Copyright & Royalties Of A Song
Overview
My aim with this Article is to help clarify and offer a brief overview of what you as an Artist / Songwriter want to be aware of when it comes to Copyright and Royalties within the Music industry. I want to make sure you are getting paid what you are owed and are setting yourself up for long-term success.
For help with terms in this article check out Music Industry Terms
Two Pies for one
A crucial concept when it comes to copyright in the music world is that the way royalties are paid out and calculated is essentially divided into two main buckets, Sound Recording (Master), and Composition (Publishing). A group of terms refers to these categories and the ways that people discuss them, but they are essentially the same thing.
You can think of Royalty or copyright on a 200% scale where it is divided into two separate 100% pies.
One Pie is the composition or the written song and the other is the Sound Recording or Master. These areas of copyright effect are connected to different jobs and companies in the creation of the overall Song both composition and sound recording.
Types of Royalties Generated
Performance Royalties (Composition)
Performance royalties are paid to songwriters and their publishers for the right to play a composition in public this includes radio airplay, TV broadcasts, live performance in venues like bars and clubs, and, interactive digital streams. This means places where the listener chooses what they listen to like on Spotify and Apple Music.
Who Collects / Pays: PRO or Admin Publishing Company
BMI
ASCAP
Mechanical Royalties (Composition)
Mechanical Royalties are paid to the composition side they are paid for the right to reproduce a composition through the process of recording, manufacturing, and distributing the work. Essentially it is paying the Songwriter for the right to reproduce the composition in a “mechanical” form.
The reason this is called “mechanical” is because it originates from the time when songs were “mechanically” reproduced in piano rolls and vinyl records. in the digital age, the term can cause confusion, but the same “reproduction” standard applies, because the composition is being reproduced for use.
Mechanical royalties have grown in importance with the rise of streaming services, but they’re still going to be a relatively small portion of a songwriter’s income so may not be something to concern yourself with too much. I wanted to include them just so you are aware and don’t become confused like me when they come up, especially since they seem to be so closely related to Sound Recording Royalties.
Who Collects/Pays: MLC or Admin Publishing Company
MLC collects only Mechanical Royalties in the US.
An Admin Publishing Company like CD baby pro or Songtrust will collect from all Mechanical Royalties and PRO
Sound Recording Royalties (Sound Recording)
Recording-generated royalties (sometimes referred to as sound recording royalties) are generated on behalf of a sound/sound recording rather than a composition. This is the most basic royalty performing artists and labels earn when their master recording is downloaded, physically bought, or streamed.
Unlike composition royalties — which are collected by PROs and publishers — master-generated royalties are handled by distributors. They’re in charge of collecting royalties directly from record stores and streaming platforms on behalf of the sound recording owner. The distributor must then distribute these royalties back to the label. If an artist is not with a label, they will collect royalties directly from their distributor.
Sound Exchange is a non-profit similar to a PRO but different in that they collect royalties on the Master Recording, they are the only way to receive royalties from non-interactive platforms like SiriusXM, Pandora, and iHeart Radio
Who Collects/ Pays:
Distributor
Sound Exchange
Conclusion
To sum up this article, there are two main areas of copyright, composition, and sound recording. songwriters and Publishers work in the composition area and Artists, Producers, and Record Labels work in the Sound recording area. Composition royalties for songwriters and Publishers include performance royalties paid by PROs like BMI and Mechanical Royalties paid by MLC. Sound Recording Royalties are paid directly from the Music Distributor to Artists, Producers, and Record labels based on the splits of the song.
There is more nuance and complexity to copyright in the music industry but I hope this helps as a general overview of understanding
My Suggestions for Independent Artists and Songwriters
The following are my suggestions for independent Artists and Songwriters who are wanting to get started collecting their royalties:
Distribution & Sound Exchange (Sound Recording Royalties)
Be sure you pick a distributor that best serves you, do your research, and see which feels like the best fit for your situation but I recommend Distro Kid, for its simplicity and speed. It has the highest payout rate and lowest cost on the subscription and also has great features for splits and collaboration.
Sign up for Sound Exchange so you can collect from non-interactive platforms like SiriusXM, Pandora, and iHeart Radio (sound exchange has the lowest admin fee for collecting these Royalties for you at 4-6%)
PRO (Performance Royalties)
Sign up for a PRO so you can register your songs, and collect on potential performance or mechanical royalties. I suggest BMI because it is free and You don’t need to register a vanity publishing company if you are an unaffiliated songwriter with BMI. BMI will pay you 100% of the money.
MLC or Admin Publishing Company (Mechanical Royalties)
You can sign up for MLC as an independent self-represented songwriter to receive mechanical royalties or sign up for an Admin Publishing Company Like SongTrust. But I would be sure to do further research to see if it is worth your investment at this time.
Additional Resources
There are tons of blogs and information on the internet to further explain these concepts but two more trusted, distilled, and comprehensive resources I have found on general music business topics are the following two books:
DISCLAIMER: In addition to the disclaimer, for clarity: This information is for informational purposes only and should not be taken as legal advice for any individual case or situation, and please do not consider this information to be a substitute for obtaining legal advice from a qualified attorney licensed in the jurisdiction(s) relevant to your matter.
