Long gone are the days of Napster and music sharing without legal consequences. Everyone did it, so what was the harm? Now, dollars and laws are tied to nearly everything in the music industry so someone can get their cut, whether they are truly owed it or not. We’re bringing you an overview of music royalties and the organizations that govern how money is collected.
Understanding the Basic Types of Royalties
There are multiple royalties involved with music production. For example, the first is known as PERFORMANCE ROYALTIES. These are collected and paid to the artists ONLY if the artist wrote the song. DIGITAL STATUTORY ROYALTIES apply only to songwriters if they recorded the song with their own voice. Here’s just a small list of royalties and monies tied to royalties that composers, corporations and license owners are fighting over:
- Performance royalties in musical works
- Digital statutory royalties in sound recordings
- Public performance royalties in the musical works
- DART royalties
- Monies generated from reciprocal Private Copy agreements
- Monies generated from record rentals
- Monies generated from digital public performance
- Monies generated from the treaty with AIE, Sociedad de Gestión
- Monies generated from master use licenses
- Monies collected from Symphonic Royalties
- Monies generated from compulsory mechanical licenses
- Monies generated from publishing revenue from synchronization rights
- Monies generated from lyric print rights
- Monies generated from public performances
Understanding BMI & ASCAP
Over the last decade, BMI (Broadcast Music, Inc.) and ASCAP (the American Society of Composers, Authors and Publishers) have brought down the hammer on playing licensed music in bars, in podcasts, on radio shows and even in YouTube videos and Facebook LIVE feeds. Lots of people understand that BMI and ASCAP are authoritative entities over music rights. In this blog, we discuss how to adhere to the guidelines for public broadcasting. We’ll also provide a history on the abbreviated names we have heard. To follow them on your own, feel free to tweet @ASCAP and @BMI. Both these organizations fall under an umbrella term known as PROs–Professional Rights Organizations. But, more on PROs later…
Essentially, both organizations state they protect the works of artists by making sure they are properly paid in regard to royalty and copyright issues. Thank you to CD Baby for summing it up in the perfect language:
“This includes fees paid by radio stations, businesses, restaurants, concert venues, bars, night clubs, sports arenas, bowling alleys, malls and shopping centers, amusement parks, colleges & universities, etc. for performing music in the public (within the confines of their establishment). These monies are paid to ASCAP, BMI and SESAC for a blanket public performance license that grants the licensee (the business) permission to allow music to be performed in their environment (this includes music over speakers and music performed live by an artist). The license fees paid to ASCAP, BMI and SESAC are passed on to the copyright owners in the musical works (song) — PUBLISHERS (50%) and SONGWRITERS (50%) — as performance royalties for musical works.”
It sounds like everything is covered, but that’s not the case. The missing gap may or may not be obvious even if you’re in the music industry. The job of ASCAP and BMI is to focus on performance royalties–royalties owed to the artist if he/she wrote the song and it’s played in a venue. There is no requirement for a PRO to seek out and collect royalties for when a song is “streamed, downloaded, or manufactured in physical form” such as a CD. This streaming/downloaded royalty is called a mechanical royalty.
Technically, if your music is streamed on services such as iTunes Music, Spotify or Amazon, you, as the artist, are owed more royalties. You’re still able to collect half of the performance royalties through those services via your PRO (and they keep the other half). It’s not something they will likely give you. There’s still a 50/50 split on mechanical royalties left on the table, so to speak. Half would go to you and the other half would go to what’s called your publishing administrator. A way to think of publishing administrators is they are a middleman, like PROs, only they sit between the artist and the publisher. They do not own any copyrights on the musical works, but do and will collect a commission based off of revenue they bring in.
If you’re a restaurant owner, a bar owner or someone similar who wishes to play music in your place of business, you definitely need to plan ahead! Figure out the hoops you’ll need to jump through in order for you to play previously recorded and copyrighted music.
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