How Streaming Royalties Actually Work for Songwriters

Most songwriters think their distributor handles all their streaming royalties. Upload to DistroKid, TuneCore, or CD Baby, and every dollar your song earns flows back to you. That's only partially true, and the gap between what you think you're collecting and what you're actually owed can be significant.

The royalty your distributor pays

When someone streams your song on Spotify, your distributor collects a master use royalty. This is payment for the use of your specific recording (the master). Your distributor passes that money to you, minus their fee.

This is the number you see in your DistroKid or TuneCore dashboard. It's real money, and for many independent artists it's their primary income. But it's only one piece of the puzzle.

The royalties your distributor doesn't pay

Every time your song is streamed, it generates multiple royalty types simultaneously. Your distributor only handles one of them. Here are the others.

Mechanical royalties. When Spotify streams your song, they owe a mechanical royalty to the songwriter (not the recording artist, the songwriter). In the US, the Mechanical Licensing Collective (The MLC) collects these. If you wrote or co-wrote the song, you need to register with The MLC to collect mechanical royalties from streaming. This is separate from your PRO and separate from your distributor.

Performance royalties. Streaming platforms also pay performance royalties for the composition. Your PRO (ASCAP, BMI, or SESAC) collects these. When Spotify plays your song, a portion of their licensing fees goes to your PRO, which then pays you based on your registered ownership percentage.

Neighboring rights royalties. When your recording is played on non-interactive platforms (like radio in many countries, or Pandora's non-interactive stations), it generates neighboring rights royalties. In the US, SoundExchange collects these for the sound recording side. If you're both the performer and the songwriter, you need to register with SoundExchange separately.

Why this matters for split sheets

Here's where split sheets connect to all of this. When you register your song with your PRO to collect performance royalties, you need to enter the ownership splits for every co-writer. If you get the splits wrong, your royalties get miscalculated or disputed.

When you register with The MLC for mechanical royalties, same thing. You need to declare your ownership share, and it needs to match what your co-writers are declaring on their end.

A split sheet is the single source of truth that makes all of these registrations consistent. Without one, you're guessing at percentages and hoping your co-writers entered the same numbers you did.

The money you're probably missing

If you're an independent songwriter who only has a distributor set up, here's what you're likely not collecting:

Performance royalties from streaming (your PRO collects these). Mechanical royalties from streaming (The MLC collects these). Neighboring rights royalties (SoundExchange collects these). Sync licensing fees if your song gets placed in a TV show, film, or ad (this requires either a publisher or self-administration).

For a song that gets decent streaming numbers, the performance and mechanical royalties combined can equal or exceed what your distributor pays you. That's a lot of money to leave on the table.

How to collect everything

The setup takes a few hours but only needs to be done once. After that, each new song release just requires registering it with each organization.

Step 1: Join a PRO (ASCAP or BMI) and register as both a writer and a publisher. This captures your performance royalties.

Step 2: Register with The MLC (themlc.com). This captures your mechanical royalties from streaming in the US.

Step 3: Register with SoundExchange. This captures neighboring rights royalties when your recordings are played on non-interactive platforms.

Step 4: Keep using your distributor for master recording royalties. That part doesn't change.

Step 5: For every song, create a split sheet before you register anywhere. Use the same ownership percentages across all platforms to avoid conflicts.

The split sheet ties it all together

Every one of these organizations asks you the same basic questions: who wrote the song, what percentage do they own, what's their IPI number, and who publishes their share? A split sheet answers all of these questions in one document.

Fill it out once, right after the writing session, and you have everything you need to register correctly across every royalty collection point. No guessing, no conflicting numbers, no money left uncollected.