Table of Contents
How the music business works
The music business pays artists from two copyrights and a handful of side streams. Every song has a composition (the words and melody), which earns for the songwriter and publisher, and a master recording, which earns for whoever owns the recording, often a label. On top of those come touring, merchandise, endorsements and sync licensing, the money from placing a song in film, TV or ads.
How much of that reaches the artist comes down to four things, and this page takes them in order:
- The deal you sign. A record deal, a 360 deal or a distribution deal decides who owns the masters and who shares in what.
- The royalties you register for. Mechanical, performance and digital-radio money sits unclaimed until someone registers the song.
- The rights you clear. Samples, interpolations and beat leases can hold up a release or eat its income.
- The people you hire. A lawyer, a publicist, a manager, each at the right stage and not before.
The Grammys and the other institutions decide who gets remembered. This page is about who gets paid.
The three contracts every artist should know
Record deal. A label pays for recording and releases, and in return owns or licenses the masters and keeps most of the revenue until it has recouped what it spent. The artist gets a royalty share.
360 deal. A record deal plus a share of the artist’s other income: streaming, touring, merchandise, endorsements and sometimes songwriting. In exchange, the label funds marketing, promotion and tour support, per the Songtrust glossary. The model appeared in the early 2000s, as recorded-music revenue fell and labels went after money artists had mostly kept.
Robbie Williams’ 2002 deal with EMI and Madonna’s 2007 deal with Live Nation are the usual early examples, and Live Nation’s 2008 deal with Jay-Z was reported at an estimated $150 million over ten years, a figure the companies never confirmed.
Whether a 360 deal is good depends on three terms: the percentage the label takes of each stream, whether that percentage is calculated on gross or net, and whether income from one stream can pay back money advanced on another. That last one is cross-collateralization. A lawyer-written guide republished by Hypebot calls resisting it “a hard sell”. Published guides quote wildly different percentages for touring and merch, so ask for the number in writing, and ask what it is a percentage of.
Distribution or label-services deal. The smallest commitment. A distributor delivers your finished music to streaming services and collects the money. You own the masters and pay either a flat fee or a commission.
Think of it as a dial. At one end you keep everything and fund everything yourself. At the other, you hand over rights for money, staff and reach. Most disasters happen when an artist signs at the wrong point on the dial for their stage.
How artists get paid: royalties, splits, and recoupment
Almost every royalty below belongs to one of the two copyrights, the composition or the master, and the two pay through different channels.
Mechanical royalties
Mechanical royalties are owed to the songwriter and publisher when a composition is reproduced: pressed on vinyl, sold as a download, or streamed on demand. For physical copies and permanent downloads, the U.S. rate is set by the Copyright Royalty Board and adjusted for inflation. For 2026, Hypebot reports it is 13.1 cents per work (up from 12.7 cents in 2025), or 2.52 cents per minute for songs over five minutes, whichever is larger. That is a per-copy figure, not a streaming one.
Streaming mechanicals run through a separate formula and a separate body. Under the Music Modernization Act, the Copyright Office designated The Mechanical Licensing Collective (MLC) to administer a blanket license for digital services, and songwriters needed to register with it from January 1, 2021. The MLC collects from streaming and download services and pays members monthly. Joining is free. If you wrote the song and nobody has registered it for you, that is your first task.
Performance royalties
Performance royalties are owed when a composition is played publicly: radio, TV, venues, and streams. In the U.S. they are collected for songwriters and publishers by performance rights organizations such as ASCAP and BMI.
There is a second, separate performance right for the master recording on digital radio. SoundExchange is the organization the U.S. government designated to administer the Section 114 license, collecting from services such as Pandora, SiriusXM and iHeartRadio. Per its published guidance, the statutory split sends 45 percent to the featured artist, 50 percent to the rights owner and 5 percent to a fund for non-featured performers. Note what is not here: on-demand Spotify plays are not SoundExchange money.
Streaming royalties
Here is the number everyone asks for, and the honest answer is that no fixed one exists. Spotify states plainly that no service pays a fixed amount per stream. Each month, in each country, your rights holder’s share of total streams is applied to that market’s royalty pool. A per-stream figure only appears afterward, as payouts divided by plays. Spotify also pays rights holders, not artists directly, so a label or distributor then pays you under your contract.
The scale is real. Spotify says it paid more than $11 billion to the music industry in 2025, with roughly half of those royalties generated by independent artists and labels. Those figures are what rights holders were paid, not what artists took home. Per-1,000-streams figures you see online are third-party estimates. Your distributor’s dashboard shows your real number.
Split sheets
A split sheet is a signed document, written the day a song is made, stating who owns what percentage of the composition (and, separately, the master). It costs nothing and prevents the most common fight in music. Collaborators leave the studio friends; royalty statements arrive two years later. A producer‘s points, a featured rapper’s verse and a co-writer’s hook all belong on the sheet. DistroKid and TuneCore both let you split revenue with collaborators at the distribution level, but that does not replace a written agreement about ownership.
Recoupment
Recoupment is the label’s repayment mechanism. When a label advances money for recording, videos, marketing or tour support, those costs are charged against your royalty share. You receive royalty checks only after your share has paid the balance back. In a plain record deal that means you can sell a lot and still owe. In a 360 deal the sharper question is whether touring or merch money gets pulled into that pool. Guides such as Promise Legal’s red flags list point to negotiating limits on cross-collateralization and the length of the label’s participation. Read those clauses first.
Rights and clearance (the stuff that holds up a release)
Master versus publishing. The master is the recording. Publishing is the composition. A beat leased from a producer might include the instrumental recording but leave composition credit and ownership to be negotiated. Know which rights you are buying or granting before you release anything.
Sample clearance. Sampling a record means using someone’s master and, usually, their composition, so a legit use normally needs two clearances: one from the recording’s owner and one from the publisher. The most cited sampling ruling is the Sixth Circuit’s 2005 decision in Bridgeport Music v. Dimension Films, which held that sampling a sound recording, however small, is infringement. The court’s shorthand was “get a license or do not sample.” Courts outside that circuit have not uniformly followed it, so the rule is not nationwide, but no label’s legal department will bet on that. I treat any uncleared sample as a delayed invoice.
Interpolations. Re-playing or re-singing a melody instead of lifting the recording avoids the master clearance but not the publishing one. You still owe the composition’s owners, which is why an interpolation can carry a publisher’s credit and share even though no original audio appears.
Independent distribution: what the platforms actually do
A distributor is a delivery pipe. It puts your masters on Spotify, Apple Music and the rest, collects the money and passes it on. It does not market you, and it does not own anything. Pricing changes often, so confirm current numbers on each company’s site before you pay.
- DistroKid. Annual subscription, unlimited uploads. Per RouteNote’s 2026 breakdown, the Musician plan is $24.99 per year in the U.S., with higher tiers adding custom release dates and multi-artist management. DistroKid says it passes on 100 percent of what stores allocate to the artist, minus banking fees and applicable taxes, with a 20 percent cut on one add-on, its Social Media Pack. It suits frequent releasers.
- TuneCore. Per its pricing page, plans start at $24.99 per year (Rising Artist), with higher tiers at $44.99 and $54.99, plus pay-per-release options. It lists a 20 percent fee on earnings from TikTok, Facebook, Instagram and YouTube. It suits artists who want tiered support and an advance option on its top plan.
- UnitedMasters. Offers free and paid tiers with different commission terms; check its own site for current terms. It suits artists who would rather pay in commission than up front.
- CD Baby. An older distributor that charges per release and takes a commission. Compare its per-release cost and commission with a flat-fee plan at your release volume.
- Amuse and others. Several smaller distributors compete on free tiers and label-style extras. Their terms change often enough that they aren’t summarized here. Compare terms yourself.
If your concern is the money, read the fee lines, not the headline price. Add-ons, social-platform cuts and what happens to your releases if you stop paying all change the real cost.
Who to hire (and when)
A&R. The label’s talent scout and, once you sign, your main contact for the creative side: song choices, producers, release plans. You do not hire A&R. You get in front of them, and the best way is a record and numbers that speak for you.
A music lawyer. Hire before you sign anything with a percentage in it: record deals, 360 deals, publishing, management agreements. Lawyers read definitions of “net,” “recoupable” and “term” that you will not catch on the first read. Paying for a review costs far less than living inside a bad contract.
A publicist. Hire when you have something to announce: a project with a date, a video, a tour. A publicist pitches press and playlist editors on a story. Without a release that deserves attention, there is nothing to pitch.
A playlist plugger. Hire for a specific release, once your distribution and metadata are clean. A plugger pitches your track to independent playlist curators and radio. Be skeptical of anyone promising a stream count; no honest vendor can.
A manager. A manager becomes useful when there are enough offers that you cannot answer them yourself. Before that, the work is your own.
FAQ
Is a 360 deal good or bad?
It depends on the terms, not the label. A 360 deal can be worth it if the label’s money and staff are real and its share of touring and merch is capped, calculated on net, and kept out of recoupment. It is bad when percentages are taken on gross, income from one stream pays back advances for another, and the term outlasts the label’s effort.
How do artists make money today?
From several places at once: streaming income from recordings, mechanical and performance royalties on the songwriting side, digital radio money through SoundExchange, touring, merchandise, and sync licensing. Which stream pays most depends on the artist. Register with the MLC, with a performance rights organization, and with SoundExchange so none of it sits unclaimed.
Do I need a label to release music?
No. A distributor like DistroKid or TuneCore will put your music on every major service for a flat annual fee, and you keep your masters. A label adds money, staff and relationships, and takes ownership or revenue share in return. The question is whether what it adds is worth what it takes.
What is recoupment?
Recoupment is a label recovering its spending on you, such as recording, videos and marketing, out of your royalty share before you are paid. Until that balance is zero, you receive nothing. The contract defines which costs are recoupable and which income repays them, so read those clauses closely.
This is education, not legal advice. Have a music lawyer read anything before you sign it.
— Davood Tavakoli, Cyphlore