We talk a lot about how music fans can earn a passive income alongside their favourite artists. But, how do we actually collect the royalties paid out to everyone?
At Fractis, we’re all about enabling everyone worldwide to invest in their favourite creators and share in their success. A key driver behind this is supporting independent musicians. Everything here revolves around digital music streaming, so let’s explain how we collect royalties.
In the dynamic world of music streaming, where independent musicians strive to earn a fair share of their hard-earned royalties, understanding how platforms collect and distribute these payments is crucial. At Fractis, we prioritise transparency and fair compensation for artists. In this blog, we will delve into our platform’s royalty collection process, shed light on the involvement of third-party entities, and discuss the frequency and transparency of royalty payments.
What Do Royalties Have to Do With It?
If you’re totally new to Fractis, hello. We’re a blockchain-based fractional royalties-sharing platform. Our goal is to make the music industry a fairer place for both independent artists and their fans. The way we aim to achieve that goal is all to do with royalties.
Digital Service Providers (DSPs) like Spotify and Apple Music provide a (usually) monthly income for artists based on the number of streams and downloads their music receives. However, this income isn’t often that significant. The rates vary from platform to platform, and from artist to artist even. But, for example, in the case of Spotify you could expect to earn between $0.003 to $0.005 per stream as of 2023. To put that into perspective, you would need approximately 500,000 streams a month to make about $1500. So, it isn’t exactly easy to make a living from streaming royalties alone.
Many artists could wait months, even years, to receive any sizeable sum of revenue generated from streaming. This isn’t ideal if you need to front the cost for studio time, equipment hire, or costs for touring and live performances.
A solution to this is royalty sharing. Artists can sell a percentage of their streaming royalties for a song or project in return for an instant injection of revenue. What do fans/buyers get out of it? They can earn a monthly passive income of royalties alongside their favourite artist. If they believe in the music, then the increased future success of an artist could result in a much higher monthly passive income for the fan. On top of this, fans and artists can feel more connected than ever before!
How Does Fractis Collect Royalties?
We’re built on the blockchain (Solana, to be precise), which means we’re big into the web3 ethos. A massive part of this is transparency.
As such, it seems only right to fully explain where the royalties that fans and buyers will receive come from, and how they reach them.
We’re officially partnered with leading digital music distribution company, RouteNote. Their strong connections and relationships with major companies in streaming, such as Spotify, Amazon Music, and Tidal, mean royalties from Fractis go through a streamlined process. Take a little peak at that very process:
- Data Aggregation: RouteNote is partnered with reputable music streaming platforms to collect accurate and comprehensive data on song plays. This includes popular platforms like Spotify, Apple Music, Deezer, and many others. Through these partnerships, they aggregate and centralise the data into our platform for efficient royalty collection.
- Rights Management: To ensure accurate identification and allocation of royalties, advanced rights management systems are employed. These systems match the metadata of each track with the corresponding fractional shareholders, ensuring that every play contributes to fair compensation.
- Revenue Calculation: Once the data is collected and matched with the appropriate rights holders, the total revenue generated from the music streaming activity is calculated. DSPs employ sophisticated algorithms that account for various factors, including geographical location, play duration, and user subscriptions.
- Royalty Allocation: After calculating the revenue, we distribute royalties to the fractional shareholders based on their ownership percentage. This ensures that every artist involved receives their rightful share of the generated revenue. We take pride in offering a fair and transparent system that empowers independent musicians.
What Type of Royalty Is Shared?
Our close relationship with RouteNote means Fractis benefits from the longstanding partnerships between RouteNote and numerous global DSPs. Over 30, to be more specific.
Both RouteNote and the DSPs play a vital role in the distribution and royalty collection process. A honed and efficient system ensures royalty shareholders and artists receive their due compensation. Although RouteNote has a dedicated Publishing department that collects a variety of royalty types, Fractis facilitates the sharing of what is called the Master Recording Royalty, or the Sound Recording Royalty.
This is the type of royalty that is generated when a piece of music is streamed or downloaded. So, the more streams, the higher the amount of revenue generated. Since the revenue flows through RouteNote to Fractis, there is a requirement to be met before funds are released. Artists need to accrue a minimum of $50 before revenue is paid out.
Fractis aims to be transparent and open with both artists and fans about the processes involved in royalty sharing on the platform.
The royalties that land in artists’ and fans’ pockets come from our partner, RouteNote. Fractis artists distribute their music through RouteNote, and Digital Service Providers and RouteNote work together to ensure the correct amount of royalties is paid out.
Following the principles of web3, Fractis is devoted to honesty and transparency, aiming to create a fairer industry for musicians. Why not make it so that fans can come along and enjoy the ride too?
To learn more about Fractis, read all about it right here!