Streaming royalty

There is no single streaming royalty. One on-demand stream triggers payments on two different copyrights, and the money reaches different people by different routes.

On the recording side, the streaming service pays the party that delivered the track — a label, a distributor, or an artist releasing directly. This is the largest share of the payout and it is set by contract between the service and the rights holder, not by law. Whatever the artist receives from it depends entirely on their agreement with whoever holds the master.

On the composition side, the service owes both a mechanical royalty for the copy made and a performance royalty for the public performance. In the US the mechanical is licensed under the statutory blanket licence created by the Music Modernization Act, at rates set by the Copyright Royalty Board; the performance element is licensed from the societies. Both are ultimately split between writers and publishers.

What makes streaming income hard to reason about is that almost every major service pays from a pool rather than per play. The service sets aside an agreed share of its subscription and advertising revenue for a territory and a period, then divides it in proportion to each rights holder's share of total streams in that pool. Nothing in that arithmetic fixes a price per stream. The implied per-stream figure moves with total listening, the mix of paid and free listeners, the country a listener is in, and currency movement — which is why the same track earns a different amount every month and why quoted per-stream rates are outputs, not rates.

A user-centric alternative, in which a subscriber's fee is divided only among the artists that subscriber actually played, has been trialled and debated but is not the industry default.