No Separate Digital Performance Royalty Accounting - Traps & Scams Every Musician Must Avoid

If your streaming checks look like they were printed at a gas station, this guide is your fire alarm. The music business loves complexity because complexity hides money. When companies avoid separate digital performance royalty accounting they create a fog that can hide missing payments, inflated fees, or full on theft. This article explains what digital performance royalties are, who should be paying them, where the holes are, and how you slam the holes shut like a boss with receipts and a plan.

This is written for artists who want real answers without legalese or plate spinning. Expect practical steps, contract language you can use, real life scenarios that feel eerily familiar, and a checklist that turns you from confused into dangerous. We will cover the difference between composition and master rights, who the collectors are globally, the worst traps, how to audit and demand your money, and what to do if you discover missing royalties.

What Is a Digital Performance Royalty

Digital performance royalties are payments made for the public performance of a sound recording on digital platforms. The important part is that these royalties are tied to the master recording, which is the actual recorded performance you made in the studio. They are separate from composition royalties which pay songwriters and publishers for the underlying musical work.

Short glossary for lazy readers

• Master means the recorded audio file you and your producer created in the studio. The owner of the master is often a label or the artist if you own it outright.
• Composition is the song itself. Lyrics and melody. Songwriters and publishers own this side.
• Digital Service Provider or DSP are streaming platforms like Spotify, Apple Music, Pandora, YouTube, and similar services.
• PRO stands for Performing Rights Organization. In the US examples include ASCAP, BMI and SESAC. PROs collect performance royalties for songwriters and publishers when compositions are publicly performed.
• SoundExchange is a US non profit that collects digital performance royalties for sound recordings from eligible noninteractive and statutory webcasters. Think Pandora or Sirius XM in some cases.
• MRC is not relevant here. Ignore this line unless you like acronyms for breakfast.
• ISRC is International Standard Recording Code. It is the serial number for your master recording. Get one. Use it. Register it.
• ISWC is International Standard Musical Work Code. It identifies the composition. Register your composition with an ISWC through your PRO.
• Neighboring rights are the rights performers and labels have in many countries for public performances of recordings. Different countries have different collection societies. In the UK PPL collects neighboring rights for performers and labels. In Canada SOCAN handles publishing performance but neighboring rights are collected by other societies such as Re:Sound for recording owners. These names matter so you can collect globally.

Why Separate Accounting Matters

If all revenues are lumped into a single vague pot labeled streaming receipts good luck proving you are owed anything. Separate accounting means the distributor or label lists clearly what portion of revenue came from digital performance royalties, what portion came from mechanical royalties, what portion came from interactive streaming, and what fees or recoupable expenses they deducted. Without separation transparency vanishes.

Real world vibe

You check your account and see $40 from a million streams. The statement says streaming revenue. No breakdown. No ISRCs. The distributor claims they paid everything out. SoundExchange has a different record. Your bank account is not a trust fall. Separate accounting lets you match the DSP report to the collector report and to the bank deposit.

Who Should Be Paying Digital Performance Royalties

It depends on the service and the country. Here is the simple map.

• Non interactive webcasters like Pandora in the US and some internet radio services trigger statutory digital performance royalties for the sound recording. In the US SoundExchange collects this money for performers and copyright owners of the sound recording. That is the master side of the house.
• Interactive services like Spotify pay a complex mix of mechanical royalties which go to publishers and digital distributors and also pay master royalties to rights holders. In the US mechanicals for interactive streams are processed through the Mechanical Licensing Collective or MLC. The MLC collects and distributes mechanical royalties for songwriters and publishers for interactive streaming of musical works.
• Public performance of the composition is collected by PROs. This covers radio, live performances, and some streaming performance income depending on the service and country.
• Neighboring rights societies in many countries collect master performance pay for broadcasts and public performance. If your music is played on the radio in many European countries you get neighboring rights payments through a local CMO which stands for collective management organization. Example CMOs include PPL and PRS in the UK, GEMA in Germany, and SOCAN in Canada for compositions.

The Top Traps and Scams

Let us be blunt. Some of these are sloppy. Some are predatory. All of them bleed artists. You have to learn to smell the fish. If it smells like the pastries section of a train station proceed with caution.

Trap 1: Aggregator or Distributor That Does Not Separate Performance Royalties

Many digital distributors deliver money labeled streaming or digital revenue without telling you how much of that came from sound recording public performance, how much is mechanical, and how much belongs to publishers. If your distributor does not separate these categories you cannot reconcile what SoundExchange or neighboring rights societies report. That makes it easy for money to vanish into vague company overhead.

Real life example

An indie band uses an aggregator that collects money from various DSPs. The aggregator sends a single monthly payment and a CSV file with minimal data. Months later the band registers with SoundExchange and discovers that the aggregator was paid substantial non interactive performance royalties that never showed up in the band's account.

Trap 2: All In Deals That Swallow Performance Royalties

Labels and management companies sometimes offer deals that say we will collect everything and pay you net. The devil is the paperwork. Some contracts claim ownership or administration rights over digital performance royalties without specifying separate accounting or audit rights. That can mean you are owed money but the company treats all incoming revenue as recoupable and non specific.

Red flag contract language

• Any income from exploitation of the masters will be paid to label in full and applied against recoupable expenses.
• Label has sole discretion in accounting and allocation of digital revenues.

Translation

If you sign that you will probably never see a clear spreadsheet showing what was paid to the DSP as digital performance royalties. You have no way to verify receipts. The company can treat performance royalties as advances on other things and keep them.

Trap 3: Misclassification of Service Type

Streaming services fall into categories. If a DSP mislabels itself as interactive when it is non interactive or vice versa the wrong royalty path is used. That can lead to performance royalties for the master not being claimed or being paid into the wrong pool.

Example

A service in your country plays curated radio stations but claims it is an interactive platform to avoid statutory performance fees. They argue users select the station so it is interactive. That means master performance royalties may not be paid through SoundExchange or local neighboring rights societies.

Trap 4: No ISRC or Bad Metadata

If your release has missing ISRCs or inaccurate metadata the DSPs and collection societies cannot match plays to your account. That means royalties sit unclaimed in black boxes at DSPs or are distributed to the wrong party.

Real world scenario

Your track ends up on a popular viral playlist but the ISRC is wrong. The plays get matched to another track, or worse, to an unknown owner and your money accumulates in an unidentified rights holder pool.

Trap 5: Fee Farming Administration Services

Some publishing administrators and collection services promise international collection and ask for steep upfront or ongoing fees that outstrip what you will realistically receive. They register you with multiple societies but never follow up to claim the money or they charge opaque fees that make your payment meaningless.

Example

You pay a company to register your songs around the world. They register you with eight societies. Years later they send a check after deducting 50 percent fees and costs for processes you did not authorize. The math makes no sense but fighting the company costs a small mortgage.

Trap 6: No Audit Rights or Limited Accounting Access

Contracts that deny you audit rights or limit the frequency and scope of reports are set up for hiding. If you do not have the right to see the DSP contracts, monthly statements, and ledgers you cannot verify that your money was collected and paid out properly.

How to Check If You Are Missing Digital Performance Royalties

Turn into a detective. The evidence is always in the paperwork if you know where to look.

Step 1 Gather Your Release Metadata

• ISRCs for every track
• UPC or EAN for the release
• Songwriter split sheets with percentages
• Producer agreements if producers are owed points

Without this basic data you are already losing the match game.

Step 2 Register With the Right Collectors

At minimum you should be registered with these if you are in the United States

• SoundExchange for digital performance royalties for sound recordings from non interactive webcasters and satellite services when applicable.
• A PRO such as ASCAP, BMI, or SESAC to collect composition performance royalties. If you are not registered the publisher could be collecting for your songs without you.
• The MLC the Mechanical Licensing Collective for interactive mechanical royalties in the US if you write songs. The MLC collects mechanical royalties for streaming and downloads on interactive platforms.

If you are outside the United States find the local equivalents such as PPL and PRS in the UK, GEMA in Germany, SACEM in France, SOCAN and Re:Sound in Canada, APRA AMCOS in Australia and New Zealand. The exact names and responsibilities vary so call them and ask what they collect. Say the words digital performance royalties and see if their eyes twitch.

Step 3 Match Statements

Obtain statements from the DSPs either via your distributor dashboard or DSP reporting pages. Obtain reports from collection societies. Compare the totals for your ISRCs and UPCs month to month. If the DSP reports shows 1 million plays and your distributor pays you based on 950 thousand plays but SoundExchange shows 1 million plays credited to someone else you have a mismatch to chase.

Step 4 Use Third Party Tools

There are companies and services that assist with matching and claiming audio usage globally. They cost money but they can find money that more than covers their fees. Use them if you are unable to handle the admin yourself. Examples include publishing administrators, neighboring rights claim companies, and royalty audit firms. Choose firms with references and ask for success examples.

How to Fix Missing Royalties

Finding missing money is one thing. Getting it to land in your bank account is another. Here is a clear playbook.

1. Register Immediately

Register your recordings with SoundExchange and your composition with a PRO and the MLC. Register with neighboring rights societies where your music plays frequently. Registration does not retroactively create rights in every case but it makes future collection and unclaimed money claims easier.

2. Demand Detailed Accounting

If you work with a distributor or label get monthly breakdowns that separate master performance income, mechanical income, publishing income, sync, and any other category. Ask for ISRC level detail. If they refuse, escalate. If they still refuse start with a certified letter demanding your accounting and reserve the right to audit. Many companies blink when the word audit is used with teeth.

3. File Claims for Unidentified Royalties

Many societies hold unidentified royalties that match plays without a clear owner. File claims to those pools. SoundExchange and many CMOs have unidentified use processes. You will need proof of ownership and metadata. This can be tedious but it pays.

4. Audit If Necessary

If you suspect underpayment or opaque accounting use your contract audit clause or sue for accounting if necessary. A royalty audit can reveal diverted income. Get a lawyer who actually does music royalty cases. The loudest mouth on social media is not the same thing as a royalty attorney.

5. Change Distributor or Administrator

If your distributor or admin is lazy or shady move. There are plenty of companies that provide transparent reporting with ISRC level detail and monthly payouts. Read the terms about SoundExchange collection and neighboring rights registration. If they refuse to provide separation or refuse to register your masters with collectors move your catalog to someone who will.

Contract Clauses You Can Use Immediately

Paste these into emails or contracts and watch the horror movie unfold in their accounting department.

Accounting And Reporting Clause

Company will provide monthly statements that separately itemize all income streams including but not limited to: digital performance royalties for sound recordings, mechanical royalties for compositions, neighboring rights receipts, synchronization fees, and direct licensing income. Statements will list ISRC, UPC, track title, number of plays, gross revenue by DSP, fees deducted, and net payment to artist.

Audit Rights Clause

Artist has the right to audit Company s books and records related to Artist s account once per 12 month period upon 30 days written notice. If the audit reveals an underpayment greater than five percent Company will reimburse Artist s reasonable audit costs and pay the deficiency within 30 days.

Carve Out Clause For Performance Royalties

Unless explicitly stated otherwise Artist retains all digital performance royalties collected by collecting societies for sound recordings. Company will not treat such royalties as recoupable advances under this agreement. Company will cooperate to ensure Artist s direct registration with applicable collecting societies and will provide any records required to support Artist s claims.

Customize this language with your lawyer but do not sign away the right to see where the money came from and to audit the books.

Registration Checklist

• ISRCs assigned and registered for every master
• UPC/EAN for each release
• Song split sheets signed and registered with your PRO
• Masters registered with SoundExchange or local neighboring rights society
• Works registered with the MLC for interactive mechanicals if you are in the US
• Publisher information accurate and up to date
• Distributor confirmed whether they register masters with SoundExchange or if you must do it yourself

Country Specific Notes That Save Money

Every country is its own jungle. Here are the places where artists commonly miss out.

United States

• SoundExchange collects digital performance royalties for non interactive webcasters and satellite. Register your artist and your masters directly with SoundExchange.
• The MLC collects mechanical royalties for interactive streaming. Register as a songwriter or publisher and submit your works. If you are a recording owner register your masters elsewhere.
• PROs ASCAP, BMI, and SESAC handle composition public performance. Make sure your splits are correct across PRO and MLC so the same writer is not getting double or zero payments.

United Kingdom and Europe

• PPL in the UK collects for performers and labels. PRS for Music handles composers. Many European countries have similar split systems. Make sure your neighboring rights claim is filed locally in markets where your streams are strongest.

Canada

• SOCAN collects publishing performance royalties. Re:Sound or other neighboring rights organizations collect master rights. Know who to register with if you have Canadian radio or streaming income.

If you have major plays in a market ask a local expert or an administrator to confirm your registrations. It is worth paying a small fee to get a local claim in a big market.

Real Life Scenarios You Will Recognize

Scenario 1: The Viral Clip That Pays Pennies

Band A goes viral on a social app. Streams skyrocket on DSPs. The distributor pays a lump sum with no breakdown. When the band registers with SoundExchange months later they find $7,000 recorded for their ISRC on Pandora style streams. The distributor claims those plays were included in the lump sum. The band has no ISRC level statements from the distributor to match. The band activates their audit clause and wins a payment plus interest. If they had not registered with SoundExchange promptly that money could have remained unclaimed or been distributed to unknown rights holders.

Scenario 2: The Friendly Manager With An Expensive Lifestyle

An artist signs a management deal with broad language that includes administration rights. The manager claims they will handle all collection and tells the artist to relax. Months pass. The artist gets paid a small percent of streaming revenue. The manager refuses to provide detailed accounts. The artist fires the manager and demands a full accounting. The manager produces an opaque spreadsheet and keeps two years of performance royalties as recoupable expenses. A royalty audit shows the manager incorrectly retained performance royalties that belong to the recording owner. Lawsuit follows. Artists learn to never let anyone control both the purse strings and the books without strong audit rights.

Scenario 3: The Distributor That Does Not Register With SoundExchange

Distributor X does not register masters with SoundExchange. An artist signs up thinking everything is handled. Years later the artist has major radio and Pandora style plays in the US. Because the distributor never registered their masters with SoundExchange the performer share sits as unidentified royalties. After a long claims process SoundExchange pays the artist some back money but only after the artist supplied receipts and legal proof. Losses could have been avoided with initial registration.

How To Protect Yourself From The Start

Prevention is easier than chasing money. Set up the right systems before the release and you will avoid 90 percent of these nightmares.

• Register your ISRCs and UPCs and keep a master data spreadsheet
• Decide if your label or distributor will register with SoundExchange or if you will do it yourself. Put it in writing
• Keep songwriter split sheets signed by everyone. Upload them to your PRO and the MLC
• Get registration confirmation emails and save them forever
• Insist on monthly statements with ISRC level detail before you sign any admin or distribution deal
• Make sure audit rights are explicit and not time limited in a way that is absurd

How To Read A Royalty Statement Like A Pro

Royalty statements are boring because they hide crimes. Here is what you must check each month.

• Do the ISRCs match your internal list? If not ask why.
• Are the plays on DSPs reconcilable with the collector reports from SoundExchange and your PRO? If not mark discrepancies and ask for explanations in writing.
• Are fees or deductions clearly listed and contractually authorized? If not demand proof of each expense.
• Is the frequency monthly or quarterly? Monthly is better for transparency.
• Can you export to CSV or Excel so you can sort and match? If no, find a new partner.

When To Hire Help

If your catalog is large, you have a label deal, or you suspect major missing funds hire a royalty auditor or music lawyer. An audit will cost money but often returns more than the expense. Some firms will work on contingency and take a percentage of recovered funds. Do your homework. Ask for references and success stories. A lawyer who knows music law and a royalty auditor who can read ledgers will be worth the cost when compared to the months wasted chasing numbers yourself.

FAQ

What is the difference between performance royalties and mechanical royalties

Performance royalties pay for public performances of a composition and are collected by PROs such as ASCAP, BMI, and SESAC in the US. Mechanical royalties pay for reproductions of the composition like streams or downloads. In the US interactive mechanical royalties are handled by the MLC. Digital performance royalties for sound recordings are for masters and are collected by organizations like SoundExchange for non interactive streaming. Keep the sides separate because each one has a different collector and different registration requirements.

Does SoundExchange collect money globally

SoundExchange collects U.S. statutory digital performance royalties for sound recordings. For plays in other countries you need to work with the local neighboring rights societies. Many societies have reciprocal agreements. So if you register with SoundExchange it may help international claims but you should also register where your music performs regularly.

My distributor says they collect everything so I do not need to register with SoundExchange. Can I trust that

Read the fine print. Some distributors do not register masters with collecting societies. Others register but do not provide you with ISRC level statements. Do not accept a verbal promise. Get it in writing that they will register and provide monthly detailed statements. If they refuse register yourself with SoundExchange in addition so you have a backup.

What is the MLC and why do I need to register there

The MLC is the Mechanical Licensing Collective. It collects mechanical royalties for songwriters and publishers from interactive streaming services in the United States. If you are a songwriter or a publisher and you want to collect mechanicals from interactive platforms make sure your works are registered with the MLC so your mechanical royalties can be tracked and paid.

How long do I have to claim missing royalties

Each collector has its own rules and statutes of limitation. SoundExchange and many CMOs will accept claims for older unmatched royalties but the process can be slower the further back you go. The best practice is to register as soon as possible and reconcile monthly so you do not build a backlog of claims.

Can I recover royalties if a previous manager or label kept them

Yes you can attempt recovery. Start by demanding accounting in writing. If they refuse use an audit clause or retain counsel for breach of contract. Recovery often depends on the contract language and the evidence you have of ownership. A royalty audit or lawsuit may be necessary. Document everything. Paper beats memory every time.

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