From Digital Music News:
This is a bigger and more complicated problem that we originally thought. Sure, artists have been complaining about insultingly small payouts from the likes of Spotify – that is, if they’re getting paid at all by their labels. But what about songwriters? Turns out that this is a totally different animal fraught with separate complications, headaches, and lots of middlemen. And for a publisher-signed songwriter, it looks something like this on streaming services, according to a diagram etched by Tunecore CEO Jeff Price in a recent blog post.
This describes two intertwined revenue sources on the song itself: mechanical and performance royalties. At a top level, a service like Spotify pays 10.5 percent of its gross revenue to songwriters and publishers, with exceedingly-complicated formulas determining the mix between mechanical and performance payouts. And after all is said and done, this process can take six months or longer to complete. Which not only means lots of percentage payouts to go-betweens, but also the inability to reinvest, pay down, or otherwise collect in a timely manner.
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