How Royalties Actually Work
Why We Don’t Claim 100% Royalty
In digital music distribution, the royalty amount displayed on streaming platforms is not the final payout an artist receives. What artists often see as “earnings” represents gross revenue, not the actual amount payable to the artist.
Before any royalty reaches a distributor or an artist, several mandatory and unavoidable deductions are applied at different stages of the distribution and accounting process.
How Royalties Actually Work
Platform Commissions
Streaming platforms and digital stores retain their standard commission before reporting revenue to distributors. These commissions vary by platform, territory, and usage model and are deducted automatically at source.
Regional Taxes & Statutory Charges
Depending on where streams or downloads occur, applicable taxes, withholding obligations, or statutory levies may be applied in accordance with local regulations before revenue is finalized.
Currency Conversion & Banking Adjustments
International music revenues are reported and settled across multiple currencies. Exchange rate fluctuations, currency conversion costs, and cross-border banking or transaction charges directly affect the final receivable amount.
Reporting Reconciliations
Platforms periodically apply reconciliations related to fraud prevention, invalid streams, refunds, chargebacks, or delayed reporting corrections. These adjustments are reflected in official platform statements.
After all such deductions and adjustments, the remaining amount is known as net revenue.
In practical terms, this net figure is often significantly lower than the headline or estimated earnings artists initially see on dashboards or projections.
The Problem with “100% Royalty” Claims
Many services promote “100% royalty,” but this term often refers only to marketing or headline calculations, not the complete payout lifecycle. In real-world scenarios, artists may later encounter:
- Platform or delivery-related fees
- Payment processing or withdrawal charges
- Administrative or reporting-related costs
- Minimum payout thresholds
Once all platform-level deductions and service-level charges are applied, the artist’s effective take-home payout may represent only a portion of the original gross earnings. As a result, artists may find that the actual amount received is materially lower than what the phrase “100% royalty” suggests.
Our Approach at Audio Buss
At Audio Buss, we believe transparency and predictability are more valuable than promotional numbers. Our model is clearly defined:
We choose clarity, consistency, and long-term trust over short-term marketing claims — enabling artists to make informed decisions about their music and their careers.