Why United States Music Creators Earn Fewer Royalty Streams

Why United States Music Creators Earn Fewer Royalty Streams



In the vast and diverse world of international music, America is, without a doubt, one of the biggest leaders in everything from creativity to influence. America has always had the reputation of breaking the sound barrier. Whether it be jazz and blues to pop and hip-hop, the songs that have come out of here have always defined how other countries entered into the talkies themselves. However, despite the fact that America has come out on top or has been the first to be influential, there are still certain American music makers who have far fewer royalty revenues or streams than those in other places, and because of that, there has to be a reason behind this as well as potential consequences.

1. The Complex World of Royalties

In order to understand the reasons behind the fewer royalty streams for US music creators, it is important to have a strong grasp on what royalties are in the first place. Royalties are the income that music creators make in the music industry, it’s their main source of money. Royalties can come from a lot of places in the music industry, US music creators could earn this money through services like streaming, through radio airplay, at live concerts and through licensing agreements among many others.

2. The Dominance of Streaming Platforms

A core reason why the amounts paid out in royalties differ in every platform can be found in the dominance of streaming. The rise in streaming has completely redefined the way in which we consume music, permitting artists to connect with global audience while completely transforming access to music. However, such a shift has come at an expense, growing music streaming has also resulted in what is an infinitely more complicated process to actually distribute the royalties. For instance, in the United States streaming services are in fact controlled in a way that is almost basic, they all operate under what is known as statutory licensing. Statutory licensing means that everyone’s rates are pre-defined, if you are a streaming service in the USA be it Spotify, Apple Music, Tradiio or something else you pay the royalties in specific rates to artists. The authority governing the statutory licensing rates is known as the Digital Millennium Copyright Act (DMCA) which defines the specific rates that one must pay for a stream. This often results to lower payouts for artists.

3. Disparities in Copyright Laws

A further US-specific feature of royalty streams for music creators is the structure of copyright laws. Unlike certain other countries where there are comprehensive systems of collective licensing in place, the US relies heavily on individual licensing agreements negotiated between rights holders of various stripes and other entities. This decentralised approach can make for inefficiencies and disparities in royalty distribution, especially for independent artists and songwriters who may not have the resources or backbone to negotiate the best deals.

4. Fragmentation of Rights

This fragmentation of rights extends the fragmentation of royalties even further. Many musical works can have many different rights holders for example the songwriter, composer, performer and record label, just to name a few. Each one of these rights holders receives a cut of the pie and often times creators have to redistribute their little piece to many different parties. The more people you have to pay the less your net creation earned.

5. Challenges in Royalty Collection and Distribution

Structures are not the entire problem though. There are practical problems as well that exist for music creators in USA. When it comes to royalty collection and distribution. Music royalty systems in USA are very sophisticated from a legal and structural standpoint, but there remain many practical challenges in addition to structural issues. The music industry is extremely decentralized, and with an increasing global and digital consumption of music it makes it difficult to track and collect royalties accurately. There are also issues with no transparency in royalty reporting from streaming platforms and other entities, which means in practice it is hard for music creators to know if they are being fairly compensated.

6. Impact of Market Forces

Market forces also play a big role in the determination of the amount of royalty fed to the creators of music. The shift in consumer behaviour, by virtue of the rise of streaming has tilted the balance in favour of access to ownership. Royalty payouts to artists have fallen. Plus, the intense competitiveness of the sector where listeners are only prepared to devote a small amount of attention to monetisation, makes it extremely difficult to earn sustainable royalty streams, particularly if you are relatively unknown and not signed to a major label.

7. International Disparities

It should also be recognized that the imbalances in the streams of royalties are clearly not only in the U.S. but are world-wide. However, the peculiar characteristics of the American music-making industry, e.g. its size, diversity, regulatory attributes, and the legislative framework has, probably, exacerbated the problems in the U.S. No one solution is going to be enough. The solutions to these problems, however, will need to work in both the US and, indeed also, in overseas.

8. Potential Solutions and Pathways Forward

Solving the problem of royalty streams in the U.S. for music creators will involve all facets of the music business including government policymakers, industry organizations, streaming platforms, and the artists themselves. A few recommendations for solving this problem include the following ideas for simplifying how music is licensed in the U.S. and how music creators are paid.

  • Reform copyright for songwriters ensuring that they are paid fairly for their work.
  • Make streaming companies be transparent how much they charge for users to listen to their services, how much the people running these services are making and how much the artists are paid.
  • Collective licensing on the entirety of music allowing songwriters to be paid fairly.
  • Help independent artists be more educated about publishing and licensing. Also, help them earn money from sources other than streaming.


The disparity in royalty payouts in United States is a very complex issue that requires solution at domestic as well as international level. Though present conditions and regulations have added up to the reasons for this disparity. The collective approach by music industry as well as government can lower these issues by addressing structural, legal and economic causes of the problem. We can create a sustainable ecosystem for music artists where they can get the genuine payouts.

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