Music Business

Episode 4 – Royalty – bow down

Music Business

It’s great to be in the presence of royalty, go on take a bow. Ok, right, i’ve got my ego in check and can now begin. I’m sure some of you guys using SendMusic have had music published whilst others don’t know what that means. I’ve been in both positions and yes, the music industry can be very confusing, especially so when it comes to getting paid when your music gets played. To begin, as an artist the first thing you NEED to do is sign up to a Performing Rights Organisation. Examples of this include PRS, BMI and ASCAP. The whole point of their existence is to get you paid! PRS is the main Performing Rights Association in the United Kingdom and I am signed up to them.

As the name implies Performing Rights Association collect one of the biggest forms of royalties: Performance royalties. In music, royalties are paid to owners of copyrighted music. How do you copyright music? You register it with a Performing Rights Association like PRS. It sounds confusing yes, but just create some music and then register the tracks you’ve made with the Performing Rights Organisation you’re signed up with to understand the process and what to do.

There are four different types of music royalties. Each music royalty type also has separate and distinct copyrights. The four sources of royalty revenue in the music industry are:

1. MECHANICAL ROYALTIES

Royalties generated for the physical or digital reproduction and distribution of copyrighted works. This applies to all music formats such as vinyl, CD, cassette, digital downloads, and streaming services. For example, a record label pays a mechanical royalty to a songwriter every time they press a CD of their music.

2. PUBLIC PERFORMANCE ROYALTIES

Royalties generated for copyrighted works performed, recorded, played or streamed in public. This includes radio, television, bars, restaurants, clubs, live concerts, music streaming services, and anywhere else the music plays in public.

Performance Rights Organisations often collect performance royalties. 

3. SYNCHRONIZATION ROYALTIES (SYNC)

Royalties generated for copyrighted music paired or ‘synced’ with visual media. Sync licenses allow the right to use copyrighted music in films, television, commercials, video games, online streaming, advertisements, and any other type of visual media.

Furthermore, a synchronization license does not include the right to use an existing recording with audiovisual media. A licensee will also need a master use license before using copyrighted music with a new audiovisual project. This is an agreement between the master recording owner such as a record label and the person seeking permission to use the recording. Any use of protected music in an audiovisual project, whether it’s a full song or short sample, will need a master license as well as a sync license. 

4. PRINT MUSIC ROYALTIES

Print royalties are the least common form of payment a copyright holder receives. This type of royalty applies to copyrighted music transcribed to a print piece such as sheet music and then distributed. Additionally, these fees are often paid out to the copyright holder based on the number of copies made of the printed piece.

The next logical question then is who gets music royalties?

The following either receive or distribute royalties for copyrighted music:

1.SONGWRITERS

Songwriters are those who write both the music and lyrics for a song. They receive either mechanical, performance, or sync royalties depending on the usage of their recordings.

2. PUBLISHERS

The publisher is the person or company responsible for ensuring copyright holders receive payment for the use of their music. For example, a music publisher will obtain the copyright from the songwriter in exchange for royalty privileges. They also issue licenses for the use of music they represent as well as collect licensing fees. These fees get split between the publisher and the songwriter.

3. RECORD LABELS

Record labels are responsible for marketing and distributing an artist’s recordings. Generally, they issue contracts that allow them to exploit recordings in exchange for royalty payments over a set length of time. They also often have the master rights to a recorded song, but not the publishing rights. Moreover, record labels generate royalty income from mechanical and performance royalties. The artist then receives a percentage of these royalties.

4. PERFORMANCE ARTISTS

A performing artist is anyone who performs the songwriter’s original work. Performers do not have publishing rights unless they are also the songwriter. Moreover, public performances of copyrighted music generate performance royalties for songwriters. These fees are often collected by the PROs such as ASCAP, BMI, or SESAC.

5. PERFORMING RIGHTS ORGANIZATION (PRO)

PROs collect public performance royalties and distribute those fees to the songwriter and music publisher. These organizations also track performances and broadcasting of registered music played in public. The PROs in the United States include ASCAP, BMI, and SESAC.

6. MECHANICAL RIGHTS AGENCY

Mechanical rights agencies manage mechanical licensing rights for the music publisher. They also issue those rights to anyone reproducing and distributing copyrighted musical compositions. These agencies often charge a set percentage of gross royalties collected for their services.

7. SYNC LICENSING AGENCY

Sync licensing agencies acquire the rights from record labels and music publishers to issue licenses for syncing music with visual media. They also distribute royalties for sync licenses to whoever owns the master recording rights.

In conclusion, there is a lot of information you need to digest and understand in order to really make money from music. Sign up with a PRO, like PRS or BMI. Register any music you make. Understand the royalties available to you and finally get the book “All you need to know about the music busniess” by Donald S Passman and you’ll be better positioned for the business side of music.