Royalties: How, When, and Why you get Paid!

Artist, Composer, Producer, Sound Recording, Public Performance, and Sync Royalties

 
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ROYALTIES

When an artist records a song, they are automatically granted 6 rights under the copyright on the sound recording of that song, known as the Sound Recording Copyright. When an an artist writes a song, meaning the lyrics and the melody, they are granted an additional copyright, the Composition Copyright. This Copyright includes the right to:

  1. Reproduce

  2. Make Derivative Work

  3. Display Publicly

  4. Perform Publicly

  5. Distribute

  6. Transmit Digitally

In order for a record label to release a record they need to have control over these 6 copyrights. If an artist has signed a record deal, they must assign their copyright to the record label in exchange for royalties, which are called Artist Royalties. The producer, or engineer, on the album also owns a piece of the copyright and so they, too, must be paid by the record label. These are called Producer Royalties. Lastly, the writer of the melody and lyrics owns the composition copyright. Sometimes this is the same person but many times, especially in Country and Pop music, the song writer is not the same person who sings or records that song. This composition copyright is treated as a license instead of a transfer of ownership. The payment from the record label to the writer, or the composer, is called a Mechanical Royalty.  

If you are looking for more Music Royalties Explained, check out this Ultimate Guide by my friend at IndieMusicAcademy!

Types of Royalty:

Artist:

Artist refers to the recording artist(s) of a piece of music.

Artist Royalties: The Artist assigns the copyrights of the sound recording over to the record label in exchange for artist royalties. The Artist Royalty rate is negotiated in the record deal and recording contract.

Composer:

Composer refers to the person(s) responsible for writing the lyrics or melody of a piece of music.

Mechanical Royalty: Monies paid out to the writer, or composer, of a piece of music by the record label in exchange for using your intellectual property. This $ rate is determined by a US Court System, called the Rate Court, and payment for such a royalty is handled by the Harry Fox Agency, or HFA.

Producer

(different from the composer of electronic music): The producer refers to the studio engineer(s) that “produces” the song into a physical form. In Hip Hop, the Producer is the person(s) that creates the underlying Beat of the song.

Producer Royalty: Also known as Producer Points. Monies paid to the producer of a record, as stated in a recording contract. In most genres, the Producer royalty rate is 1-2%. In Hip Hop and electronic music, it can be as high as 50%.

Public Performance:

Performing Rights Organization, or PRO, is an agency that collects the Public Performance Royalty owed to songwriters and publishers. In the United States, there are 3 PROs: BMI, ASCAP, and SESAC

Public Performance Royalty: Is paid to the songwriter, or composer, of a piece of music any time your music is performed in public. The songwriter is owed a royalty when their song is played on terrestrial, satellite, and internet radio, TV shows and commercials, or when it's performed in a live venue such as a club, restaurant, amusement park, or jukebox.

Sound Recording

Sound Recording Royalty: Is paid only to the recording artist(s) of a piece of music. The sound recording royalty is similar to the Public Performance royalty, except that it goes to the performing artist of the song and not to the songwriter. The Sound Recording royalty is only paid out when the piece of music is played on a non-interactive service, such as Pandora or a television show. The Sound Recording Royalty is collected by a singular group in the United States known as SoundExchange. They hold onto all sound recording royalties owed until the owner comes forth to claim them.

Sync Royalty

Sync is short for Synchronization, or the process of “syncing” audio with video. Typically, a Synch Deal is a one-time flat fee paid up front for the unlimited use of that piece of music with a piece of video. In some cases however, It can come with a royalty payment known as a Sync royalty. The Sync Royalty is paid to both a music administrator, like the Harry Fox Agency, and to the record label or owner of the master recording. Both the performing artist and the songwriter are paid in a 50/50 split.

Who Collects the Money?

Artist Royalty: Record Label -> Artist

Mechanical Royalty (Songwriter): Harry Fox Agency -> Publisher -> Songwriter

Producer Royalty: Record Label -> Producer

Public Performance Royalty: PRO -> Harry Fox Agency -> Publisher -> Songwriter

Sound Recording Royalty: SoundExchange -> Artist

Sync Royalty: Harry Fox Agency & Record Label -> Publisher & Artist

 

This Article is from the

 2019 Music Industry Success Book

 
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The Knowledge you need for Success in the Music Industry!

This 102-page book is a practical guide for navigating the music industry as an artist or band. Together, we examine Publicity, Marketing, Touring, and the Album Release, as well as Record Labels, Royalties, Copyright, Artist Managers, Booking Agents, Social Media, Creating Content, Building a Brand, DIY Publicity, Advertising, Booking a Tour, Navigating a Record Deal, and so much more..

This book is not in any sort of chronological order, its more of a “choose-your-own-adventure” book. Pick and choose whichever chapter you want and read at whatever pace you please. Each chapter is, for the most part, a standalone article on that topic. And each module features topics that are in a similar category. This book contains niche ideas as well as general knowledge, and is based off of my years of experiences in the Music Industry. 

 

This eBook is Free! Please grab a copy!

Meet Your Teacher:

 

  • 26 Years Old

Josiah Garrett, photo by Cathy Marszalik

Josiah Garrett, photo by Cathy Marszalik

 
Josiah Garrett