YouTube Royalties

How are music royalties calculated on YouTube?

By Maxence Pepin

09 May, 2024

If you're a musician or music rights holder, understanding how royalties are calculated on YouTube is crucial to making the most out of your music. In this article, we'll walk you through the various aspects of music royalty calculation on YouTube, including types of royalties, the YouTube Partner Program and monetization, Content ID system, and distribution to rights holders.

Understanding Music Royalties on YouTube

YouTube has become a critical platform for the music industry, as it allows artists to easily share their work and connect with fans. However, navigating YouTube's complex royalty system can be challenging. Here's a breakdown of the key elements you need to know to understand music royalties on YouTube.

Types of Music Royalties

There are two main types of music royalties on YouTube: performance royalties and mechanical royalties. Performance royalties are earned when a song is streamed or publicly performed, while mechanical royalties are paid when a copyrighted song is reproduced or sold. In both cases, royalties are calculated based on various factors, such as the number of views and the length of time a song is played.

Performance royalties are earned by the performing artist and the songwriter, while mechanical royalties are earned by the songwriter and publisher. YouTube has a system in place to ensure that the appropriate parties receive the appropriate payments.

It's important to note that the amount of royalties earned can vary greatly depending on the popularity of the song and the number of views it receives. For example, a popular music video with millions of views can earn a significant amount of royalties, while a lesser-known song with only a few thousand views may only earn a small amount.

Additionally, YouTube has a revenue-sharing program that allows creators to earn a portion of the advertising revenue generated by their videos. This can be a significant source of income for musicians who have a large following on the platform.

YouTube's Role in Royalty Distribution

YouTube plays a significant role in the distribution of royalties, as it provides the platform for streaming and ensures that the appropriate payments are made. They use the YouTube Partner Program and Content ID system to identify and manage music royalty matters. The Content ID system is a digital fingerprinting system that identifies copyrighted material and ensures that the appropriate rights holders receive payment.

YouTube also works closely with Performing Rights Organizations (PROs) and has licensing agreements in place to ensure the proper distribution of royalty payments to rights holders. PROs are organizations that collect and distribute royalties on behalf of songwriters and publishers. YouTube has agreements in place with many of these organizations to ensure that the appropriate parties receive payment for their work.

Overall, understanding music royalties on YouTube can be complex, but it's an important part of being a successful musician in today's digital age. By understanding the different types of royalties and YouTube's role in royalty distribution, artists can ensure that they are receiving the appropriate payment for their work and can continue to create and share their music with fans around the world.

The YouTube Partner Program and Monetization

To collect music royalties on YouTube, you must be part of the YouTube Partner Program. This program allows creators to monetize their content and earn ad revenue. Let's dive deeper into the eligibility criteria and how to enable monetization for your channel.

Eligibility Criteria for the YouTube Partner Program

The eligibility criteria for the YouTube Partner Program are:

If you meet these criteria, you can apply for the YouTube Partner Program and start earning music royalties through ad revenue.

How to Enable Monetization on Your Channel

To enable monetization on your YouTube channel, follow these steps:

Bear in mind that YouTube reserves the right to disable monetization if it detects any violations of its terms, policies, or copyright guidelines.

YouTube's Content ID System

Content ID plays a vital role in identifying copyrighted music used in YouTube videos and ensuring that royalties are distributed to the rights holders. Let's take a closer look at how Content ID works and how to dispute Content ID claims.

How Content ID Works

Content ID is YouTube's automated system that scans and matches uploaded videos against a database of copyrighted material. When a match is found, the system will apply the policy specified by the rights holder, such as monetizing, blocking or tracking the video.

If your music is claimed through Content ID, you, as the rights holder, will receive a percentage of ad revenue, which constitutes your music royalties.

Disputing Content ID Claims

If you believe a Content ID claim is made in error, you can dispute the claim by following these steps:

YouTube will then review the dispute and contact the claimant to make a decision. Usually, disputes are resolved within 30 days.

Calculating Music Royalties on YouTube

The calculation of music royalties on YouTube depends on a combination of factors, such as ad revenue and royalty rates. Here, we'll discuss the variables that affect royalty calculations and how revenue is shared between artists and YouTube.

Ad Revenue and Royalty Rates

Music royalties on YouTube are primarily based on ad revenue generated by the videos. Generally, YouTube takes a percentage of this ad revenue, while the remaining earnings are distributed to the rights holders. It's necessary to note that advertising rates can vary and that not all ad views generate revenue.

Factors Affecting Royalty Calculations

Several factors can impact royalty calculations on YouTube, including:

All of these factors can influence the amount of ad revenue generated, ultimately affecting the music royalties paid to rights holders.

Revenue Sharing Between Artists and YouTube

As mentioned earlier, YouTube takes a percentage of ad revenue generated from videos. This percentage depends on factors such as the type of ad, the agreement between YouTube and the rights holder, and market conditions. Typically, artists can expect to earn between 55% to 70% of the ad revenue, with the remainder going to YouTube.

Distribution of Royalties to Rights Holders

Once music royalties are calculated, they need to be distributed to the appropriate rights holders. The process involves the role of Performing Rights Organizations (PROs) and direct licensing agreements with YouTube.

Role of Performing Rights Organizations (PROs)

Performing Rights Organizations (PROs), such as ASCAP, BMI, and SESAC, are responsible for collecting performance royalties from various sources, including YouTube. They have agreements in place with YouTube to ensure the accurate distribution of royalties to their members. As a songwriter or publisher, you will need to register your music with a PRO to receive your share of royalties.

Direct Licensing Agreements with YouTube

Some rights holders may have direct licensing agreements with YouTube, independent of PROs. These agreements usually cover mechanical royalties and may also include performance royalties. In this case, YouTube will distribute royalties directly to the rights holder, based on the terms of the agreement.

In conclusion, understanding how music royalties are calculated and distributed on YouTube is essential for musicians and music rights holders. By being knowledgeable about the YouTube Partner Program, Content ID system, and the role of PROs, you can ensure that you are accurately compensated for your music on the platform.

Maxence Pepin
Written byMaxence Pepin

Maxence has amassed over 50 million streams as an independent artist before working as a business development manager for an indie dance record label.