Music Copyrights for beginners
Music Copyright, definitely the least sexiest area of the music industry but yet extremely important cause that's how artists get paid. The problem is that it’s certainly not easy to understand cause there are many players involved and different types of rights. In this article I’m gonna try to explain what is the music copyright, the types of music rights and who gets a cut. So, let’s start by trying to clarify some concepts!
Music Royalties are essentially the payments received by the rights holders, which can be songwriters, composers (songwriters often write music for individual singers or bands, while on the other hand, composers arrange music for large groups of musicians like orchestras), recording artists (those who performs songs in a studio-like setting for the purpose of recording songs and releasing them to the public. A recording artist can also be a songwriter), publishers, and other copyright holders for the right to use their music. These royalties are paid out by institutions that use the music (from TV channels, radio stations and venues to streaming platforms and beyond), and collected on behalf of rights holders usually by CMO’s (Collective Management Organizations which are collection societies that enable copyright owners to collect royalties).
And to continue, let’s explain the first important thing we have to understand. For every song recorded, there are two sets of copyrights, one for the musical composition and one for the actual sound recording.
Composition Rights: songwriters and their music publishers own the copyright for the harmony, melody, and lyrics.
Master Rights: the copyright for the particular expression of a composition, created when the composition is turned into a sound recording, and owned by recording artists or usually their record labels.
And up to this point let’s make a stop to clarify what a Publisher is!
Publishers basically are in charge of managing the royalties (remember, the money paid to songwriters when their songs are sold, distributed, embedded in any media or monetized in any other way). So, if you write songs and have certain success you are probably going to need a Publisher but watchout, getting a Publisher will increase your income but they will also get significant revenues from the songs, so deals are often very complex and it's always advisable getting legal help before signing any contract!
Surprised? Well that was easy peasy. From now on it’s when it gets real messy cause there are different types of music royalties.
Mechanical Royalties: these ones are usually paid out by the record label if there is one involved, or through the music distribution service in case of independent artists. These royalties are generated through physical or digital reproduction and distribution of the copyrighted songs, which applies to all music formats, both old and new such as vinyl, CD, cassette, digital downloads, and streaming services (payouts for digital streams are therefore royalties and labels and recording artists work with distributors -or aggregators- to put the recording on streaming platforms and get back royalties due). As a physical example, record labels pay a mechanical royalty to a songwriter every time they reproduce and sell a CD of their music.
Performance Royalties: these ones are generated through copyrighted songs being performed, recorded, played or streamed in public. Meaning that even playing a recording of a song is considered a performance. Which includes for example coffee shops but also terrestrial radio (AM/FM), television, clubs, restaurants, bars, live concerts, shopping malls, music streaming services, internet radio, and anywhere else the music plays in public.
As an example of a live performance, artists always have to report their setlists to venues, exactly for purposes of public performance royalties calculation. Venues have to send the setlist to a PRO (performance rights organization), and this one will allocate the public performance royalties back to songwriters (which are often the same performers who played the song in the first place).
Sync Royalties: these ones are generated when copyrighted music is paired or ‘synced’ with visual media. Synchronization licenses give the license holder the right to use copyrighted music in films, television, commercials, video games, online streaming, advertisements, and any other type of visual media.
Print Music Royalties: these one are not as common for recording artists but are a common form of payment for classical and film composers. This type of royalty applies to copyrighted music transcribed to a print piece such as sheet music and then distributed through a print music publisher. These fees are often paid out to the copyright holder based on the number of copies made of the printed piece.
By this time you sure have already guessed there are many parts involved, so let’s find out who’s taking a cut from all this.
Songwriters: they are owners of the composition and receive a percentage of all composition royalties.
Recording Artists: they are partial owners of a master recording, so they get a share of all royalties on the master side. The exact percentage depends on the deal signed with record labels and distributors.
Record Labels: like we just explained, royalties on the master side are typically split between the recording artists and the record labels, given there’s a recording deal in place. Typically, record labels finance release marketing and/or production, taking a sizable stake in the future master royalties. Accordingly, record labels earn a share of all different types of royalties due to recording artists.
Publishers: songwriters receive 50% of the performance and mechanical royalties. The other 50% is the publisher’s share but this doesn’t mean that they keep this cut. It just means that it’s their duty to collect this share. Publishers take a cut from this share in exchange for the administrative and/or promotion services, involved in collecting and maximizing the composition royalties on behalf of the songwriters.
Distributors: the distributor’s job is to get an artist’s music onto the digital streaming platforms, promote the artist’s content is visible across the digital storefronts, and collect streaming royalties on behalf of the artists. In exchange (just like the PROs on the composition side) distributors take a percentage of the royalties or a flat fee for each payout.
PROs: they are the organizations that collect performance royalties and neighboring rights on behalf of songwriters and publishers. They are the distributors on the composition, issuing licenses to music users and allocating the money generated to proper songwriters and their publishers.
Licensing Companies and Sync Agencies: they work with both the master and compositions sides of the music industry. Sync agencies build connections between right owners and music users. Helping the artist find a sync placement in a movie, or, inversely, helping the movie producers find the song to fit the scene. Licensing companies usually take a cut on all sync fees passing through them.
So, to summarize. Someone writes a song (songwriter) and someone records that song (recording artist). Both can obviously be the same. Then artists make a deal with a partner (usually with a label for recording artists and with a publisher for songwriters) to promote and monetize their songs. Then, the songs (master recordings) have to be distributed (the reason why labels work with distributors to take their music to, let’s say Spotify). In the meantime, songwriters and publishers make agreements with PRO’s, so that these can track and collect royalties on their behalf. In between, music is reproduced in many different ways (live shows, radios, records, streaming services, bars, etc…) and depending on how music has been played, the intermediaries collect money. In the last step, finally the artists and songwriters get paid (and therefore record labels and publishers).
Learn more by reading How Music Royalties are calculated?
Cover photograph by Pooneh Ghana
