Quick Reference Guide to Music Rights & Royalties

music rights TV money

Ask 10 people to explain music rights and the flow of music royalty payments, and you will get 10 different answers. This is because the current royalty structure is hopelessly archaic and convoluted, a patchwork of rights and assumptions conceived in an era long before digital media and, in some cases, even before broadcast media existed. The whole system is in dire need of streamlining and simplification, and hopefully the current copyright proceedings in Washington will ultimately forge a simpler, fairer and more transparent system.

In the meantime, here is a “cheat sheet” to help understand the current state of music rights & royalties:

TV

Music rights involved: synchronization, performance

Synchronization fees: negotiable (paid to publishers & record labels)

Performance fees: paid via PROs to writers/publishers

NOTE: Synchronization fees are paid to copyright owners of the composition and master recording. Typically, a music publisher will own the rights to the composition and a record label will own the rights to the recording. Payments for each “side” of the copyright are usually equal.[1]

 

RADIO

Music rights involved: synchronization, performance

Synchronization fees: negotiable (paid to publishers & record labels)

Performance fees: paid via PROs to writers/publishers

NOTE: Synchronization fees are only required for radio programs and commercials, not for song airplay since there is no synchronization involved when a song is played on the radio.

NOTE: In the U.S., record labels and recording artists do not currently get paid for performances on terrestrial radio since radio stations are exempt from paying performance royalties on sound recordings.

In most developed foreign countries, however, this exemption does not exist.[2]

 

FILM (in-theater)

Music rights involved: synchronization

Synchronization fees: negotiable (paid to publishers & record labels)

Performance fees: N/A

NOTE: No performance fees are involved for music performances in U.S. movie theaters due to an exemption under U.S. copyright law, however in many foreign countries (U.K., Germany, Japan, Italy, France, Canada, Australia, etc.) this exemption does not exist.

 

NON-INTERACTIVE STREAMING SERVICES

(Sirius XM, Pandora, etc.)

Music rights involved: performance

Performance fees: paid via PROs to writers & publishers, paid via SoundExchange to artists and record labels.

NOTE: As noted above, record labels and recording artists do not get paid when their music is played on terrestrial radio, however they are collectively paid more than 5 times more than songwriters and publishers for performances on digital services due to more favorable SoundExchange rates vs PRO rate (ASCAP & BMI rates are subject to rate court proceedings under their respective consent decrees). [3]

NOTE: Since the U.S. copyright in sound recordings did not exist prior to 1972, some streaming services are taking the position that they do not need to pay royalties on pre-1972 recordings.

 

INTERACTIVE STREAMING SERVICES

(Spotify, Rdio, Rhapsody, etc.)

Music rights involved: master use rights, mechanical, performance

Master use fees: negotiable (paid to record labels)

Mechanical fees: streaming mechanical royalty paid to publishers via administrators such as HFA or MRI, as per statutory rate[4]

Performance fees: negotiable for record labels, paid via PROs to writers & publishers

NOTE: In late 2012, several major publishers (Universal and Sony/EMI) attempted to pull their digital rights from ASCAP & BMI in an effort to negotiate higher performance rates directly with digital streaming services.

 

YouTube

Music rights involved: synchronization, performance

Synchronization fees: negotiable (paid to publishers & record labels)

Performance fees: paid via PROs to writers/publishers

NOTE: YouTube has developed an extensive “Content ID” system to automatically identify copyrighted content. When copyrighted content such as music is uploaded to the system, rights holders can opt to either block the video or “monetize” it by authorizing YouTube to run advertisements in conjunction with the video.

 

DIGITAL DOWNLOAD STORES

(iTunes, Amazon, etc.)

Music rights involved: master use rights, mechanical

Master use rights: rights and pricing are negotiated by record labels

Mechanical fees: Statutory mechanical license fees are paid by the record company to the publisher for each download. (If the same entity owns both the master and publishing, this fee does not apply).

NOTE: Digital stores such as iTunes take a cut (30%) of sales revenue. If artists or labels use an aggregator such as TuneCore or The Orchard, additional fees or percentages apply.[5]

 

– Ron Mendelsohn
CEO, Megatrax 


 

[1] https://www.nmpa.org/legal/music101.asp

[2] http://www.lacba.org/Files/LAL/Vol32No3/2599.pdf

[3] http://www.americansongwriter.com/2014/06/songwriter-u-copyrights-licensing-royalties-fact-sheet/

[4] https://www.harryfox.com/license_music/what_is_mechanical_license.html

[5] http://en.wikipedia.org/wiki/App_Store_(iOS)

 

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