Does Radio Pay Royalties?

The split that confuses everyone: song vs. recording

Every track has two separate copyrights, and they get paid differently:

• The composition, the underlying song: the melody, chords and lyrics. Owned by the songwriters and their publishers.
• The sound recording (the master), the specific recorded performance you actually hear. Usually owned by the label, or by the artist for an indie release.

US radio law treats these two copyrights very differently, and that single fact explains why one spin can pay one set of people on AM/FM and a broader set on digital.

Terrestrial AM/FM: pays the songwriter, not the artist

When your song airs on a regular AM/FM station, a performance royalty is owed on the composition only. It is collected by the performing rights organizations, the PROs: ASCAP, BMI, SESAC and GMR, and paid to the songwriters and publishers.

The recording earns nothing. The US has no terrestrial performance right for the sound recording, so featured artists and labels collect zero from ordinary AM/FM airplay. This is unusual internationally, and it is why a performing artist who did not write the song can hear themselves on the radio all day and never see a terrestrial royalty.

Digital and satellite radio: SoundExchange pays the artist too

Non-interactive digital and satellite services, SiriusXM, Pandora in radio mode, and internet webcasters, are different. They owe a performance royalty on the sound recording, collected and paid out by SoundExchange. SoundExchange splits that royalty by a fixed statutory formula:

• 50% to the master owner (the label, or the artist on a self-released master).
• 45% to the featured artist.
• 5% to a fund for the non-featured musicians and vocalists who played on the track.

On top of that, those same digital and satellite services also pay the composition royalty through the PROs. So the same spin on Pandora radio can pay the songwriter (via the PRO) and the artist and label (via SoundExchange) at once.

What about on-demand streaming?

Picking the exact track yourself, full on-demand streaming, is licensed differently again. Those interactive plays pay through direct service deals and mechanical royalties rather than through SoundExchange. The dividing line is interactive (on-demand) versus non-interactive (radio-style): SoundExchange covers the radio-style, non-interactive side. So Pandora's radio mode routes through SoundExchange, while a track you deliberately queue up on a full streaming service does not.

How to make sure you actually collect

None of this money is automatic. It only reaches you if you are registered on both sides, and a lot of independent royalties simply go uncollected because artists skip these steps:

• For the composition, affiliate with one PRO (ASCAP, BMI, SESAC or GMR) as a writer. If you self-publish, register as a publisher too, then register every song you release.
• For the recording, register with SoundExchange as the featured artist, and also as the rights owner if you own your masters, so you collect both the 45% and the 50%.
• Keep your metadata clean. Accurate ISRC codes, writer and publisher splits, and contributor credits are how the collecting bodies match a play to the right people. Sloppy metadata is a common reason money never finds its owner.

The bottom line

Does radio pay royalties? Yes, but read the fine print. Terrestrial AM/FM pays only the songwriter and publisher. Digital and satellite radio additionally pay the artist and label through SoundExchange on a 50/45/5 split. Register with a PRO and with SoundExchange, keep your metadata tidy, and you collect everything a spin is worth. Next, here is how to get your music on the radio in the first place, and the line between legitimate promotion and payola.

This page is general information, not legal or financial advice. Royalty rules change, for your specific situation consult a qualified entertainment attorney or your PRO and SoundExchange directly.