The music business has changed significantly over the past decade, and with the aid of technology that brought about the emergence of streaming services, artists and record labels have fully seized control of the royalties from their creative works. This has also made it simpler to track revenue sources and set uniform percentage earnings.
The compensation that rights holders (songwriters, composers, recording artists, etc.) receive for the authorized use of their music is known as music royalties.
There are 4 major types of music Royalties in the music business including Sync royalties, performing royalties, Mechanical royalties and print royalties.
Sync royalties are royalties paid to the right owners whenever a song is synced to another content. The license allows the licensee or the purchaser the right to use the music in a visual piece such as movies, tv shows, games commercials, YouTube or other similar content.
A recent example is the ‘Wakanda Forever’ teaser trailer where Tems’ rendition of Bob Marleys ‘no woman no cry’ and Kendrick Lamars ‘Alright’ played as the soundtrack of the trailer.
The right to the music typically belongs to the publishing house that represents the owner or the artist. The copyright is divided into two parts including Masters sound recording and composition
When a director or a producer wants to use a song for a project he must contact the song writer or the publisher of that piece to ask for permission. The songwriter then offers the song at a negotiated fee for a one time use. The cost then depends on various factors like how long the song will be used, if the song will be used as a background music, commercial, or movie trailer.
Factors also include if the song will be used from the original master recording or will be covered by another artist as we have in musical movies such as ‘Pitch Perfect’. Territory is also part of the factors that make up the agreement.
Performance royalties are also part of the fees the composer receives if the work is broadcast on radio, TV or the internet.
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Mechanical royalties are royalties paid whenever a copyrighted work is reproduced either in its physical or digital form. The songwriter is owed mechanical royalties when his song is printed on physical form like CDs, Vinyls, cassettes, used as a ringtone or streamed on interactive platforms like Spotify, Apple music, Boomplay etc.
Interactive streaming platforms allow the users to interact and demand what they listen so they generate mechanical royalties.
Mechanical royalties are paid by whoever attains the mechanical license to reproduce or distribute your music and it can range from record label or record companies to anyone who wants to record a cover of your song. The songwriter also decides if a share goes to another co-writer, or producer who contributed.
Performing Royalties are royalties paid to a songwriter or publisher of a particular song whenever the composition is broadcast or publicly performed. They are also generated when songs are played on TV, radio, life events, restaurants, gyms, supermarkets etc. Basically if you hear music when you are out, it’s most likely generating cash for the people who wrote it.
It’s to be noted that not every country has enforced Performance Royalty payment so you don’t get paid when your songs are performed publicly in such places.
Print royalties just means you are owed royalties whenever your songs are presented in print. In this recent age, the most common form is when your songs are written on lyric sites(and you monetize it I.e. they pay you for displaying your lyrics)
It is also necessary for you to understand the two types of music rights because some royalties are paid to the owner of the composition right and some to the owner of the Master right
Two types of music rights: Master vs. Composition
The term “master” refers to the copyright for a composition’s specific expression that is established when it is transformed into a sound recording and is owned by recording artists and their record companies (if a recording agreement is in place).
Copyright for the words, melody, and harmony belongs to the songwriters and their music publishers. When a genuine and original musical work is transferred to a tangible media, such as a notepad, sheet music, etc., composition copyright is secured.