How do artists get paid when their recordings stream on internet radio?

Recording artists are often surprised to learn that a stream on internet radio and a spin on an FM station are treated completely differently under U.S. law. The difference comes from how Congress wrote the performance right for sound recordings, and it decides whether a featured artist, a session player or a label sees any money. This page explains that right, the statutory split of the royalties, and the practical steps to get paid. It sits under our page on entertainment law for music, film and TV. For the way a song's other income streams are collected, see our page on collective rights management and music publishing.

How internet radio royalties reach an artist, step by step

1. The service gives notice. Before its first transmission under the statutory license, a service must file a Notice of Use of Sound Recordings with the Licensing Section of the Copyright Office, and it must file an amended notice within 45 days after any of that information changes (37 CFR 370.2(d), (e)).
2. The service streams within the license. To qualify, the transmissions cannot be part of an interactive service, and they must carry the identifying information encoded in the recording, such as the title and the featured artist, where that is technically feasible (17 U.S.C. 114(d)(2)(A)).
3. The service reports what it played. Reports of Use list, for each recording, the featured artist, the title, and the ISRC code or the album title and marketing label, plus the number of performances, and they are generally prepared for each calendar month (37 CFR 370.4(d)). They go to the collective designated by the Copyright Royalty Judges.
4. The service pays the collective. Under the current terms for commercial broadcasters' internet streams, covering 2026 through 2030, payments, statements of account and Reports of Use are due by the 30th day after the end of each month (37 CFR 380.42(b)).
5. The collective matches and splits. It values all performances by a service equally, based on the Reports of Use, and it is responsible for paying only those who give it the information it needs to identify and pay them (37 CFR 380.44(a)(1)). After its reasonable costs, it divides the money by the statutory shares shown in the table below.
6. Unmatched money waits, then expires. If the collective cannot identify or locate someone entitled to a payment, it holds the money in a segregated trust account for three years from the first distribution of that payment, and no claim is valid after that (37 CFR 380.44(b)).

What performance right does a sound recording have?

A narrower one than a song. The owner of a musical work controls public performances of it in general, but the owner of a sound recording controls public performance only "by means of a digital audio transmission" (17 U.S.C. 106(6)). Even within digital transmissions, the statute carves out exemptions, including nonsubscription broadcast transmissions (17 U.S.C. 114(d)(1)(A)). That is why recordings earn performance royalties from digital services such as internet radio, but not from over-the-air AM and FM broadcasts. Our page on why AM/FM radio stations don’t pay recording artists explains the broadcast side. Our post The Music Copyrights Puzzle explains how the song and the recording carry separate rights.

Services that are not interactive, meaning the listener cannot request a particular recording or a program made for them (17 U.S.C. 114(j)(7)), can qualify for a statutory license, with rates and terms set by the Copyright Royalty Judges (17 U.S.C. 114(d)(2), (f)). The services pay a collective designated by the Judges. Under the federal regulations for webcasting, that collective is SoundExchange, Inc. (37 CFR 380.2), and the current terms for commercial broadcasters name it as the collective for the current rate period (37 CFR 380.40).

How is the money split?

The statute sets the split, not the artist's record contract. The designated collective must distribute statutory license receipts as follows (17 U.S.C. 114(g)(2)):

The collective may first deduct its reasonable costs of administering, collecting and distributing the royalties (17 U.S.C. 114(g)(3)). The featured artist's 45% is distributed by the collective itself, per recording, to the featured artist or artists, or to the persons conveying rights in their performance (17 U.S.C. 114(g)(2)(D)).

The rule is different when a transmission is licensed directly by the label rather than under the statutory license. In that case the statute says a featured artist is paid by the copyright owner according to the artist's contract, and a nonfeatured artist according to the applicable contract or agreement (17 U.S.C. 114(g)(1)). That is why the same recording can generate two very different kinds of income depending on the service.

Can producers and engineers be paid from the artist's share?

Yes, through a letter of direction. The collective must have a policy for accepting instructions from a featured artist or the recording's owner to pay part of their share to a producer, mixer or sound engineer who was part of the creative process (17 U.S.C. 114(g)(5)). For recordings made before November 1, 1995, the statute also allows a 2% payment to a qualifying producer in some cases even without a letter. Our page on how producers get paid from digital performance royalties walks through both routes.

What changes the answer

• Whether the service is interactive. An on-demand service, or one that builds a program for the individual listener, cannot use the statutory license (17 U.S.C. 114(d)(2)(A)(i), (j)(7)). Its plays are licensed directly by the recording's owner, and the artist is paid under the recording contract (114(g)(1)).
• Whether the owner signed a direct deal. License agreements negotiated voluntarily between recording owners and services take effect in place of the rates the Judges set (17 U.S.C. 114(f)(2)), so a direct deal can move money out of the statutory split.
• The type of service. The Judges set rates for 5-year periods and must distinguish among types of services (17 U.S.C. 114(f)(1)). Commercial broadcasters' streams, for example, have their own terms for 2026 through 2030 in 37 CFR part 380, subpart E. Our guide to how the Copyright Royalty Board sets music rates explains the proceedings.
• Who owns the master. The 50% share goes to the owner of the 106(6) right (114(g)(2)(A)), so an artist who owns the recording outright can collect both the owner's share and the featured artist's share.
• When the recording was fixed. Recordings fixed before February 15, 1972 earn in the same system: a qualifying transmission is authorized when the statutory royalty is paid (17 U.S.C. 1401(b)). Our page on pre-1972 sound recordings protection covers those older catalogs.
• Whether it is audio or video. A digital audio transmission does not include the transmission of any audiovisual work (17 U.S.C. 114(j)(5)), so a streamed music video sits outside this system. Our page on who owns a music video explains the separate rights in a video.

A worked example

Common mistakes

• Assuming the label's royalty statement already includes the featured artist's 45%. For statutory plays, the collective pays that share itself (17 U.S.C. 114(g)(2)(D)), so it reaches the artist only if the artist, or someone the artist conveyed it to, is set up to receive it.
• Self-releasing artists claiming only the featured artist share. If you own the master, the 50% owner's share is yours too.
• Releasing the same recording under different artist spellings, titles or ISRC codes. Reports of Use identify recordings by those fields, and the collective values performances based on what the reports say.
• Expecting on-demand streams or music video plays to pay through the collective. Interactive services are licensed directly (114(d)(2)(A)(i)), and audiovisual works are outside the definition of a digital audio transmission (114(j)(5)).
• Promising a producer a share in conversation and never signing the letter of direction, which leaves the producer with no statutory route to payment.
• Letting old statements go unchecked. Unclaimed money is held for three years from the first distribution, and audits reach back only three calendar years (37 CFR 380.44(b), 380.46(b)).

What to do this week

1. List every recording on which you are the featured artist, and separately every recording whose master you own. The 50% share follows ownership of the recording.
2. Collect the ISRC code, exact title, artist name, album title and label name for each track, and make them match across every release and distributor.
3. Read your label, distribution and management agreements for any clause that conveys your featured artist share or the owner's share to someone else.
4. Make sure the collective can identify you and pay you for both shares, with consistent names and current payee details.
5. Sign the letters of direction you promised producers, mixers or engineers, so the instructions match the producer agreement.
6. Register the copyrights in your recordings; the collective's search for missing owners includes Copyright Office public records (37 CFR 380.44(a)(2)). See how to register a song's composition and recording.
7. Read your royalty statements rather than filing them. If you are based in Atlanta, our page on intellectual property and entertainment law in Atlanta sets out the royalty and publishing work the firm handles for local clients.

Frequently asked questions

Do I need a record label to collect digital performance royalties?

No. The statute pays the owner of the recording's digital performance right and the featured artist, whoever they are (17 U.S.C. 114(g)(2)). An independent artist who owns the master can be entitled to both shares.

Does a radio station's online stream pay recording artists?

It can. The statute's definition of an eligible nonsubscription transmission includes retransmissions of broadcast transmissions (17 U.S.C. 114(j)(6)), and commercial broadcasters' internet streams have their own payment terms for 2026 through 2030 (37 CFR 380.41 to 380.46). The over-the-air broadcast itself still pays the recording nothing.

Can an artist audit the collective?

Yes. Under the current commercial broadcaster terms, a copyright owner or performer may audit the collective's distributions once a year, for any of the prior three calendar years, by filing a notice of intent with the Copyright Royalty Judges and using an independent certified public accountant who is not paid on contingency (37 CFR 380.46). The person auditing pays the cost unless the audit finds a net underpayment of 10% or more.

What happens to royalties nobody claims?

The collective holds them in a segregated trust account for three years from the first distribution, then may use them to offset its deductible costs (37 CFR 380.44(b)). Federal law also says the collective's holding and distribution of these receipts overrides state unclaimed property laws (17 U.S.C. 114(g)(7)).

Do session musicians and backing singers get anything?

Yes, through the two 2.5% funds. Each is managed by an independent administrator appointed jointly by recording owners and the relevant union, and pays nonfeatured performers whether or not they are union members (17 U.S.C. 114(g)(2)(B), (C)).

Are songwriters paid from the same money?

No. These royalties are for the sound recording only. Songwriters and publishers are paid for performances of the song through separate licenses, which our page on how performing rights organizations work explains.

Do plays outside the United States pay through this system?

Not as a rule. The Copyright Office explains that there is no "international copyright": protection in a particular country depends on that country's own laws (Circular 38A). For plays abroad, see collecting performance royalties for your recordings abroad.

Zala IP Law advises artists, labels and producers on recording agreements, royalties and the registrations that sit underneath them. If you suspect digital performance income is going missing, request a consultation or call 404-313-1701.