worldwide while facilitating the flow of revenue back to its creators. Okay, so you can see that everything there links to recorded music. If the music is not recorded, that can't work. Okay, now let's move over to the intangible. And by the intangible, I mean the song, right? So if a song is recorded, then it can have a life, right? It can be consumed until it's recorded, it can't. And that's the intangible, and it's really that that music publishers work with. Because of course, you could take one song and have multiple different recordings of it, but it's still that same song. Even if the performance changes, the arrangement changes, the recording changes, the era that it's in changes, it's still that same song, and that sits in music publishing. I wish music publishing was called something else, but it's not, right? So here is what music publishing actually is.

What Music Publishers Actually Do

SPEAKER_00 6:58

Music publishing sector is a part of the music industry that manages, protects, and monetizes compositions. That's the underlying songs, rather than the sound recording. So we're talking about three things: lyrics, melody, harmony. It focuses on the rights of the songwriters and the composers and ensuring that they are paid whenever their music is used commercially or in public. Now, at its core, music publishing involves copyright ownership and administration. Publishers acquire rights, or they might have the rights licensed to them by the songwriter, either partially or fully, and then the music publishers look to exploit those rights by licensing those songs for various uses. Various uses might sound vague, so let's have a look at some of the various uses. This might include live performances, film spots, television placements through sync licensing, advertisements. It also extends to physical and digital sales, but I'm going to come back to that in a few minutes. The key function of music publishers is also royalty collection. Now they track where and how a composition is used and collect income such as performance royalties and mechanical royalties and synchronisation fees. This process often involves working with collection societies or performing rights organizations to monitor public usage globally. Now that is where it gets a little bit complicated because in theory, all of the performing rights organizations and the collection societies around the world should connect with one another. And again, I wish that it really truly worked that way. And on paper it does. In practice, it doesn't. And that's why we need music publishers to help songwriters to be able to actually collect on their royalties. And they can't really do that until things like cue sheets from production companies are actually submitted properly. And PROs, in my experience and in my observations of others, will only go so far to actually chase that up. That is where music publishers come into the fray. Now, beyond administration, publishers also play a very creative role. They support songwriters through funding, collaboration opportunities, career development, often connecting them with artists, producers, media projects. So the sector of music publishing acts as both a rights manager and a creative partner for songwriters and composers, ensuring that songwriters and composers are compensated while maximizing the commercial potential and exposure of their compositions. Okay, so everything I've said there sits with that previous point, right? It sits with the songs, not with the recordings. And again, that bit in the middle gets really confusing because if you're a songwriter that is an artist, it feels like the same thing. And I want you to know that it's not. They are two completely different things.

Performance And Mechanical Royalties

SPEAKER_00 9:35

Okay, now there's different things, and by things I mean income streams that a music publisher collects on, right? There's basically four categories: one's sync, one's print, one's mechanical, and one's performance. So performance income, let's start with that, because that's the main one. Performance royalties are payments to songwriters and composers and publishers when a song is performed publicly or broadcasted. So we're talking about television, uh, radio, live concerts, streaming. We'll come back to that one in a few minutes, too. Or when music is played in public venues, as recorded music is broadcasted in things like restaurants and shops and bars and cafes and everything else. These royalties are collected and distributed by performing rights organizations which track when and where songs are used. And the songwriter and publisher typically receive their share. Now, performance royalties are separate from mechanical royalties as they relate specifically to the public performance or communication of a song when it's been reproduced or distributed. Okay, so let's take a look at mechanical royalties and understand what they are. Mechanical royalties are payments made to songwriters and music publishers when their song is reproduced and distributed, right? In physical form, largely. These are tied specifically to the underlying song, so the rather than the sound recording. This is where it gets a little bit confusing. So let me try and simplify this a little more. Traditionally, mechanical royalties came from the physical reproduction of music. So we're talking about vinyl records, cassettes, CDs, DVDs. Each time a copy was made and sold, a royalty was owed to the rights holder. Today they applied in digital formats, in downloads and also in certain types of streaming, otherwise known as fixed digital. If you're wondering why a mechanical collection is also linked to streaming, well, in order to stream something, we need to have a physical device, right? Like a phone or a laptop or a tablet. Streaming, fixed digital, can feel like it's invisible, but we can't actually access it without that physical device. And it's for that reason that it's attached to a mechanical royalty. Now, when a song is streamed on platforms like Spotify or Apple, a portion of that revenue is generated and allocated as a mechanical royalty. Now, those royalties they can be paid by record companies or by digital service providers or streaming platforms and are often collected and distributed through to music publishers or to the collection societies, although that does vary quite a lot around the world. In some regions, they are there are kind of like set statutory rates for mechanical royalties, whilst in others they are still negotiated. Mechanical royalties are distinct from performance royalties, which are generated when music is played publicly. In essence, mechanical royalties ensure that songwriters and composers are compensated whenever their music is reproduced and distributed, whether physically or in digital. Okay, so let's imagine that a songwriter has composed a song and it goes out on a CD or a DVD. And don't worry if you think that sounds ancient, because actually there are still countries in the world, especially in uh in East Asia, that still do that, right? Still sell DVDs and CDs by the bucket load. And actually, in the cry for new uh physical media in the Western world, we're starting to see an increase there, especially in vinyls. We all know, right? So actually, if a songwriter has a song that has been recorded, even if they are the artists themselves, then there is a songwriting royalty attached to the physical sale of that record. And that's where it gets a little bit confusing, I think, sometimes for some people, because it feels like, well, that's the recorded music, that goes to the record company. But yes, but if a songwriter has a song that has been recorded and reproduced mechanically, then there's a royalty attached to it. Okay, now where does streaming sit in all this?

The Streaming Revenue Split

SPEAKER_00 13:23

Now I'm very open about the economics of streaming. I've talked about it many times in the podcast, and I'm very positive, by the way, about streaming because I remember what came before streaming, the era of bit torrents and piracy, it was awful, right? So actually, when streaming came in, it kind of let's say at least acknowledged intellectual property in both the intangible, the songs, the music publishing side, and then the recorded music side, distributors, record companies. Again, separating those two things out, right? But what can be confusing sometimes is for when you hear that a music distributor collects your streaming revenue, and then you kind of go, Well, yeah, but there's a PRO that collects it as well. So what does that look like? Well, it's generally an 80-20 split. So streaming revenue, 80% of it, generally speaking, in most territories in the world, will go to the recording. So that's 80% of what comes in goes in relation to the recording of that song. The other 20% will go towards the songwriting or music publishing. Now, in the UK, for instance, that 20% is actually split in two, and half of it, so 10%, is collected by PRS, and the other half is collected by MCPS. Now, I wish that I could standardize it as simply as that for every territory in the world, but thing is, there are different nuances, right? Generally speaking, that's how it looks. That was set up that way many, many, many years ago, and it hasn't really changed since. And I don't think it will change anytime soon.

Quick Recap And Invite Questions

SPEAKER_00 14:51

Okay, so there's a little snapshot overview, right, between distribution and publishing. So when I hear people that say, Yeah, I don't know who I'm going to distribute my music through, also there's publishers over there. Maybe I should go to that publisher. Please know that they are two totally different things. Hopefully, from this moment on, you will always know the difference. Okay, any questions? Hit me up. I'm a I'm here to help, right? That's the goal of me being here to just give little education lifts every now and again, to be able to get you back on track with where you need to be so that this stuff doesn't slow you down. You can just move past it, move on, and make the music of your dreams. Okay, that's enough from me today. Have a great day. May the force be with you.