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One of the most complex and widely misunderstood areas of the music industry is music publishing royalties and, how you get paid as an artist through this revenue stream. Here in this 2-part discussion we take you through every part of music royalties and explain how they are earned and how you, most importantly, get paid. At IQ Management, we offer a plethora of services to our artists and, we cannot stress highly enough, that music royalties are one of the most important areas of any artist’s career.
IQ Management has been involved in the music industry for over 30 years. In that time, we have seen the landscape of how music earns money for artists change almost immeasurably. Digital streaming services have become integrated into every facet of music and, it is now more complex than ever to understand what is earned and who it is paid to, and by which organisation. We have put this guide together to explain how you earn royalties from multiple sources including, Spotify, YouTube, films, games, and live performances. Not only that but also the percentages that are fair and reasonable, so you get paid the correct amounts.
In part one, we will take a look at copyright, the different types of royalties, how they are earned, and the different organisations that collect and distribute them.
We hope these in-depth guides help you in understanding the more complex areas of the music industry and help you in choosing a reputable company to act on your behalf.
Sound Recording Copyright
However, it’s important to understand that sound recording copyright is separate from the copyright of the underlying musical composition. While the composer may own the copyright to the musical work, the person or company that owns the sound recording of the performance also has a separate copyright on that recording.
The length of time that sound recording copyright lasts varies depending on the country, typically ranging from several decades to a century. In the United Kingdom, the duration of copyright for sound recordings is legally established to be 70 years from the initial date of publication. Or, 50 years from the creation date, depending on which event occurs first.
Songwriting copyright is the legal protection that grants creators of musical compositions exclusive control over the use of their works. This intellectual property right enables the copyright owner to have exclusive rights to publicly perform, reproduce, distribute, and create derivative works (remixes, etc) based on their original composition.
In most countries, the person (or company) that writes the lyrics and music of a song is considered the author or creator of the composition and holds the copyright. As the owner, they have complete control over the use of their work, including the right to make and distribute copies of sheet music, lyrics, or audio recordings. This also extends to licensing the works to others to use their composition, for an agreed fee.
It’s important to distinguish songwriting copyright from the copyright of the sound recording of the song. The sound recording is owned by the person or company that produces the recorded performance of the composition. Therefore, the songwriter and the recording owner have separate copyrights, and each party must be granted permission to use the other’s work.
The duration of songwriting copyright varies from country to country. However, typically it lasts for the life of the author plus a set number of years after their death.
How do I copyright my music?
In the United Kingdom, you automatically obtain a copyright for your original music composition as soon as you create it. This will extend to most countries around the world. You can check how UK copyright law protects your created works here.
You are, however, able to extend protection internationally for territories that may not be covered and enforce your rights in a court of law. You can officially register your copyright with the Intellectual Property Office (IPO). Here are the general steps to register a copyright for your music in the UK:
Create your original music composition – This can be a song, instrumental music, or any other type of musical work that is original and fixed in a tangible medium of expression.
Decide who will own the copyright – If you are the sole creator of the music, you will likely already own the copyright. If you collaborated with others or created the music as part of your employment, the copyright ownership may be shared or owned by someone else.
Complete the copyright registration form – You can register your copyright online using the IPO’s online copyright registration service or by completing a paper form and mailing it to the IPO.
Pay the registration fee
Submit the registration form and payment.
Once your works are registered for copyright, you will receive a certificate of registration from the Intellectual Property Office. This provides evidence of your ownership and the date of creation of your music composition, which can be useful in case of any future legal disputes. It is recommended to keep your certificate of registration in a safe place and renew your copyright registration periodically as required by law.
So, do I need a publisher? What is a publisher?
A music publisher is a company that manages the business aspects of music compositions on behalf of the creators. The main role of a music publisher is to promote, exploit and administer the rights of the compositions they represent. They work with songwriters, composers, and other music creators to help them monetize their compositions by licensing them for various uses and collecting royalties.
Music publishers are responsible for finding and pitching compositions to artists, record labels, advertising agencies, and other potential users. They also negotiate licensing agreements and collect the royalties on behalf of the composition’s owner. This allows the creator to focus on creating new music while the publisher handles the business aspects of their career.
Music publishers may also provide services such as songwriting and production assistance, marketing and promotion, and copyright registration and enforcement. They may also be attached to management companies, who offer the services in-house to the clients they wish to represent. They may also offer advances to songwriters to help fund the creation of new compositions.
Music publishing companies play a crucial role in the music industry by helping music creators monetise their work and reach a far wider audience. They act primarily as a liaison between creators and the end user, negotiating deals and collecting royalties to ensure that creators receive fair and accurate compensation for their work.
Music royalties are recurring generated revenues, from multiple sources that are made to songwriters, publishers, record labels, composers, and performers for the use of their music. Multiple different 0types of music royalties exist. Each of which is applicable to a particular form or usage of the music. Here we discuss the most common types of music royalties.
Note: There are many other types of royalties that may apply in specific situations, such as ringtone royalties, grand rights royalties (for theatrical productions), and more. The specific types of royalties that apply to a particular piece of music will depend on how it is used and exploited.
Mechanical royalties are payments made to songwriters, composers, and music publishers for the reproduction and distribution of their music. These royalty payments are accrued when an artist’s music is used to make physical media, such as vinyl records, CDs, and tapes. They are collected by organisations known as Mechanical Rights Organizations (MROs), which represent the interests of music publishers and songwriters.
In the UK, the rate for mechanical royalties is set by the Mechanical-Copyright Protection Society (MCPS), which is the main MRO. The MCPS operates a blanket license scheme, which allows music users to obtain a license to reproduce and distribute music in return for payment of a set fee. The MCPS then collects and distributes these fees as mechanical royalties to the relevant songwriters, composers, and publishers.
Performance royalties are the accrued payments that are generated and paid to songwriters, composers, and music publishers for the public performance of their music. This encompasses the use of their music on radio, TV shows, movies, or live concerts. The collection and distribution of these royalties are handled by specialist organisations known as Performing Rights Organisations (PROs).
The United Kingdom has two primary Performing Rights Organisations (PROs) that handle the collection and distribution of performance royalties. These are known as the Performing Right Society (PRS) and Phonographic Performance Limited (PPL). The PRS is responsible for collecting and distributing royalties related to musical compositions, which include the lyrics and melody of a song. PPL on the other hand handles the collection and distribution of royalties related to sound recordings. These specific royalties pertain to the actual recording of a song.
The rates for performance royalties in the UK are typically based on a number of factors. These include the type of use e.g. radio play, live performance, etc., the popularity of the song, and the revenue generated from the use. The PRS and PPL use a variety of methods to track and monitor the use of music, including digital fingerprinting technology and surveys of radio and TV broadcasts.
Performance royalties are usually divided between the songwriter, composer, and music publisher. The songwriter and composer will normally receive a larger portion of the royalties. The exact distribution of royalties is determined by the specific contractual agreements between the parties involved.
Synchronisation (Sync) Royalties
Synchronisation (sync) royalties are the financial compensation given to songwriters, composers, and music publishers for the usage of their music in various audio-visual productions. These encompass movies, TV shows, video games, commercials, and any other audio-visual production. These royalties are paid out for the synchronisation of the music with the visual images in the production, hence the term “sync”.
Sync royalties can be a significant source of income for musicians and music procucers, particularly those whose music is well-suited to use in audio-visual productions. The rates payable for sync royalties can vary widely depending on a number of factors These would include the popularity of the song, the type of production, the length of the song used, and the prominence of the music in the production. Other factors would be if an artist has been specifically commissioned to create music for an audio-visual production.
Sync royalties are typically negotiated and paid out on a case-by-case basis, rather than through blanket licenses like performance and mechanical royalties. This means that musicians and music publishers need to be proactive in securing sync placements and negotiating sync royalties for their music.
In some cases, musicians and music publishers may work with sync licensing agencies that specialize in securing sync placements for their clients’ music. These agencies can help to identify opportunities for sync placements and negotiate favourable terms and rates for their clients.
These entities will typically negotiate and pay sync royalties directly to the songwriters, composers, and music publishers whose music is being used. In some cases, a sync licensing agency may be involved in negotiating the sync placement and sync royalties on behalf of the musician or music publisher. These agencies may take a commission on the sync royalties earned in exchange for their services.
Note: Sync royalties are separate from other types of music royalties, such as performance and mechanical royalties, and may have their own unique contractual and payment terms. As such, musicians and music publishers should ensure that they have clear agreements in place with the entity using their music for sync placements, in order to ensure that they are receiving fair compensation for the use of their music.
In the United Kingdom Digital Royalties refers to payments generated and paid to songwriters, composers, and music publishers for the use of their music on digital platforms. These include streaming services, download stores, and online radio. Digital royalties are comprised of various types, such as mechanical royalties, performance royalties, and sync royalties.
Mechanical royalties compensate songwriters and music publishers for the reproduction and distribution of their works in digital media. This includes permanent downloads and interactive streams that take place on digital platforms. The current rate for mechanical royalties in the UK is set by the Copyright Tribunal and is currently 9.1p per track or 8.5% of the retail price, whichever is higher.
Performance royalties are paid to songwriters, composers, and music publishers for the public performance of their music on digital platforms. This includes any time their music is played on streaming services or online radio. Performance royalties are collected and distributed by Performing Rights Organisations (PROs) in the UK those being, Performing Right Society (PRS) and Phonographic Performance Limited (PPL).
Sync royalties are paid out to songwriters, composers, and music publishers for the use of their music in audio-visual productions. These include TV shows, movies, video games, and commercials that are streamed or downloaded online.
The digital landscape is constantly evolving, and new ways of consuming and distributing music online are emerging all the time. As a result, digital royalties can be a hugely complex area of revenue.
Neighbouring Rights Royalties
Neighbouring rights in the United Kingdom are also referred to as International Performance Royalties. They refer to the rights of performers and record labels to receive fair compensation for the use of their recorded music in various contexts. Neighbouring rights are distinctly separate from copyright, which is the right of songwriters, composers, and music publishers to control the use of their musical works.
Performers and record labels earn neighbouring rights royalties when their recorded music is played on international radio and TV broadcasts, public performances, and digital music streaming services. The royalties are collected and distributed by two main organisations, the Phonographic Performance Limited (PPL) and the Performer’s Rights Society (PRS).
PPL collects and distributes royalties for the use of sound recordings, while PRS collects and distributes royalties for the use of performances, such as those by session musicians and background singers. The royalties collected by these organisations are then distributed to the performers and record labels who are entitled to them.
Neighbouring rights royalties can be an important source of income for performers and record labels, particularly in the digital age where music is widely consumed on streaming platforms on an international scale.
Print Music Royalties
Print music royalties are typically paid out by music publishers, who produce and distribute printed music products. The royalties are usually paid as a percentage of the wholesale price of the printed music product. The percentage is determined by the terms of the contractual agreement between the musician or music publisher and the music publisher.
In the UK, the main organisation responsible for collecting and distributing print music royalties is the Mechanical Copyright Protection Society (MCPS), which operates a blanket license scheme for print music. This allows music publishers to obtain a license from the MCPS for the reproduction and distribution of printed music in return for payment of a set fee. The MCPS then collects and distributes these fees as print music royalties to the relevant songwriters, composers, and publishers.
In some cases, UK musicians may choose to act as their own music publisher and distribute their own printed music products. In this scenario, the musician would need to register with the MCPS and obtain their own license to reproduce and distribute their music in print form. They would then be responsible for collecting and reporting their own print music royalties.
It’s worth noting that print music royalties are typically separate from other types of music royalties, such as performance, mechanical, and sync royalties. It can be confusing but essentially, this means that musicians and music publishers can earn multiple types of royalties for the same piece of music.
Print music royalties are typically paid out by music publishers who produce and distribute printed music products, such as sheet music and songbooks. These publishers obtain a license from the Mechanical-Copyright Protection Society (MCPS) for the reproduction and distribution of printed music, and they pay a set fee in return.
The MCPS is responsible for collecting and distributing print music royalties to the relevant songwriters, composers, and publishers.
You may be a bit scrambled by now but if you have made it this far, thank you! We are hugely grateful for taking the time to read part one. We hope this guide has been beneficial and helps you understand the complex nature and different types of music publishing royalties.
In part 2 we will look in detail at how royalties are generated, calculated and, how the money is distributed before it finds its way to artists!