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Music rights are a scary topic for many of us. We don't know where to start, and we tell ourselves that it's not a critical part of what we do. We prefer to focus on creating music instead.
This means we often don't take the time to research the subject, or we may occasionally read the odd article that is too brief to be comprehensive, so we end up with partial or even wrong information.
But it's crucial to build up our knowledge of the industry if we want to make the best possible career choices and maximize our earnings.
And you know what? Music rights really aren’t so complicated. Grab a cup of coffee, tea, or any other beverage of your choice, and make yourself comfortable. We're inaugurating our Blog with a deep dig into music rights.
Ready? Let’s get started!
Two types of rights are attached to a track:
Different stakeholders are part of the creation process of a song:
Copyright are the rights of authors, composers, and songwriters. These terms may sound as if they encompass the same definitions, but, each has a precise meaning, although all of them are always linked to the art of writing a song. Copyright also concern publishers.
Within copyright, we need to distinguish between two types of royalties: performance royalties and mechanical royalties.
We pay performance royalties to play a composition in public – for example, a restaurant that plays background music to create a cozy atmosphere. Restaurants being public places, the owner must pay for a licence to be allowed to play the music.
We pay mechanical royalties to reproduce a composition on physical goods such as CDs. A label would typically need to pay these to produce CDs. They would have to pay mechanical royalties for each CD they manufacture.
But wait a minute. We mostly listen to music on streaming platforms nowadays, so what about streaming services? Mechanical royalties are paid when a user chooses to play a specific song. Performance royalties are also generated each time a track is being played. So when you decide to play a track (you’ve looked for it and hit play), your stream will generate both performance and mechanical royalties.
On the other hand, suppose you’re using a non-interactive music streaming service such as Pandora, or listening to any radio on Spotify. In that case, your stream will only generate performance royalties.
In Europe, the system is pretty simple: Independent Management Entities (IMEs) such as Bridger or traditional Collective Management Organizations (CMOs) like SACEM in France or SABAM in Belgium collect and pay the copyright royalties of their members.
The principle: you register with one of them, which will then be in charge of collecting your copyright royalties. This collection happens on many different channels: TV, radio, live shows, and online streaming services, as well as restaurants and other public places.
These societies have specificities but work relatively similarly: you usually pay a membership fee, with or without a yearly membership to renew for a price. They also take a commission on your earnings, which might vary according to the channels where your works are broadcast (TV, radio, etc.). They could, for example, take a 10% commission on revenues generated on streaming services while taking 25% for revenues generated on traditional TV channels.
The system is a bit different in the United States. Performance Rights Organizations (PROs), such as BMI or ASCAP, are in charge of collecting and paying you the public performance rights. For mechanical reproduction rights, you must go through Rights Administration Entities (RAEs), such as the Harry Fox Agency or Music Reports.
It means that if you’re in the United States and want to get the full spectrum of your copyright, you need to combine a PRO and an RAE. It’s a little bit simpler for Europeans, who only need to work with one organization.
The Independent Management Entities, Collective Management Organizations and Performance Rights Organisations/Rights Administration Entities collect where your works are played.
Historically, there's TV and radio (as well as concert venues and commercial establishments). Still, the democratization of the internet and the advent of legal streaming have profoundly changed consumer habits, creating many challenges and opportunities for broadcasters and listeners.
Your copyright management society also collects your rights on streaming platforms such as Spotify, Deezer, or Apple Music, as well as on a whole series of emerging platforms and networks. These emerging services are often your primary sources of revenue in this new digital ecosystem.
If your music is available on streaming services through a digital distributor such as DistroKid, please note that this distributor only pays out royalties on the master side. If you are not a member of a society authorized to collect your copyright royalties, you miss a part of your income.
IMEs like Bridger collect the royalties of their members from streaming platforms. PROs and CMOs also do so from public venues and radio and TV stations that broadcast their members' music.
We end our guided tour with master rights.
Two actors are commonly associated with master rights: performers (singer, guitarist, bass player, …) and producers. Master rights are linked to the recording of a musical work. That’s why they encompass performers and producers.
Just like what we’ve mentioned for copyright, master rights can be collected on two main types of channels:
We refer to music played on television, radio, in discos or any public place, such as a restaurant or bar.
Each country has its own collective management organizations in charge of collecting and redistributing the master rights to performers and producers for music broadcast on TV and radio, and in clubs and other public places.
Music streaming platforms – also called DSPs, or Digital Service Providers – such as Deezer, YouTube, Apple Music or Spotify, have become the primary way musicians reach their audience.
To be available on the streaming services, you either must register with a digital distributor (DistroKid or TuneCore, for example) or, if you’re with a label, they’ll take care of handling the distribution for you.
It is these industry players who manage the performers' and producers' share.
All companies have their own specific business model when it comes to digital distribution. Sometimes, you’ll have to pay a yearly subscription, as with DistroKid. With others, you will need to pay for each recording. This is the case with TuneCore, for example. Sometimes the service is free, with the distributor simply taking a cut of your earnings.
In streaming, master rights royalties are collected and managed by the distributors (CDBaby, DistroKid or TuneCore for example) or by your label.
Two types of rights are linked to a track: copyright and master rights. Copyright cover the remuneration of songwriters and publishers. IMEs or CMOs collect them in Europe, while PRO/RAEs take care of the collection in the US. Master rights remunerate the performers and producers. They are typically paid out to artists by their digital distributors if they work independently, or by labels.
