Trying to understand how to collect the different types of music royalties can be a serious headache. Not only are there different types of royalties, but also several organizations that collect and pay out these varying types of royalties. In this blog, we'll make the world of music royalties a bit easier to understand.
Let's start by taking a look at some of the types of royalties that get collected and paid:
Performance Royalties
Performance royalties are paid to songwriters and music publishers when their copyrighted music is played or broadcasted in a public place. Performance royalties include:
· When your music is performed at a concert;
· When a public venue plays your music over their sound system (bar, restaurant, store, etc.);
· Having your music played on a TV show, commercial or video game;
· Radio play; or
· When your music is streamed through a digital platform (Spotify, Apple Music, etc.).
Mechanical Royalties
Mechanical royalties are paid to songwriters and copy right owners to compensate them when their musical composition is reproduced. Essentially, each time a consumer purchases a song, publishers receive a mechanical royalty payment, which is then passed to the songwriter. These are paid when:
· A CD or Vinyl is manufactured which includes the songwriters' music.
Digital Performance Royalties
Digital Royalties are fees that non-interactive digital music services pay for streaming music content. "Non-interactive" refers to any digital streaming service in which the user does not choose individual songs, but instead the music they hear is chosen algorithmically. Pandora and Sirius XM are two examples of non-interactive digital music services. These royalties are collected and paid to songwriters and music producers each time their music is played on one of these platforms.
Now that we've tackled that, let's take a look at five ofthe main organizations in the US that track and pay royalties.
Broadcast Music, Inc., "BMI"
BMI is currently the largest Performance Rights Companyoperating in the United States and represents over 1.1 million songwriters,composers, and music publishers.
[Performance Rights Companies, often referred to as PROs,are responsible for issuing licenses as well as tracking, collecting, andpaying royalties to musicians, songwriters, and publishers.]
BMI collects and pays performance royalties.
American Society of Composers, Authors, and Publishers,"ASCAP"
Is the second largest PRO operating in the US and currentlyrepresents over 700,000 songwriters, composers, and music publishers.
ASCAP collects and pays performance royalties.
Songtrust
Songtrust was founded in 2010 as a digital rights solution for songwriters and musicians. Songtrust collects royalties generated by compositions on behalf of songwriters and publishers. Songtrust collects the publisher's share for the composition as the publishing administrator.
Songtrust collects performance and mechanical royalties.
SoundExchange
SoundExchange emerged in 2003 to handle the sound recording royalty for performances of recordings on digital media. They represent over 155,000 songwriters and music publishers.
SoundExchange collects and pays digital performance royalties.
Harry Fox Agency
The Harry Fox Agency is a mechanical licensing organization responsible for licensing and collecting mechanical royalties on behalf of music publishers in the United States.
Harry Fox Agency collects and pays mechanical royalties.
It all makes sense now, right? Okay, probably not. We know that understanding royalties as a songwriter, artist, and/or producer can be overwhelming. That's where we come in. Our experienced entertainment law lawyers are here to help you manage everything from contract negotiations, royalties, and copyright to your personal brand. Call or email us today for a free 30-minute consultation.