Buyout VS Royalties: How to Choose Wisely?

It’s one of the few topics that usually receives the most black-and-white statements. You either choose one or another, and there’s no in-between. In my experience, the middle ground is actually the sweet spot when it comes to these two. In this DIY Musician Blog post, we will discuss Buyout VS Royalties and when to choose each for your benefit.

Option 1: Royalties

«Never take a buyout!» is the most widely spread saying of musicians from this camp. Royalties are payments you earn when your music is used by others, like when it’s streamed, sold, played on the radio, used in a movie, or performed live. They’re a way for you to get paid for your creative work.

There are different types of royalties. Publishing royalties are payments to the copyright owner for the use of a composition (lyrics, melody, harmony, etc.). Master royalties are payments generated from the actual sound recording of a song, and they are paid to the owner of the master, typically a record label or the artist if they own their masters, and also often shared with producers. Mechanical royalties come from sales or streams of your recorded music (Spotify, Apple Music, CDs, or downloads). Performance royalties are paid when your music is played publicly—on the radio, on TV, in a venue, or even in a restaurant. Sync royalties happen when your music is licensed for use in visual media like films, shows, ads, or games. Print royalties come from selling sheet music.

While the royalties are indeed the core of a long-lasting music career, there is some nuance in when to go for them. Deals involving royalties are more complex, so there is more to consider beyond the agreement itself.

Highlights:

• You need to be equipped. To be able to collect all the revenue from this kind of deal, you need to have your Royalty Streamline System all set up and going. That includes your PRO, Publishing Administrator, SoundExchange, etc. Some of this preparation will require time and money, so it should be taken care of before you sign a royalty-related deal.

• There’s usually no upfront fee. These contracts usually don’t involve advances. So it will be some time before you see the payoff. In some cases, there are upfront payouts, but always review the terms of receiving them. For instance, if your royalties will be paid only once they exceed the upfront payout, be sure you’re ready for that.

• The collection takes time. Royalties start generating only once the project is out. And after the release, it’s usually between six months and a year when the royalties are collected and delivered through multiple channels. Statistically, most start to decline after the first year of a project's life, except when you write timeless hits, so if you focus your career on royalty-based titles, you need to have a pipeline to support the income with new projects consistently.

• High risk = High reward situation. Royalty projects are like investments. There’s no guarantee that it will bear fruit or be sustainable. But when you release a personal album, get featured on a long-running TV show, or collaborate with a coming-up artist who seems to have a prosperous career ahead, it’s worth it. 

• The contract should be clear and solid. Review all the terms and get outside professional support from an attorney at all costs. No vague promises. It should be clear who collects which types and percentages, what the splits are, payment schedules, and how it’s distributed. It’s an intricate type of contract, and it should be treated as such.

• It adds up! The best part about royalties - they pile up. As time goes on, you’ll be able to see all of your work paying off even decades later. Some music may get its golden opportunity years after creation, and by maintaining ownership, you’ll be able to capitalize on your creativity in the long run. It’s a long game, but so is a music career.

When to choose Royalties

Go for royalties when ownership matters. If you're building a personal brand, developing artist collaborations, or scoring high-profile media, retaining your rights gives you control and room for growth. This model is best for music you believe in—tracks with emotional, artistic, or strategic value that may find success now or years down the line. If you see your catalog as part of your legacy, royalties are the way to go.

Option 2: Buyout

«Never give up your rights!» is what you’ll hear from royalty purists, and for good reason. But in many situations, a buyout can be the right call. A buyout is a one-time payment you receive in exchange for giving up all or most rights and future royalties for your music. Once the deal is done, you’re usually entirely out of the revenue stream.

This type of agreement is prevalent in content-heavy industries like advertising, corporate, YouTube content libraries, and some lower-budget film or TV projects. The buyer gets the right to use your music forever (or for a set term) without additional payments, and you get your payment upfront. Buyouts can sound like a creative nightmare, but the reality is more nuanced. They can be a reliable, low-friction income stream when used strategically.

Highlights:

• Simpler, faster deal. Buyout contracts are typically more straightforward and quicker to finalize. You agree on a fee, sign the deal, and you’re done. This is especially helpful when working with smaller clients or indie productions that don’t have the infrastructure to manage ongoing royalty payments.

• Upfront cash in hand. Unlike royalties, you get paid immediately or within a short timeframe. This is ideal if you need fast cash flow or are working on a high volume of tracks and want to keep the income moving steadily.

• Lower risk. You don’t have to worry about whether the project flops or the music generates usage. Once you get paid, the burden of success is off your shoulders. This is a stable way to monetize music that may not have long-term hit potential but still fits a specific use.

• Possibility to stay anonymous. Some musicians prefer not to have their name or artist brand attached to everything they do. Buyout tracks often get used without credit or public attribution, which allows you to experiment with styles or genres outside your usual scope or ghost-produce for clients under NDAs.

• Less admin work. No need to chase down payments, register with multiple organizations, or manage complex royalty pipelines. This makes it ideal for production music catalogs, background tracks, or one-off custom projects that don’t need long-term management.

• Useful for backlog monetization. If you have old music sitting on your hard drive that’s unlikely to become part of your main catalog or artist brand, a buyout is a great way to breathe new life into it and generate income from the material you’ve already created.

When to choose Buyout

Buyouts are best for tracks you don’t see as long-term signature pieces—stock music, quick-turnaround custom work, or music created specifically for a brief. They're ideal when working with creators who need flexibility when just starting and don’t have a royalty system in place, or when you need to keep income flowing between major projects. For me, the buyout was a great start, fueling the first royalty-based projects as they came together.

It’s also a great option when the odds of ongoing royalties are low, or when you simply want to move on from a track and get paid for your time. If you’re building a sustainable music career, combining strategic buyouts with royalty-based releases can give you both stability and long-term growth. 

Fun fact: Netflix loves the buyout deals for composers, while in that particular case, I would probably go for the royalties option.

Choosing between buyout and royalties isn’t about picking one over the other—it’s about knowing when each one serves you best. Royalties offer long-term potential and creative ownership but require setup, patience, and risk tolerance. Buyouts provide quick payment and less management work, but often mean parting ways with your rights forever.

The smartest path for today’s DIY musician is to strike a balance: keep your royalty-driven projects close to your chest, and use buyouts strategically to fund and support your bigger creative goals. The key is clarity on your music, your priorities, and your creative vision. Choose wisely, and both models can work in your favor.

Be well, stay tuned!