According to most of the people music industry or any creative industry is very hard to survive in but the income is very slim but times are changing for artists and musicians as music royalties are a good way to get some money in your pocket while creating something you love. So, let’s dive in:
What are Music Royalties?
More or less every musician or artist is aware of this term but how much do you know exactly? And is it enough for you to claim it? No worries, here is a simple explanation. Music royalties are payments that are compensatory which are received by rights holders like
- Songwriters: whose lyricism is the first to the creation of a song.
- Composers: whose vision and musical sense puts everything in a harmonious melody.
- Recording artists: whose magical vocals give life to the beautiful lyrics and melody.
And their respective representatives in exchange for the licensed use of the tracks or the songs. So, in simple words, you get paid every time your licensed track gets played or used by somebody else, like in reels and videos for example. Sounds fair, doesn’t it? Most of the time these royalties are paid by institutions to intermediary bodies that collect the royalties on behalf of the rights holders but sometimes they are paid directly as well. But to get deeper into this concept you should know about the two subsets of music rights. The first one is Composition and the second one is Master. The first kind of copyright is owned by songwriters and their music publishers for the harmony, melody, and lyrics. The copyright is only gained when the music, or lyrics, or even the harmony is committed to any tangible medium starting from a piece of paper to a single tweet. The second kind of copyright is gained and owned by recording artists and their record labels when a song is turned into a sound recording.
Before going too deep, a few things should be kept in mind while collecting royalties like how it is distributed and who gets paid when it is dealt.
Recording Artist: If you are the recording artist then it is your voice that has given life to the track and it makes you partial owner of a master recording and all of the royalties get shared on this side which includes featured artists getting the lion’s share and also non-featuring artists as well. Although the exact percentage of the share is stipulated in deals they have signed up with record labels and distributers.
Record Labels: Given there is a recording deal in place, royalties on the master side are usually shared between artists and record labels. As the record labels put a huge amount of money into finance for the release marketing or/and the production, they take a huge cut in the future master royalties. Due to this, the record labels earn various kinds of royalties due to recording artists.
Distributors:
These are the group of people who are responsible for the promotion of your music on different digital platforms. It’s their job that your music gets spread all over the internet and Just like PROs, they collect the royalties on behalf of the artists, and for this, they take a minimum amount out of the royalties. Distributors, labels, and recording artists together make up the pipeline of the recording royalties.
Licensing Companies and Sync Agencies: These agencies work on both the master and composition sides. They create a bridge between the right owner and music users. These agencies help an artist to find a sync placement in the latest hit movie, or, inversely, help the producers of a movie to get a song that fits the scene. For this kind of work, the licensing companies usually take a percentage of all sync fees.
Songwriters: Just like recording artists who are partial owners of the master recording and get a share of the master royalties, the songwriters are partial owners on the composition side and get a cut from all composition royalties. When any music work is created, two equal shares of copyrights are assigned among which 50% goes to the writers and 50% goes to the publishers. The share of the writers is paid via PROs directly to the writers but in the case of the publisher, only a publisher can collect its share. This means if you are a songwriter who does not have a publishing company in your support you will miss out on the publisher’s share.
Publishers: As mentioned previously the publisher gets 50% of the royalty but that does not mean that they can take it all home, it only means that it is the publishers’ duty to collect that share. After this, the royalty is split if there are subs or smaller publishers in the case of a vast international company in exchange for the administrative and promotional services they have provided.
PROs: These are management organizations that collect composition royalties on behalf of publishers and songwriters. They are responsible for the issuing of licenses to music, distribution of the composition, and allocating the money generated to the rightful songwriters and publishers.
To get further the next step is to know and understand about the types of royalties a musician or an artist can avail.
Six Types of Musical Royalties
Streaming Rights: Due to the rise of music streaming platforms, this type of royalty can be gained. Whenever your music is streamed on these platforms a few coins slide into your pocket.
Neighboring Rights and Royalties: These royalties will dance their way into your life whenever your track gets airtime that is whenever it is played on radio, TV, or in public places, and the rights for these are applicable to performers and recording artists.
Digital Performance Royalties: When your music swaggers its way on video platforms like YouTube, Vimeo, JW Player and so on the platforms are bound to pay you for creating such musical masterpieces.
Sync Licensing Fees: How many times have you watched a video or a movie with a piece of very good background music or song and thought to yourself that the music is a perfect fit for the visuals? That is licensing fees so every time your track gets used for other people’s visuals like for TV commercials, videos or movies keep your ears open for that sweet jingling sound of coins flooding in.
Public Performance Royalties: Imagine your music echoing in a café or a shopping mall, basically in public. Now imagine coins shimmying their way down in your pocket because public performances can bring you royalties too.
Mechanical Royalties: These kinds are gained when your music is reproduced or distributed in physical or digital form. Think of CDs, vinyl records, or digital downloads, and every time someone buys or streams your music, you become a little bit more rich.
Now let’s talk about how these music royalties are collected.
Mechanical Royalties: It is collected by the mechanical rights administrator on behalf of the songwriter or composer. It’s the Mechanical Licensing Collective in the U.S. Other than them, songtrust also collects these.
Performance royalties: These are mainly collected by performing rights organizations, such as ASCAP, BMI, and SESAC, who collect money for public performances like radio broadcasts, TV broadcasts, live performances in theaters and nightclubs, etc.
Streaming Royalties: It is mainly negotiated between the music distributors and streaming services and paid to the sound recording copyright owner.
Neighboring Rights/ Digital Performance Royalties: These are quite similar to Public Performance Royalties which pay the songwriters but the difference is that Neighboring Rights pay the sound recording owners for public performances.
Now stop and think about why you should go through all of this. How long do music royalties last?
That is the best part of this whole thing actually. When you go through all of these overwhelming and pretty confusing equations you might ask why bother. Well, you should bother because music royalties last seventy years after the death of the creator or the death of the last surviving creator in the case of a band or a group.
So, you see, going through this whole equation is definitely worth the time you invest in it because the coins will still keep coming even if you have left the world with your creation still pleasing the people.
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