How do artists earn royalties for their music on Netflix?

Composers and artists alike have taken comfort for decades in the fact that there are so called 'per minute rates' paid by performing rights societies to its members when their music is broadcast on the TV and radio - aka royalties.

ITV, for example, pays around £100 per minute of music used on its main channel.

However, we've discovered quite a bit of vagueness when it comes to how music is paid for when used on digital platforms such as Netflix and the like.

After having tried in vain and almost resigning ourselves to the fact that nobody really knows what Netflix actually pays in royalties, we made one more attempt to shed some light on it all. And we think, having enquired with PRS in the UK, we finally found a bit of clarity, at least for UK-based artists. Hurrah! Warning: it might be a tad early to celebrate lucrative new income streams just yet...

Netflix

Netflix supplies PRS with a list of the programmes streamed on its platform in a given time period.

Additionally, they state the number of times each of those programmes has been streamed.

They also supply cue sheets for each production (the details of all the music and its duration) which gives a total of minutes of music on each production.

Programmes + Streams + Cue Sheets. All clear so far?

Points means...

The total amount of royalty revenue is then pro-rated across all music within these productions in this time period (see above) via a points system.

1 point = 1 minute of music for a production streamed once.

So, let’s suppose a Netflix show has 100 minutes of music and the programme is streamed 10,000 times. It would generate 1,000,000 points. ONE MILLION POINTS!

This formula is then applied to all the programmes and all the music on Netflix. Apparently the end figure is a total number of points for the whole service over this time period. Dividing the total amount of money paid for the service by the total number of points gets you a monetary value per point.

So, a 3-minute piece of music on a programme streamed 10,000 times generates 30,000 points. Multiply that by the £/point calculated for the whole service over the period in question and that is how much that musical work will generate in royalties.

In a Nutshell?

The more popular the programme on Netflix, the more royalties the artist will see. However, what that amount is will more precisely depend on the money generated from subscribers during a period divided by the total music counted up over that same period for all programmes.

We get the logic behind it. Perhaps in time an average price point will be published every few months for proper, straight forward clarity.

In the meantime, although our experience so far is that Netflix royalties can be ok over time, it's probably not worth banking on receiving similar rates to ITV primetime from digital platforms just yet…

This article was first published in 2017.