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What Are Master-Generated Royalties?

Master-generated royalties, also known as recording royalties, are royalties generated on behalf of the sound recording / master recording (rather than the composition) from physical/download sales and streams.

This kind of royalty is the most basic royalty performing artists and labels get every time their master recording is downloaded (ex. iTunes) physically bought, or streamed (ex. Spotify, Apple Music, Tidal, etc...)

Who Collects Them?
Unlike composition royalties which are collected by PROs and Publishers, master-generated royalties are handled by a distributor, such as CD Baby. The distributor is in charge of collecting recording royalties directly from stores/streaming platforms on behalf of whomever owns the master recording. The distributor then must distribute these royalties back to the label. If an artist is not with a label, they will collect the recordings royalties directly from their distributor.