U.S. Music Royalties – How To Get Paid

U.S. Music Royalties – How To Get Paid

Music Royalties

A basic understanding of music royalties is important for those of us trying to earn a living in the music business. Here in the U.S., music royalties are paid to the “Publishing” rights holders, and to the “Master” rights holders of music.

The “Publishing” music royalties are paid to the owner or owners of the song itself, which would typically be the songwriters and their publishing companies. The lyrics and melody are the intellectual property that make up the publishing rights. There can be more than one writer and publisher involved in ownership of a song.

“Master” music royalties are paid to the owners of the sound recordings of songs. That can be the record label or the artist, or even a third party that purchased the rights, but is typically the person or entity who has paid to have the sound recording made. Each song can have more than one sound recording. For example the song “Crazy,” which was written by Willie Nelson and made popular by Patsy Cline has been recorded by many different artists over the years. Each of those recordings has a different owner or owners.

So how and when do the songwriters, publishers, and owners of sound recordings get paid music royalties here in the USA?

Let’s start with the publishing rights royalties, which are entitled to the songwriters and their publishing companies. They get paid the following music royalties:

  • Print royalties, from the sale of sheet music
  • Mechanical royalties from the sale of sound recordings
  • Synch (synchronization) royalties from use in film and TV
  • Performance royalties from things such as radio airplay, digital streaming, and live performances

Licenses must be obtained from the owners of the publishing rights by the person or entity wishing to use the song. For example a record label or artist will need to purchase a mechanical license from the song publishers in order to record and release a song. A film or TV company that wants to use a song in one of their productions must purchase a synch license from the publisher. The Harry Fox Agency represents many U.S. song publishers for granting mechanical and synch rights. The Harry Fox agency will collect the fees for these types of music royalties on behalf of the publishers, along with a small fee for themselves, and then in turn pay the publishers their shares.

In the case of performance royalties that are entitled to songwriters and publishers, we have PROs (Performance Rights Organizations) such as ASCAP, BMI, and SESAC. These PROs will track, collect, and distribute performance royalties on behalf of the songwriters and publishers. If you’re a songwriter, sign up with one of those organizations so that you can be sure to collect your music royalties for performances. Radio stations, digital streaming services, live music venues, etc, are required to pay fees to these PROs in order to play “performances” of songs. Even venues with jukeboxes or that have live cover bands are required to pay fees to these organizations.

What about master music royalties for the owners of sound recordings?

For starters, here in the U.S., the owners of sound recordings, or master rights holders, do not currently collect any performance royalties from terrestrial radio airplay (i.e. AM/FM radio airplay), as they do in many, if not most, other countries. The argument by radio is that radio airplay is basically free advertisement for the artists and record labels, and when people hear the recordings on the radio, they’ll go out and buy them. Of course we all know in recent years there has been a huge drop in sales of sound recordings, so that argument is really no longer valid. Recently there has been a push by the RIAA and other music organizations to change this law, so that performers and owners of sound recordings can receive music royalties from terrestrial radio airplay.

Master rights holders profit mainly on the sales of the sound recordings – CDs, downloads, vinyl, etc. If a label is involved and has paid for the production of the sound recording, they will generally retain ownership of the recordings, paying the artist a contractually agreed upon percentage. The amount paid by the record label to the artist is typcially around 12 to 15 percent. That’s right. A major label will generally keep around 85% of the profits because of their investment in the artist to record, distribute, and promote the product. Independent artists generally retain all ownership and profits from the sales of their recordings. That is of course unless they’ve signed some of those ownership rights over to investors, producers, mixers, or other people who have helped them along the way.

Master rights holders also collect digital music royalties for digital radio like Pandora and SiriusXM, as well as some other digital streaming services such as Spotify. Digital music royalties are collected by an organization called SoundExchange, who in turn distributes payments to the owners of the sound recordings. SoundExhange also pays royalties to the “featured artist,” which would be the band or solo artist, and then a very small portion for any session players, etc. If you’re an artist, label, or owner of any sound recordings, be sure to sign up for a SoundExchange account in order to be able to collect those music royalties.

I certainly hope this has provided a good overall view of music royalties for you, as it’s gotten so much more complex in recent years with the Internet and digital streaming services, and can be difficult to navigate. The bottom line is that you need to make sure you have things in place to collect the royalties that you may have coming, whether it’s a SoundExchange account, affiliation with one of the PROs, or both. Also, as you can see, if you’re the writer and performer of your music, you have more ways to make money, since you’ll have ownership in both the publishing and the masters.

Some Helpful Links:

Performance Rights Organizations (PROs):

www.ascap.com
www.bmi.com
www.sesac.com

The Harry Fox Agency: www.HarryFox.com

SoundExchange: www.soundexchange.com

Here’s an article that provides more information on the current push to provide performance royalties to the owners of masters for terrestrial radio airplay: https://futureofmusic.org/article/fact-sheet/public-performance-right-sound-recordings.

Here’s an interesting article about a proposed bill, that if passed into law, would provide performance royalties for engineers, mixers, and producers:
http://www.musictimes.com/articles/32472/20150319/producers-mixers-engineers-digital-royalties-new-house-bill.htm

I hope you find this blog useful as you work towards navigating this crazy business of music. Please feel free to share it with others who may benefit from this information, and if you have any comments, please leave them below. I’d love to hear your thoughts!

Make waves & sound amazing!

Marc Frigo
Your Online Mixing Engineer
PlatinumMixer.com
Marc@PlatinumMixer.com

Please leave any comments below. I’d love to hear your thoughts!

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