How Songwriters Make Money

Millions of people are out there today, chasing the dream of making it in the music industry. Many people will endlessly pursue the goal of landing song placements with the industry’s biggest artists like Taylor Swift and Drake, though many will never make it that far.
 

Of course, that does not mean you cannot make a living as an independent songwriter, all while feeling the same glory and respect from the art you create. Come dive in with us as we explore the ways in which songwriters make money. 

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Overview of the Different Types of Songwriting Royalties

Once your music is published and out there in the world, you will be able to generate several different forms of income, including upfront fees, mechanical royalties, performance royalties, sync fees, and more. 

Upfront Fees from Music Licensing

Upfront fees often come in the form of an advance, which is recoupable from future royalties. Typically, an advance will be weekly or monthly payments from the publisher to the songwriter upfront. Sometimes, the publisher will provide a songwriter with the entire sum of money in one sitting. 

The idea behind this upfront payment is that the song will recoup that money through mechanical royalties, performance royalties, sync fees, and more. However, advances are becoming less and less popular these days as competition increases.

Other times, the publisher will offer what is called a "buyout" fee. In that case, they are giving you an upfront payment for the exclusive right to represent your song. These can range from as low as $50 to hundreds of dollars.

Songwriter Mechanical Royalties

Mechanical royalties get their name from the olden days, when people had player pianos in their homes and establishments. People would purchase piano rolls with popular songs on them and the songwriter would earn a mechanical royalty each time one of those piano rolls were sold.

Nowadays, a songwriter receives a mechanical royalty whenever a legal copy of a song is made. The songwriter will receive the mechanical royalty through those who acquire the song with a mechanical license. Mechanical licenses include interactive streams, digital downloads, and ringtones. 

In the United States, mechanical licenses are issued by The Harry Fox Agency. They also collect and distribute any associated royalties. 

There are different types of mechanical royalties to look out for, each of which has its own payment percentages. These mechanical royalty types include:

• Physical mechanical royalties
• Digital download mechanical royalties
• Streaming mechanical royalties

Songwriter Performance Royalties 

Whenever a songwriter has their song performed in public, they will receive what are called performance royalties. These performances don’t have to take place in a concert venue, however. They can be through FM, AM, satellite radio, or streaming services like Spotify and Pandora.

The same thing goes for places like supermarkets, coffee shops, airplanes, and bars. Even network television generates performance royalties, which is the bread and butter of a music licensing. 

Of course, knowing each time that your song is played live as a songwriter would be nearly impossible, which is why songwriters become affiliates with Performing Rights Organizations like ASCAP or BMI. These companies collect and distribute performance royalties for songwriters.

There is not a standard rate for performance royalties, meaning the payouts will vary. For example, a terrestrial radio station is going to pay more royalties compared to your local community college radio station, as terrestrial radio stations get paid more for playing songs. Similarly, a local TV broadcast pays less than a national one. And that is amplified because payment could be based on the estimated number of viewers.

When it comes to payment percentages for radio, the percentage can vary based on where it is played. From highest to lowest, these different forms of radio include:

• Satellite Radio
• Government Radio
• Terrestrial Radio
• Independent Radio
• College Radio

Negotiations for these royalties are made by the Performing Rights Organizations.

In the live world, an artist can even generate royalties based on live performance simply by playing their own songs at a show. By submitting your setlist and a show recording to your PRO, you can earn a small amount of royalties based on the songs you’ve played. 

Sync Fees

Songwriters or owners will grant companies or individuals with sync licenses, allowing these companies or individuals to sync up their songs with visual compositions, such as movies, television shows, advertisements, or YouTube videos. Sync fees are one-time payments that give the producer or director the ability to use the song in question.

These types of fees are different compared to other income sources from songwriting, as 50% of the income will go to the artist and 50% will go to the songwriter.

The main point is that for a song to be used in a television show, movie, or commercial, it must first be licensed. As for how much that license will be worth depends entirely on the project. 

Let’s say that a studio wants to license your song for a high-budget summer blockbuster that is set to make millions of dollars. In that case, you could easily make hundreds of thousands of dollars or more.

When it comes to licensing your songs for commercials, seeing anywhere between $10,000 and $70,000 for licensing fees isn’t uncommon. For indie films or student projects, you might only get a few hundred dollars for a licensing fee, which can mean a lot if it’s a few hundred dollars that you didn’t have in your pocket the day before!

Sync licensing is a major income stream in the world of songwriting and many make a handsome living with it today. Plus, even getting one song licensed can have music supervisors coming back for more!

How Does a Songwriter Get Paid?

The way in which a songwriter gets paid differs based on the kind of royalty that they are receiving. 

For example, every time a record or track sells, the songwriters present on that record or track will receive 9.1 cents in mechanical royalty payments. Songwriters will often receive this money in the form of checks, which get sent to their mailbox.

Beyond that, there are other ways for songwriters to make money. For example, if your song appears in a television show, movie, video game, or commercial, then the record label or publisher will make a deal and give the writer a specific amount of money in licensing royalties.

Major hits from artists like Billie Eilish, Adele, or Taylor Swift, can easily bring in half a million in radio royalties every single year. Plus, when those songs are performed in concert, at sporting events, or at awards shows, those artists and songwriters will receive payment. 

A small amount of money comes from online streaming too, from platforms like Spotify, Rhapsody, and YouTube. 

It should also be noted that songwriters are paid out differently in other countries. While it is $0.091 per song reproduction here in the United States, it can be 8-10% of the value of the recording in other countries.

For example, when Foster The People’s hit “Pumped Up Kicks” came out, the album sold 671,000 copies and the song sold 3.8 million. Because Nate Foster, the band’s frontman, has sole songwriting credit, he was able to collect every penny from their mechanical royalties. The payment came out to a whopping $406,861.

Of course, in many cases, other people will also receive part of the pie. 

Who Else Gets Paid?

For starters, if there are any co-writers on the song, you will typically agree to the splits beforehand  and split the royalties accordingly. 

For example, the royalty rate for a song on streaming platforms is typically $0.005 per stream, which is far less than a cent. Let’s say that song has more than a quarter-million streams on Spotify and generates $1,200 in royalties. If you have three writers on the song with even splits, you will receive $400 in payments. 

If you have a publisher and get one of your songs synced in a commercial or television show on behalf of the publisher landing that deal, they will also take some of the sync royalties for the administrative legwork. The beauty of working with a publisher is that they can provide you access to large writing sessions or writing briefs for commercials and movies. They can also provide writers with advances so that they can live and write comfortably. 

That administrative legwork typically includes collecting sync royalties, distributing payment, and trying to get you the best percentages. 

Plus, not all publishers will be able to collect both foreign and domestic royalties, which can be essential depending on where your music ends up. You might need to get an admin deal where a secondary publisher can help collect and distribute payments in foreign territories. In this case, they will likely take a 10% cut of the pie as royalties come in. 

How Much Do Songwriters Make?

There is no single answer to this question. While Glassdoor says songwriters make $65,000 on average annually, there are so many factors to consider that it would be impossible to create an average.

Yes, quantifying a number like this might be possible if the songwriter has a gig with a company writing jingles or gets syncs pretty often, but the number can change drastically from month to month and year to year.

To make the most from your writing in the mid-tier of songwriters, it is important that you focus on more than streaming royalties, as it is pretty much impossible to make anywhere near $65,000 per year purely on streaming unless you are in the upper echelon (top 1%) of songwriters. 

That said, there are many outliers and ways in which songwriters can make tons of money with a single song. A songwriter with a single hit song can bring in anywhere from $10,000 to $50,0000 with a single performance, according to Pierre Bradshaw, who has worked at Universal Music/MCA for six years.

Some of the highest paid songwriters of today are those who have been writing hits for many years, including Jimmy Buffet, Jay-Z, Sean Combs, Paul McCartney, Bono, and Andrew Lloyd Webber, all of whom have become millionaires based on their songwriting alone.  

Alternate Ways Songwriters Can Get Paid

 Of course, there are other ways you can get paid as a songwriter. It just depends on how important it is for you to maintain ownership, and how important it is for you to haver your name out there.

Ghostwriting

While it might seem strange to want to write songs for other artists and give up any potential credit you might get for the work, there are plenty of songwriters out there that become ghostwriters. In many ways, ghostwriting can be extremely satisfying and rewarding, and be a great way to earn a living, especially if you have the right contacts.

Plus, ghostwriting is extremely flexible as long as you have an Internet connection and a laptop. 

While your name might not appear in the liner notes of the song or album, people in the industry will get to know your name, and your reputation can grow. By supplying your ghostwriting clients with excellent work, you can build your client base.

Because a ghostwriter does not get paid on the backend with any royalties, they are almost always paid upfront for any lyrical contributions they make. A ghostwriter at a big label could easily make anywhere from $10,000 to $20,000 upfront. Some extremely popular songwriters can even make up to $50,000 per song, or even per verse. 

Song Buyout

You can also choose to sell your songs to other artists or labels outright. In a song buyout, one party will purchase a song from another party with the agreement that they do not have to pay any further royalties or pay for further licensing to use the music. Buyout music is often referred to as copyright-free music or royalty-free music. 

You might even choose to sell your song to a publishing company or a music library. 

There are pros and cons to this option of course. If your song gets used in a big advertisement or movie or hits it big on the radio, you won’t make any more than what was initially agreed upon. However, this can be an excellent option for those who are just getting their feet wet and want to make some money writing songs without having to feel concerned with what they may or may not make if the song gets picked up by a publishing company or sync company. 

Additional Songwriter Concerns 

 Of course, making money as a songwriter isn't just about the money! There's a lot more that goes into our music, and we tend to feel an emotional connection to what we do. That's why we need to think about some additional concerns.

Moral Rights

Moral rights is a very important concept here in the United States. While there is a general definition for moral rights, it doesn’t necessarily apply to musicians and songwriters. 

In the case of musicians and songwriters, there are two main benefits to moral rights:

• Moral rights give composers or artists the right to always have attribution for their work or distance themselves from their work if they choose to do so.
• Moral rights also grant composers and artists to object to using their music for something that they feel is offensive.

Because artists and composers often do not get the credit that they deserve for their creativity and time, the first benefit can be very helpful in building a career.

On the other hand, the second benefit is helpful, as it allows composers, artists, and musicians to object to having their work used somewhere if they believe that it is offensive. For example, an artist can object to having their music use in a political campaign or in visual media that they don’t align with.

Copyright Ownership

In general, the person that wrote or recorded the original version of the song owns the copyright for the song’s recording. This means that if you were the only person involved in writing the song and recording it, then you own the entire copyright. 

This tends to get more complex when two or more contributors come into the mix. Often, those people will become co-owners of the copyright, sharing control over how the song is used.

Copyright law is extremely dense and would be difficult to attack in a single paragraph, but it is a major concern you must have as a songwriter who owns the copyright, as copyright provides a fair portion of power as to how far you can take your song. 

Final Thoughts on Making Money as a Songwriter

Making money as a songwriter isn’t something that happens overnight. It takes many years practice, writing, demoing, and networking. Because of this, many starry-eyed songwriters simply aren’t cut out for it. 

It all starts with you getting a catalog of songs together to showcase your skills and registering your songs with performing rights organizations so that they are able to collect royalties on your behalf.

Stay on the grind, learn as much as you can about the music industry, and make sure that you’re making the biggest impact with your music’s reach. In doing so, you will find a way that works for you to make money as a songwriter.