What You Need To Know About Copyright, Royalties and Performing Rights Organizations.
This may seem like a BORING topic, but it’s one of the most essential pieces of information you NEED to know. Music Copyright is where artists make their money. If you don’t know certain TERMINOLOGY, you and your artist could miss out on a big payday. Which may haunt you for the next fifty years. There are artists I have worked with who are still waiting for their copyrights to revert back to them from songs from the early 70's….the soonest they can request them back from the record labels is in 2032. READ those last two lines again.
What is copyright?
The definition of copyright is the ownership of intellectual property by a group or person.
If you own that recording, you can control whatever happens to it and how it can be potentially used. Retaining that ownership can lead to making a lot of money from all of your recordings.
How you ask? Let’s dive into the many ways you can drive revenue from your recordings. The goal is to make a living making your music. It’s easier and harder in a lot of ways to profit from your hard work in today’s world versus in the past. We will talk more about this later. Let’s start with the basics first, so you understand your rights as a songwriter.
How do I earn royalties from my sound recordings?
To make money from your recordings involves the copyright of the recording being utilized.
What is a sound recording?
A sound recording is a composition that is captured in a device that can be played back. Often called the medium or master recording. Protect your master recordings at all costs! They may make you a lot of money in the future. No one thinks about 30–50 years from now. My work with legacy artists and artists who are still making hits has truly opened my eyes. I talk with all of them about master recording rights, termination, etc., pretty frequently when it comes to their publishing. If you can, try to own your masters and publishing.
The master is the physical recording and the publishing is the right to use the songs in commercials, cover songs, film, etc. If you were to ever sell your catalog, selling your publishing = the royalty streams of income, ASCAP, Soundexchange and publishing income.
GUARD YOUR PUBLISHING WITH YOUR LIFE!
The master is the final version of the song after it has been recorded, mixed and mastered. This version is used in distribution to all DSPs (Digital Service Providers: Spotify, Apple Music, etc). Back in the day, master’s were stored on physical reel to reel tapes. Technology has clearly advanced and now they are saved in a file on a computer.
Who owns the sound recording or master once the song/album is completed?
If you are just starting out (independent) and do not have a publisher or record deal in place, you own that recording and master. Make sure to register the song with your PRO (Performing Rights Organization).
If you are presented with an agreement by an independent or major record label before or after you record your music, make sure that you have a trusted entertainment lawyer review the wording. Most record labels will try to pursue ownership of your masters in a contract in exchange for them paying the costs to record and promote a single or album.
Let’s go back in time for a minute. Record labels have always been sneaky and greedy unfortunately. They are in the business to make money with your music. There are risks on both sides. My legacy artists are now dealing with termination issues to get their masters back that they “temporarily” gave up to their record labels. One artist recorded an album in 1976, his termination date is 2032. He can send notice up to ten years prior, so 2022. Think about that, the time period you are giving up your masters.
I had another artist who recorded a massive hit in the early 70’s. He went to terminate and through a top entertainment lawyer, found sneaky and very suspect wording. It mentioned in his contract with a major record label that he was a “work for hire,” in regards to recording his own song. After finding this out, he only can sell half the publishing as well since in the agreement he had to share it with the record company in order for them to actually release it. Messed up, I know. But, he did it anyway and now makes a very healthy income since it’s one of the top performed songs in the world.
If you can, even with a big record label, try to retain your copyright. It may net you millions of dollars just for asking.
Do you need to copyright your recordings?
You do not need to register your song recordings with the copyright office. However, it would be wise for you or your lawyer to do so anyway as you want to be legally covered in case someone infringes on your copyright. Using your som=ng without permission. You would be surprised how many times this has happened, to unknown and known recording artists.
In order to register, you must directly register songs with the U.S. Copyright Office. Here is the form if interested. But remember, the sound recording copyright is completely separate from a composition copyright. That is reserved for songwriters. If you own the sound recording and composition, you will need to register copyrights for each one.
What are the sources of revenue for my recordings?
FYI: There are many ways to use sound recordings to generate sources of revenue. But…these sources also generate publishing royalties for the songwriters/publishers. For now we are just going to talk about streams of income with sound recordings.
At the present moment, the most popular way for fans and listeners to hear your music is on streaming platforms. Those include, Spotify, Apple Music. YouTube, etc. With streaming, fans can hear your music as much as they want and not actually download the songs or own them. In order to pay sound recording owners, streaming platforms generate revenue by advertising and paid memberships at different costs per month or year. Then they pay out revenue at a predetermined streaming royalty rate.
The rates vary on each platform and record label if you are signed to a major. You can actually get a better royalty rate if you structure a deal in your favor. Most rates are between .003 to .006. But, I should mention that these streaming platforms are constantly negotiating with concerned organizations in the music business to adjust the rates.
Revenue from Downloads
If you can believe it, some people still download music. iTunes is still the top platform for listeners to buy your music from. An artist makes more money if a fan downloads a song or album. The artist’s music now lives in the user’s library who downloaded it.
Also, downloads often deliver higher quality audio files than streaming. Since the quality for DSPs often is based on the bandwidth they have available and wifi connection.
For years, the industry of physical media has declined, until recently. The sale of CDs and Vinyl has been in a sharp decline. But, in the last few years they have made a strong comeback! More and more artists are selling vinyl, CDs and even 8 tracks with new releases. This is where an artist will make the most revenue, as you get a larger percentage of profits or can in some cases set the price yourself.
Digital Performance Royalties and Neighboring Rights
I have had many people ask me over the years to clarify what neighboring rights are and how they relate to digital performance royalties.
In the United States, Neighboring Rights Royalties are created by airplay on satellite radio stations. Like Sirius XM and Internet radio like Pandora. Neighboring rights are essentially digital performance royalties; Royalties generated from radio airplay. But the royalties are for the recording (vocal) instead of the composition (lyrics) and are owed to the holder of the sound recording copyright.
Ex: If you have a hit song that you personally recorded but did not write, these royalties are for you.
Who collects these royalties?
In the United States, one of the most well known companies that does this is called SoundExchange. They collect royalties from satellite and Internet radio. I highly suggest that if your music is being played on the radio or internet radio stations to register on the platform. SoundExchange holds royalties for up to three years if you have not registered yet. A few years ago I started managing a semi well known artist who had never heard of SoundExchange. We registered him and his back royalties were enough to buy a modest home. These are your royalties that are owed to you. What are you waiting for?
What about Neighboring Rights outside the United States?
Outside the term has a different meaning. The term refers to royalties that are owed to performing artists when a song is played on terrestrial radio. The United States does not recognize these royalties. However, other countries around the world do.
Let me be clear though, only recordings created outside the U.S. are eligible to collect neighboring rights royalties for terrestrial radio airplay. If You live outside the U.S. and recorded your music OR you live in the United States but recorded your music in another country, you are eligible to collect royalties. I highly suggest that you research the neighboring rights organization in that country and register your songs with them. Also, feel free to ask your publisher or record label about them. Knowledge is power, and in some cases you can profit nicely from understanding your rights and what types of royalties are owed to you.
What does it mean when your song is “sampled?”
This is when another artist uses your recording in one of their songs or projects. It’s called “sampling,” since you own the copyright to the recording. If you have full or majority ownership, you are in position to approve or deny the use. If the copyright is split evenly between different parties, (50/50) each owner has to agree. That’s another topic that most artists and managers don’t take seriously. If you write or record a hit song and have to share the spotlight with another artist or writer. Make sure you get along with them, their families etc. If one of the owners passes away, you will be dealing with their estate. I know it’s hard to tell how the future will play out. But I have worked with numerous bands and artists that are still fighting over copyright, thirty and forty years later.
Getting back to sampling. If you approve of the use of your song, you can negotiate the fee the other interested party pays. Sometimes it’s a flat fee they can offer (MFN) or negotiable. Also, it doesn’t hurt to ask around quietly if you are being quoted a good price. Sometimes larger artists instead of a one off fee will offer you a percentage of the streaming or copyright royalties for the song.
Ex: I had an artist that was approached by Beyonce a few years ago. She wanted to sample a recognizable lick in my artist’s song from the 1970’s. Since the lick was prominent throughout her recording, we negotiated that my artists would receive 33% writers share of the song, plus a fee. So to this day he still gets publishing royalties since he owns 33% percent of that song.
What about remixes?
Similar to sampling, if someone wants to remix the recording you own and created, they must get permission from the copyright holder directly. Remixes are not samples or covers, they are somewhere in between. A remix creates a new recording and in turn if someone wants to remix your song they must pay you money, secure a license or negotiate the fee you are owed for them to release their remix.
If you are a songwriter and not a singer, this next section is for you.
What about Music Publishing?
Music publishing is the use of a song’s composition copyright. The composition of a song is the lyrics and melody written by one or more songwriters. Music publishing only relates to the composition, songwriters, that is you!
What types of royalties can I earn from music publishing?
Performance royalties, Mechanical royalties, Licenses for samples, Sync licensing fees, Printing sheet music
How do I collect my publishing royalties?
Most independent artists who perform and write their own songs control both of their copyrights. It is extremely hard to collect all of your earned royalties by yourself. It’s not impossible, but I do not recommend this. Why? Well, there is a much easier way. Plus, in order to collect every single publishing royalty owed to you, that would mean you would have to qualify technically as a publisher.
Registering your songs with hundreds of organizations around the globe. And your catalog would have to be large enough to qualify as a publisher. It’s entirely up to you, as you are the artists. But more than likely you would rather be writing songs. A manager would have to do that for you, which would take valuable time away from them promoting you. Also, you don’t want to chance them being registered incorrectly, do you?
Those royalties would be technically classified as unclaimed and those all have expiration dates to claim them. There is an easier way, Performing Rights Organizations or PROs.
What about performance royalties?
Any time a song you composed is played in a public setting…either through live performances in concert, in a restaurant, elevator, grocery store or on the radio, that is called a performance royalty that you are owed. These royalties are collected by the PROs, along with record labels if you have a publishing deal with them. The most common would be an admin deal. Where the record label gives you an advance for a period of time, typically three to five years to administer and take care of your catalog for a percentage of your income. They also will shop your catalog for sync licenses, covers, etc. Once you have recouped the advance they have given you, the publishing percentage they took reverts back to you and you can either renew or go to another publisher for a better deal. PROs do not do this, record labels publishing and independent publishers do this. Remember, they are in this business to make money with your music.
Performing Rights Organizations (PROs)
They are agencies whose sole job is to monitor live performances and radio airplay. Then they pay royalties to publishers and songwriters who claim ownership to songs that are registered with them. In regards to blanket licensing, PROs charge a fee to restaurants, venues, and radio stations to have the right to play or perform the songs that are registered with the PROs catalog. The fee varies on the size of the venues, the bigger they are, the larger the fee. In turn, the PROs take fees but then use that money to pay publishers and songwriters.
If you are a national or international touring act, typically management or the venue has to register your setlist with the PRO you are affiliated with. This way, you get paid and if you are not the songwriter, they get paid as well. If you are an independent, here is a link below to register, this is for the PRO, ASCAP. A quick google, you can easily find where to register the setlist you plan to perform on tour.
How do Performing Rights Organizations pay performance royalties?
They split performance royalties 50/50 between the songwriter and publisher. Which means you will have to create two accounts with the PRO you choose in order to get paid on both sides.
Which PRO should I join? You can only join one.
I have personally worked with the two main PROs, ASCAP and BMI. Both get the job done, collecting songwriters royalties. However, I am a bit biased when it comes to ASCAP. They have always gone above and beyond for my artists, are always available when I call their customer service and extremely friendly when we go to events they are hosting. I have also found that they tend to pay a bit more than BMI when it comes to dispersing royalties. Now, BMI is great as well, I have worked with them as well. They do make it tough when trying to transfer an artist to another PRO, but they take a bit longer to get a hold of. It honestly depends if your management or record label has a better connection with one or the other. The better the connection the better you and your catalog will be treated.
What are the differences between them?
Not much. But, ASCAP currently charges a one time fee of $50 to register as a songwriter. BMI does not charge a fee to register as a songwriter. But, to register as a publisher, they charge a one time fee of $150. ASCAP charges $50 to register as a publisher and they also require you to collect the publisher’s share of royalties. BMI allows songwriters to directly collect the publisher’s share.
Other PROs to mention are SESAC, which is invite only. GMR (Global Music Rights) was formed by Irving Azoff and is invite only as well. PRS is part of the British music copyright collective.
What about mechanical royalties?
Originally, the mechanical royalty was attributed to physical media. We talked about those previously (CDs, Vinyl, etc). Now, mechanical royalties have been expanded to include digital sales and streams. If and when your song is downloaded from a service like iTunes or played via an interactive streaming service like Spotify or Apple Music, you are owed a mechanical royalty.
These royalties are also generated by artists recording a cover version of your composition. If someone wants to record a song you wrote, they must pay the current mechanical rate in the U.S., which is 9.1 cents per copy downloaded or streamed. Think of people who cover Christmas music that is not public domain, they must pay to release their own version. These royalties are paid to a mechanical agency, similar to a Performing Rights Organization.
What does a mechanical agency do?
They collect these mechanical royalties from labels for the pressing/creation of physical media and from digital services like iTunes/Apple Music and Spotify for downloads and interactive streams. They also collect directly from artists who pay them the mechanical rate for cover songs they want to release.
There is only one mechanical agency in the United States. The Harry Fox Agency (HFA). Most artists know them from their licenses for cover songs, but HFA also collects mechanical royalties from digital platforms. Other countries have mechanical agencies.
I want to stress that it’s very difficult to join Harry Fox as an independent artist. Only publishers can affiliate with HFA, and they require that publisher to have a large catalog of songs.
What is the Mechanical Licensing Collective?
The Mechanical Licensing Collecting (or MLC) is a new U.S.-based Mechanical Rights Organization (MRO) for self administered songwriters. It was designated by the U.S. Copyright Office to issue and administer the digital audio mechanical blanket license in accordance with the Music Modernization Act to DSPs in the U.S. They are now responsible for collecting mechanical royalties from streaming platforms in the U.S. The MLC does not collect international royalties. It will only collect royalties generated from streams in the U.S.
Should I give a producer some of the publishing?
Honestly, it depends. Technically, a song is words and melody, that’s it. Producers at times can contribute to the overall creation process. But do they have a legal right to your song? Nope. It’s entirely up to you on how to structure. Personally, I pay producers per song and make it clear that they are getting a flat fee and not a percentage on the backend. Some producers will be greedy and try to register with SoundExchange or a PRO, claiming ownership for a percentage. Make sure to watch out for that. Record labels sometimes have in house producers where they get a percentage of every song regardless, watch out for that as well. Remember, you are the artist, this is your music and you should be in control of who you want to work with and deal with for the rest of your music career. And ALWAYS get your agreement on paper.
If you are an independent artist, the top distribution platforms are CD Baby, TuneCore, DistroKid, etc. I would personally recommend any of them. I have used all of them at one time or another to help some of my independent artists. The platforms get your music delivered to all of the DSPs and can help with song splits between writers, which should also be registered with your PRO. Make sure when you are writing with someone else you have their PRO information and agree on the correct splits. The norm is 50/50 if both of you put in equal work. If you find yourself in a situation where you are writing with another artist, and that artist has already had some success, stand your ground. Sometimes they may try to take advantage of you and offer a lesser percentage. Unless it’s absolutely necessary.
KNOW YOUR WORTH.
About Liz Kamlet
Liz Kamlet is a top music industry professional. Her clients have sold over 100+ million records, 2+ billion streams, 50+ million social media followers, and won/been nominated for multiple Oscar and Grammy awards.