In the last part of this series, we dived into the basics of music publishing by first explaining to you the two important parts of a song, composition and sound recording, and their corresponding copyrights, composition copyright and sound recording copyright. We also explained further that the composition copyright is what is subject to music publishing and its exploitation and monetization as well as promotion to ensure the songwriter gets paid is what a music publisher’s job basically entails.
Like in streaming revenue and song sales, the royalties earned by a songwriter aren’t the same for everyone. It is largely dependent on how much is being done to push the record and put it in places it can get heard or earn publishing royalties.
But when you don’t try to ensure you earn publishing royalties as a songwriter, you are leaving a huge part of your potential earnings off the table. There are countless ways to earn money from your songs as a songwriter, even from interactive streaming platforms. The Copyright Royalty Board, an organization that protects the rights of songwriters and publishers and works in their best interests to make sure they’re paid fairly for the use of their compositions, is currently at loggerheads with platforms like Spotify and Amazon to hike rates for the use of songs in their catalogs to 44% by 2023. Imagine not exploiting your publishing rights and missing out on this much earnings when it finally occurs. Sounds sad right?
So the question now, maybe, is how do you actually make money as a songwriter? What are the types of royalty streams that publishing companies help you collect when you do register your song with one?
Once an original piece of authorship has been created and "fixed in any tangible medium" of expression, the music copyright is owned by the author. An exclusive right to reproduce and distribute the musical work, perform or show the musical work publicly, as well as develop derivative works based on the musical work, is thereby owned by the author and can be obtained by anyone else simply by obtaining a license from the author.
The creator or owner of the copyright can also decide whether or not other people are allowed to use the work in the manner listed above. As a result, a license from the copyright holder is necessary to use or exercise any of those rights, and the copyright holder is entitled to remuneration in the form of royalties.
Three basic types of publishing royalties can be paired with the three subgroups of composition copyright listed above.
Songwriters receive mechanical royalties when their work is reproduced. Those interested in recording, manufacturing, and distributing the music work pay for it. Simply said, the term mechanical royalties originated from the fact that the composition's physical medium used to be created mechanically.
Mechanicals are now predominantly generated anytime a user decides to play a specific song on a streaming service, which reproduces the composition in today's streaming music market. This changes the situation. Non-interactive streaming, such as Pandora's ad-supported radio, doesn't generate mechanicals because it doesn't allow the user to "select to play."
Mechanical royalties can be paid out in a variety of ways, depending on the medium. Streaming services like Spotify, Apple Music, and the like pay directly to publishers via the DSPs for interactive streams. In the event of on-demand downloads and physical sales, mechanicals goes to the owners of the sound recording first, and then these owners, usually the labels, must distribute the royalties owed to the publisher.
Mechanical rights organizations (Harry Fox Agency in the US and the Mechanical-Copyright Protection Society in the UK) receive fees from the DSP/record label and distribute them to the composition owners and publishers. Public performance and mechanical royalties are both claimed by Performing Rights Organizations in most of continental Europe.
Public performance royalties are a sort of income given to composers in exchange for their work being performed or displayed in public. The people who own the composition rights to a song are compensated every time it's performed publicly. It doesn't matter if it's a radio show, a restaurant's background music, or a digital stream.
Performance rights organizations, or PROs, administer, collect, and distribute public performance royalties (ASCAP, BMI, and SESAC in the US, PRS in the UK, etc.). Streaming services and traditional "broadcasters" each pay their own royalties for public performance.
DSPs will pay a portion of their revenue to PROs, which will be divided among all platform right holders in the same manner as streaming royalties on the recording side of the business are determined. Estimates range from 6-7 percent of the service's overall revenue to the All-In Royalty Pool, based on the quotes provided.
Venues, clubs, restaurants, TV channels, radio stations, and so on are all public performance users. In order to perform music in public, broadcasters must get a blanket license from the performing rights organizations (PROs). Using a blanket license, broadcasters can play any song they want, and the final fee is determined by the platform's potential viewership.
Cue sheets, broadcast logs, and other forms of reporting are used by these users to communicate their playlists to the PROs. As a rule, 99.99% of the time you hear music in a public place, there is a blanket license in place to play it.
Public performance rights organizations (PROs) then use that data, which includes a wide range of variables, to compute royalties owing to rights owners. The goal of every calculation procedure is to connect the royalties dues for a song to the type of performance it is being calculated for. A song that is broadcast on national television at a prime time will earn far more money than a song that is played on a college radio station in the middle of the night that is not commercial.
Songwriters are entitled to synchronization royalties when another work based on their song is released. For every time a song is used in any form of media, the copyright owners are compensated in royalties or licensing fees in return for their consent to use the music. Sync licensing is the term used to describe this process.
Sync licensing and mechanicals and public performance royalties differ primarily in two ways.
First and foremost, the money generated by synchronizations is split between the recording and publishing sides of the music industry, creating a distinct segment of the music business. Synchronization agreements must be worked out with the owners of both the composition and the recording of sound.
While performance royalties can be covered by a single license or mechanical charge, syncs must always be directly arranged between music consumers and copyright owners (or their corresponding representatives). Playing Rihanna and other unknown artists on the radio costs the same, plain and simple. However, the cost of using a Rihanna song in an advertisement or movie is significantly different from the cost of using any other artist.
Aside from these main three royalties, there are also other ways songwriters earn money. To utilize a drumbeat, soundbite, or any other element of a song that you have created and recorded, musicians with such intentions must first seek your permission and then pay you royalties for the usage of the song. Both the master recording owner and the songwriter/publisher are entitled to royalties when an artist samples another artist's original work and incorporates it into their own work. These are known as Licenses for sampling
There are also Print rights for sheet music. You are paid whenever your creation is printed in any form, including sheet music, lead sheets, fake books, etc. as the songwriter/publisher of the song. These last two are of course really small in comparison to Sync, Mechanicals, and Performance Royalties.
These are some of the ways a songwriter makes money from their music. And that is why a Publisher, like Tunedly, is needed to handle these aspects of the business because most songwriters would not be able to go about handling all these by themselves. In our next article, we will be discussing the roles of publishers and the different types of agreements involved in working with one.
Thank you for reading this article here on Tunedly, your favorite online music recording studio, music publishing company, and masked music discovery platform.