How Music Publishing, Copyright and Royalties Actually Pay Artists

When a song plays on a streaming service, two different copyrights are activated at once: the musical composition (the melody and lyrics, owned by songwriters and publishers) and the sound recording (the specific recorded performance, usually owned by the artist or a record label). U.S. law treats these as separate assets, and each generates its own royalty streams through different collecting organizations.

The publishing side: who collects what

On the composition side, two main royalty types exist. Performance royalties are generated whenever a song is played publicly — on radio, television, in venues or on streaming platforms — and are collected in the U.S. by performing rights organizations (PROs) such as ASCAP and BMI. According to BMI, performance income is split on a 200% basis: 100% to the songwriter and 100% to the publisher, producing an effective 50/50 division between the two parties, according to music-business publication Ari's Take, which reviewed BMI's royalty structure.

Independent songwriters who have not signed with a publisher can register a 'vanity' publishing entity or simply claim both shares themselves, Ari's Take reported. BMI retains roughly 12% of collected royalties for operating costs before distributing the remainder to members, the same source said.

Mechanical royalties are the second publishing revenue stream. They are owed whenever a composition is reproduced — historically on physical records, now overwhelmingly through streams and downloads. In the United States, the 2018 Music Modernization Act (MMA) created a blanket licensing system for digital mechanical royalties and established the Mechanical Licensing Collective (MLC), the nonprofit the U.S. Copyright Office designated to collect and distribute these payments, according to the Copyright Office. Songwriters and publishers have had to register directly with the MLC since January 1, 2021, to receive their share, the Office said.

Rates are reset periodically by federal regulators

In the U.S., statutory mechanical rates are not negotiated freely; they are set by the Copyright Royalty Board (CRB), a panel of judges, under a multi-year process known as Phonorecords IV, covering 2023 through 2027. For 2026, the CRB set the mechanical rate for physical copies and permanent downloads at 13.1 cents per song (2.52 cents per minute for tracks over five minutes), up from 12.7 cents in 2025, industry outlet RAIN News reported, citing the CRB decision. That rate structure replaced a 9.1-cent rate that had been frozen for roughly fifteen years, according to music-industry analysis site Music Tech Policy, which also tracked the CRB's Phonorecords IV rate schedule.

The recording side: SoundExchange and the 45/50/5 split

The sound recording copyright generates its own royalty, separate from publishing, whenever a recording is played on non-interactive digital services such as satellite radio or internet/webcasting platforms (traditional AM/FM terrestrial radio in the U.S. pays no sound-recording performance royalty at all, according to SoundExchange's FAQ). This statutory royalty is collected by SoundExchange, a nonprofit that was spun off from the Recording Industry Association of America (RIAA) and became independent in 2003, according to Wikipedia's entry on SoundExchange.

The distribution formula for these statutory royalties is written directly into federal law. Under 17 U.S.C. § 114(g)(2), as reproduced by legal reference site BitLaw, receipts are split as follows: 50% to the copyright owner of the sound recording (typically the label), 45% paid directly to the featured recording artist, and the remaining 5% split evenly — 2.5% each — into escrow funds for non-featured musicians (via the American Federation of Musicians) and non-featured vocalists (via the American Federation of Television and Radio Artists, AFTRA).

Two copyrights, two income streams — compared

Streaming mechanical royalties follow a separate, revenue-based formula rather than a flat per-copy rate, and that portion of the Phonorecords IV schedule has been described by Music Tech Policy as frozen for the full 2023–2027 period and declining in practice, a trend the outlet attributes to how major streaming services structure bundled subscriptions.

Why this matters for artists

Because publishing and recording royalties are tracked by different organizations, an artist who also writes their own songs may need to register separately with a PRO (for performance royalties), the MLC (for mechanical royalties) and SoundExchange (for digital sound-recording royalties) to collect every stream they are owed. Missing a registration does not forfeit the right to the money, but it can delay or complicate payment, since each collecting body pays out only to registered rights holders it can identify.