Disclaimer: this article isn’t intended to invade Grace’s privacy regarding her income, but merely to explore industry standards regarding how money is earned by recording artists who compose their own material, how revenues are shared with the record label they are signed under, and how much ownership they have when co-writers are listed on a song.
Many of us have often wondered how a recording artist makes money, especially in this ever changing music industry. Here follows a breakdown of a singer/songwriter’s revenue streams.
Owning the Masters to songs: A recording artist, like Grace, doesn’t own the master recording to published songs. In Grace’s case, Syco/Sony/Columbia owns the master recordings to her songs. That’s their role as music publishers. It’s the same arrangement that exists with authors of books. The publisher owns the book, but pays royalties to the author for books sold, and may provide an advance on such royalties in anticipation of sales. In the music industry, however, providing artists and writers with advances is not a standard practice.
Mechanical Royalties: These Royalties are the ones paid out to songwriters for their compositions when they are “sold”. “Sold” is stated here in quotations, because in this day and age most revenues are generated by streams and units sold are based on an algorithm that determines how many streams of a song have to occur before the collection of streams is considered as a sold unit. Let’s start simply. For every song “physically” sold, whether that’s on a CD, or a digital download (i.e. iTunes), a measly $0.091US is afforded to the artist. Yep, less than a dime per song sold. In other words if Grace sold 1 million copies of a song, she would receive $91,000.00 US. If Grace’s album has 12 tracks (such as “Just The Beginning”) and the album sold 1 million copies she would receive $1,009,200.00 US. 10 digital singles sold (per song) are considered the equivalent of 1 sold album unit. Here’s where it gets really complicated… Streaming. Actually, it’s so convoluted, it is getting its own category…
Streaming Royalties: The calculation of these royalties are constantly in flux and may vary by artist depending upon their sales history and each individual streaming service. Spotify claims that for each song streamed the song holder (the record label unless the artist is truly independently distributed) will receive between $0.006 to $0.0084. That revenue is then distributed, at the label’s discretion, or according to the artists’ and songwriters’ individual contracts, to the producers, songwriters and performers. In order to determine an artist’s album sales in the streaming age 1,500 streams of a song on an album have to occur before the streaming album is considered to have sold 1 unit.
Performance Royalties: These royalties are paid out when a songwriter’s works are played in a public setting such as radio, television, malls, bars, sports venues, etc. This monumental task of calculating these revenues are accomplished via non-profit Performance Rights Organizations such as ASCAP, BMI or SESAC. Artists such as Imagine Dragons make A LOT of money from performance royalties.
Synchronization Royalties: These are royalties that are paid to a songwriter for the use of their songs in television programs, movies, commercials, film/television trailers, etc. Unlike general royalties, “Syncs” do follow an advance payment principle. The amount of money paid out varies wildly and has to be negotiated before the song is used. The typical advance for a song played in a television program is between $1,000 and $25,000, while a commercial (which is often played far more frequently and can reach a much broader audience), can receive between $50,000 and $300,000. Typically, the record label has control over “Syncs”, meaning who/what gets to use them and for how much money.
Sharing Songwriting Credit: Not all songs are co-written equally and as such a good entertainment lawyer (a talent agency such as WME) should nail down, in writing, what percentage of a song was written by whom to firmly establish how much of the revenue stream from a song will be appropriately given to the contributors to a song. These negotiations are done on a song-by-song basis, unless the artist has a “boilerplate” stance on the issue before entering into a collaboration with a co-writer(s).
The crux of all of the above is that a fortune is not to be made from royalties at the artist/songwriter level, unless one is a mega-star like Drake, Post Malone, Taylor Swift, Ed Sheeran, Shawn Mendes or Ariana Grande. For the vast majority of artists (if they are also the writers of their own material, like Grace), their revenue comes from charging for live performances (concerts), though in this day and age the record labels have insinuated themselves into that revenue stream as well. The only way to be truly successful in the recording industry is by selling in great volume.
Grace is more likely to cement her financial security through her career as an actress where the tables are turned and she will actually receive the majority (literally just over 50%) of that revenue stream rather than less than 10% as is the case in the music industry.