How do royalties work?

Artists receive royalties in a number of ways depending upon what connection to the song they have. For instance, an artist who performs a song on a record but did not write the song, receives one type of royalty, while the writer of the song (even though she didn't perform it on the record) receives a different type of royalty.

The royalties that artist's might receive are as follows:

1. Mechanical Royalties - paid by the person/company who releases a record/download (typically a label) to the writer of the song, whether the writer performed the song or not.

2. Artist/Record Royalties - paid by the person/company who releases a record/download (typically a label) to the performer of the song, whether the the performer wrote the song or not.

3. Performance Royalties - paid to the songwriter by Performance Rights Organizations (ASCAP, BMI, or SESAC) from fees these Performance Rights Organizations collect from broadcasters such as radio and television stations for the rights to broadcast copyrighted material.

4. Synchronization Royalties - paid to the songwriter by a producer of a movie, TV show, or ad for the right to use the songwriter's music in their movie, TV show, or ad.

The amount of these royalties is determined differently depending on the type of royalty. The article "Royalty Streams" details all of the different types of royalties, and how they are calculated.