How Music Royalties Work in the Music Industry
How do music royalties work and how to get paid? This guide breaks down the complexities of music royalties and music copyrights in the music industry.
What Are Music Royalties?
Music royalties are payments that go to recording artists, songwriters, composers, publishers, and other copyright holders for the right to use their intellectual property. There are U.S. copyright laws that give artists these exclusive rights to their work.
Music Royalties are also generated for various types of licensing and usage. The types of music royalties include mechanical, public performance, synchronization, and print music. The music industry relies on these royalties as a primary form of payment to musicians. Moreover, contracts define music royalty agreements between the creator and distributor.
What Are the Types of Music Royalties?
There are four different types of music royalties. Each music royalty type also has separate and distinct copyrights. The four sources of royalty revenue in the music industry are:
- Mechanical Royalties
- Public Performance Royalties
Performance Rights Organizations known as PROs often collect performance royalties. PRO organizations such as ASCAP, BMI, and SESAC negotiate licenses for public performances and tracks their usage. They also collect and distribute the royalties generated to the rights holders.
- Synchronization Royalties (Sync)
Furthermore, a synchronization license does not include the right to use an existing recording with audiovisual media. A licensee will also need a master use license before using copyrighted music with a new audiovisual project. This is an agreement between the master recording owner such as a record label and the person seeking permission to use the recording. Any use of protected music in an audiovisual project, whether it’s a full song or short sample, will need a master license as well as a sync license. For example, you need both a sync and master agreement before syncing up the latest Jazz track with your wakeboarding video on YouTube.
- Print Music Royalties
How Do Music Royalties Work?
Music royalties and copyrights is a complex subject. This guide outlines the basic rights and usages of musical compositions.
Types of Copyrights for Music
There are two sides of music copyrights: master rights and publishing rights.
Master rights belong to the owner of a master sound recording. A master recording is an original song or sound used for reproduction and distribution. Master rights usually belong to either the artist(s), record label, recording studio, or any other party that financed the recording.
Publishing rights belong to the owner of the actual musical composition. The publishing side of music refers to the notes, melodies, chords, rhythms, lyrics, and any other piece of original music.
Who Gets Music Royalties and Administers Music Royalties
The following roles either receive or distribute music royalties for the use of copyrighted music.
- Record Labels
- Performance Artists
- Performing Rights Organization (PRO)
- Mechanical Rights Agency
- Sync Licensing Agency
Sync licensing agencies acquire the rights from record labels and music publishers to issue licenses for syncing music with visual media. They also distribute royalties for sync licenses to whoever owns the master recording rights.
Music Royalties Breakdown
Various music copyright usages generate royalties. New royalty streams emerge as the music industry and technology continue to evolve.
Additionally, every song has two copyrights. There are copyrights for musical compositions, which consist of the underlying music and any lyrics. The other is copyrights for the “master recording” used for reproduction and distribution.
There is a difference between licensing and royalties. A license gives the right to use a musical composition owned by someone else. While royalties are the payments generated for the use of those compositions.
In general, artists issue exclusive rights to a publishing company for the use of their recordings in exchange for royalties. The music publisher has the right to release the recording or issue rights to either a record label or mechanical rights agency. Additionally, artists can assign the master sound recording copyright to a record label. This agreement allows the label to reproduce, distribute, and license that recording in exchange for royalties.
Furthermore, all parties involved in the production receive a percentage of royalty payments. The royalty amounts are often negotiated up front and then defined in a legally binding agreement.
"Music is moonlight
in the gloomy night of life"