Glossary · Money
Breakage
Breakage is money a digital service pays a label or rights holder that is never attributed to any specific track — minimum guarantees, advances and equity that exceed what usage alone earned. The term comes from physical distribution, where labels billed for broken records.
Breakage originally described a deduction: record labels once withheld a percentage of royalties to cover vinyl that broke in transit, and kept doing it long after the shipping problem stopped mattering. The word survived into the streaming era with an inverted meaning.
Modern breakage is money that arrives at a rights holder without a track attached. When a streaming service licenses a large catalogue, the deal often includes minimum guarantees, non-refundable advances, technology fees, or equity. If actual usage-based royalties for the period come to less than the guarantee, the difference is real money the label received that no artist's play count generated. Historically some of that was never passed through to artists at all, because artist contracts pay on royalties earned per track, and unattributed money is not royalties earned per track.
This matters to an independent artist in two ways, and only two. First, it is one reason the widely cited "per-stream rate" understates what services actually pay out — some of the money never touches a stream count. Second, it is a clause worth reading if you ever sign to a label: better modern agreements commit to allocating a share of unattributed digital income to artists pro rata, and older ones simply do not mention it.
If you self-release through DistroKid, TuneCore or CD Baby, breakage is not your problem, because you are not on the other side of a minimum-guarantee deal. It is worth knowing anyway, because it explains a gap in the public numbers that otherwise looks like arithmetic that does not add up.
An artist's explanation of a label accounting term — not accounting advice.
Related terms
- Black box royaltiesBlack box royalties are music royalties that were collected but could not be paid to the correct owner, usually because the work…
- Royalty poolA royalty pool is the total sum of money a streaming service sets aside for rights holders in a given market and month, before it…
- AdvanceAn advance is money paid to an artist or songwriter up front against royalties they are expected to earn later.
- RecoupmentRecoupment is the process by which a label, publisher or distributor recovers money it advanced to an artist out of that artist's…
Definitions on this site describe the United States system. I am an artist who has been through this, not a lawyer.
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