How are music royalties calculated and distributed to artists?

Music royalties are calculated based on how a song is used and distributed through several channels. There are two main copyrights involved: the master recording (owned by the artist or label) and the composition (owned by the songwriter or publisher). When a song is streamed, played on radio, or sold, royalties are generated for both. Streaming services like Spotify pay a fraction of a cent per stream, typically pooling subscription revenue and dividing it based on each song's share of total streams. Performance royalties from radio and live venues are collected by performing rights organizations like ASCAP, BMI, or SESAC, which then distribute payments to songwriters and publishers. Labels typically take a significant cut before passing earnings to artists, which is why many artists earn more from touring and merchandise than recordings.