Common Mistakes Artists Make with Their Royalties and How to Avoid Them

 

Artists often pour their heart and soul into creating music, but managing the financial side of their work, particularly royalties, can be a challenge. Royalties are crucial for artists to earn money from their creations, whether from streaming services, radio play, live performances, or sales. Many artists fail to maximize their earnings due to common mistakes in handling their royalties. These missteps can lead to reduced income, unnecessary legal complications, or even loss of ownership over their work.

Understanding how royalties work and avoiding pitfalls is essential for artists who want to safeguard their financial interests. Whether it's misunderstanding the terms of royalty contracts or neglecting to register with the right collection agencies, these mistakes can have long-lasting consequences. By taking proactive steps, artists can ensure that they receive the money they are entitled to and avoid costly errors.

1. Failing to Register with Royalty Collection Agencies

One of the most significant mistakes artists make is not registering with royalty collection agencies such as ASCAP (American Society of Composers, Authors, and Publishers), BMI (Broadcast Music Inc.), or PRS (Performing Right Society) in the UK. These organizations track when and where an artist's music is played and ensure they get paid.

• If artists fail to register with these agencies, they miss out on performance royalties generated from public plays on radio, TV, live venues, and more.
• Additionally, international plays can be challenging to track without proper registration. By registering with a collection agency that has international partnerships, an artist can ensure they’re collecting royalties worldwide.

Artists need to research which organizations best suit their music distribution needs based on where they expect their music to be played. For example, ASCAP and BMI cover the U.S., while PRS covers the UK and many other regions. Ensuring global coverage is key for maximizing income.

2. Not Understanding Contract Terms

Many artists rush into signing contracts without fully understanding what they're agreeing to, especially when it comes to royalty splits. Record deals often include detailed terms on how royalties will be divided between the artist and other parties such as producers or labels.

• Some contracts may offer unfavorable royalty rates for the artist while giving higher percentages to producers or the label.
• In some cases, an artist might inadvertently sign away ownership of their masters or publishing rights in exchange for upfront cash advances.

Artists should always seek legal advice before signing any contracts related to royalties. A lawyer specializing in entertainment law can help clarify any confusing terms and ensure that artists aren't giving away more than necessary.

3. Neglecting Digital Royalties

The explosion of digital streaming platforms like Spotify and Apple Music has introduced new royalty streams for artists. Yet many musicians are unaware of how digital royalties work or fail to properly collect them. Digital Service Providers (DSPs) pay both recording royalties (for master owners) and performance royalties (for songwriters).

Artists who are both performers and songwriters need to ensure they’re collecting all applicable revenue streams:

• Recording Royalties: Paid directly by DSPs like Spotify to master owners (often a record label).
• Performance Royalties: Collected by PROs (Performance Rights Organizations) on behalf of songwriters when tracks are streamed.
• Mechanical Royalties: Paid by streaming platforms for song reproductions and collected by mechanical licensing agencies such as The Mechanical Licensing Collective (themlc.com).

If an artist self-releases their music through platforms like DistroKid or TuneCore, they must ensure all rights are properly registered with relevant organizations so that no revenue is missed.

4. Overlooking Sync Licensing Opportunities

Sync licensing refers to the use of an artist’s music in films, TV shows, commercials, video games, and other visual media. It’s a lucrative source of income that many musicians ignore because they assume it's hard to break into, or they simply don’t know how it works.

The truth is sync opportunities are more accessible than ever due to platforms that connect independent artists with brands looking for music. Sync licenses typically offer two types of payments:

• A one-time fee paid upfront when a song is licensed for use in media.
• Additionally, every time the media featuring the song airs publicly (on television or streaming services), performance royalties are generated.

Artists should actively pitch their songs for sync licensing opportunities through specialized agencies or even direct outreach to content creators looking for new music. Missing out on sync licensing could mean losing thousands of dollars in potential revenue over time.

5. Not Keeping Accurate Records

A final critical mistake is failing to keep accurate records of royalty payments received and those still owed. Many artists rely solely on collection agencies or DSPs' statements without cross-referencing them against actual plays or usage data.

• This lack of oversight can lead to unpaid or delayed royalties slipping through the cracks.
• An effective way for artists to manage this is by using royalty-tracking software such as Songtrust (songtrust.com) which helps track all income streams in one place.

Maintaining detailed records allows artists to spot discrepancies early on and take action if payments seem inaccurate. This step is especially important if multiple parties are involved in earning royalties from the same work, such as co-writers or producers. Mishandling royalty payments is a common issue that could severely impact an artist's income over time. From failing to register with collection agencies to overlooking digital revenue streams and sync licensing opportunities, there are many ways artists can miss out on money they're rightfully owed.