Digital Music Distribution is not Just About Streaming

Estimated reading time: 8 minutes

In this post, part two of my series about digital music distribution and your music, I’ll address the other platforms where your distributor will deliver your music content beyond the streaming sites — potentially driving extra income from your music. Here’s where there are some real differences between what each distributor offers.

Table of Contents:
• How will your digital music distributor monetize your music?
• Music streaming platforms
• Publishing royalties
• YouTube monetization
• Smaller payouts, but more plays
• Social media
• Premium revenue opportunities
• Playing the lottery
• Enhanced services often come at an enhanced cost
• Get your “Digital Distribution Checklist”

First, if you missed part one of this series, where I talk about the two big things that distributors want you to think are important but which actually aren’t, please read that first.

How will your digital music distributor monetize your music?

To me, one of the most important questions when deciding who to choose for digital music distribution is this: in how many ways do they monetize your music?

You already know that collecting digital music royalties is a business of fractions of pennies. So, you clearly want as many of those fractional pennies collected as possible. The more of those pennies your distributor can collect for you, the more money you will make from your music.

The fact is, not every distributor has the ability to collect royalties for you from every possible money-making channel.

Music streaming platforms

Let’s start with the basics: the streaming platforms. Every distributor delivers to all the two dozen or so major streaming platforms: Spotify, Apple Music, Amazon, Deezer, Tidal, and some larger international ones like Tencent in China and JioSaavn in India. These streaming platforms pay royalties on your sound recordings, and these royalties will, in most cases, make up the bulk of your digital music royalties.

But there is another category of royalty opportunities that can be a real difference maker for you. I call them royalty opportunities beyond the sound recording. The first big opportunity to collect royalties other than sound recordings is collecting publishing royalties.

Publishing royalties

Some distributors, including CD Baby and Tunecore, offer publishing administration services where they register your song with BMI or ASCAP and collect the mechanical royalty for the compositions on top of your sound recording royalty. It’s not a ton of money from streaming platforms, but it can add another 10 to 15 percent on top of the sound recording royalty that you get, which is something.

And there are quite a few other opportunities to collect mechanical royalties for your compositions, including radio play. Now, you don’t need your digital music distribution partner to do your publishing administration for you. You technically could do it all yourself. But that is a ton of work and there are a couple of independent publishing administration companies out there that can do this task for you.

Songtrust is one of those companies. In fact, of the big three digital distributors, Distrokid is the only one that does not offer publishing royalty collection — they refer you to Songtrust instead. However, for me when I’m trying to collect the most royalties for the least amount of effort, it’s a nice convenience when my distributor offers this.

YouTube monetization

In many cases, your distributor will deliver your songs to YouTube and register you as the owner so you collect royalties when the content your distributor has put there is played and when others use your music in their videos.

Again, you do not need your distributor to do this for you, but it sure is convenient when they can, especially if they don’t charge an extra setup charge for it. Technically, the YouTube royalty is neither on the sound recording nor on the publishing — it’s a sync license, because it synchronizes your sound with video. But since the payouts are so tiny, it’s commonly called microsync.

YouTube pays royalties when your music is in a video on a channel that monetizes, which means that when there are paid ads on a video that includes your song, a piece of those paid ad royalties will come to you as a royalty for your music being in that video.

Of course, there are also a ton of YouTube videos that don’t monetize when played because they’re not on a paid monetizing channel.

Smaller payouts — more plays

YouTube royalties are tiny. The sound recording royalty from one Spotify stream is about three-tenths of a penny — at least it is for me. The royalty from one paid YouTube view? Somewhere around five one-hundredths of a penny.

But, while YouTube pays the lowest royalty of all the DSPs, their usage is so huge and the number of plays is so massive, the total dollars can add up. If you look at the chart of royalties by percent I shared in the first post, YouTube is a solid number three in royalty collections after Spotify and Apple Music, and about triple the royalty I got from number four, Amazon.

The good news is, all three of the big digital music distributors offer this service today.

The next royalty opportunity offered by some digital music distribution companies is social media.

With the popularity of TikTok and Instagram and Facebook, you’ll want your distributor to deliver your content to those social media platforms and collect any royalties that come from it. Now, today those royalties don’t amount to much, mostly because the royalty rates and administration are still being worked out. In general, you want your music to be on these platforms because this is where a lot of music discovery takes place, even if there’s no royalty to speak of being paid at this point.

Premium revenue opportunities and digital music distribution

Now, in addition to the royalty opportunities I just mentioned for publishing, YouTube, and social media, some distributors offer what I would call premium revenue opportunities.

Synchronization, or sync licensing, is one of them. This is where the distributor has their own music library or connects you with a music library or partner where music supervisors can search for and license your music for use in a movie or in a TV show or an online game or a commercial. It’s a cool service that can generate nice revenue depending on the placement that you get.

For example, CD Baby has a robust sync program that includes many sync placements for five figures — i.e., over $10,000 per placement — and tons of smaller placements.

Playing the lottery

Besides sync, there are some distributors that promise other ways to monetize or gain visibility for your music. For example, United Masters says they have a partnership with the NBA and State Farm. It sounds good, but what does that mean for you? Quite possibly nothing, but who knows? Now, it’s probably obvious that services like sync licensing or these partnerships are a bit like a lottery ticket. They sound attractive to most artists, but in reality, a very tiny few artists will actually benefit from them.

So, while it’s good to know that the distributors you’re looking at are offering these extra opportunities, and it’s worth trying them, if you’re already inclined to use a distributor, I would not recommend changing your decision based on these lottery ticket opportunities.

Enhanced services often come at an enhanced cost

Now, here’s a really important point. The distributors won’t advertise this, but many of the enhanced services come at an extra cost that they kind of try to hide from you.

For example, Tunecore advertises it does not charge commissions on sound recording royalties, but if you opt in for its publishing administration service, it charges $75 extra per writer and a 15 percent percent commission on your publishing royalties.

Distrokid also touts that it doesn’t take a cut of your sound recording royalties, but it takes 20 percent of any YouTube royalties you earn.

And CD Baby tells you it takes a nine percent cut of your sound recording royalties, but if you sign up for the YouTube and publishing administration programs, it takes a larger cut.

Now, I’m not saying that these distributors are not entitled to get paid for the work. They absolutely do. The convenience of having your distributor collect YouTube and publishing and sync royalties on your behalf is worth paying for. But my point is, make sure that you check exactly what they charge for each of the extra services offer.

Get your “Digital Distribution Checklist”

I’ve made a list of 59 questions and options for products and services offered by the digital distributors in the market. It tells you where your content is delivered, how and how fast they pay you, how easy they are to work with, and it lists the creator tools and promo/marketing services they offer.

This is everything you want to ask a distributor in a clean, organized list. And I’ve set this up so you can easily check off which of these items are important to you. It makes finding the right distributor for your music a total no-brainer. Click here to download the PDF.

Read the series
Choosing a digital distributor for your music: Part 1
Digital music distribution: It’s not just about streaming
Digital music distribution Q&A: Pricing, payment, support, and more

Tony van Veen is the CEO of DIY Media Group, the parent company of Disc Makers and BookBaby. As a college student, he played in indie bands, created his own LPs, cassettes, and t-shirts, and sold them at shows. Today, he collects CDs, vinyl LPs, and concert t-shirts to support the artists he loves.