Okay so today I’m going to be braking down what music royalties are, and the main ones you’re going to be dealing with as an artist.
To some people learning about royalties can be difficult, but all you need is to understand the basic terms and concepts so you can know how much you get paid and when. Once you have the basics down everything else will look easy. So here are the main music royalty terms you’ll come across as a music artist.
Mechanical License Royalties
A Mechanical License is payed out on a physical or digital recording of a song. A Mechanical License is purchased from an record label or artist who would like to do a “cover” of your song to be featured on their album. To do a cover means to re-record your song, and when they-re-record your song they can sing it they way they want to, but can not change the lyrics to your song. This is due to the copy right law your song is under.
There are two ways a Mechanical License can be paid. 1) On all albums a record label or indie artist presses 2) On all albums that are pressed and distributed. So the license can be paid upfront or a percentage on each record sold. The rates for a Mechanical License vary from country to country but is negotiable between the person issuing the license and the Licensee, but it can’t be less than the statutory rate.
As of January 1, 2006 the statutory rate is 9.10 cents for a composition five minutes or less in length. For example, a record with 12 tracks on it that sells 50,000 copies would generate $54,600.00 in mechanical royalties (12 tracks X $.0910 X 50,000 sold copies) that the record company would have pay to the songwriter.
Performance License Royalties
A performance License Royalty is issued to you every time your songs are performed. So you get paid when your songs are performed at a venue, on the radio, in a night club, in a restaurant, at an event etc. In order to receive performing royalties you need to be registered to a Performing Rights Organization.
A Performing Right Organization (PRO) is an agency set up to collect performing rights royalties from entities who use your songs for play or performance. A PRO handles all the paper work, monitoring, and collection of your performance royalties so you don’t have to worry about that part. Public performance royalties are calculated using several variables and not on a per play basis.
Digital Performance Royalties
Digital performance royalties are paid out to an artist every time their songs are played on cable TV Music Channels, satellite radio, and internet radio. In order to get digital performance royalties you have to register with a company called Sound Exchange. This is the main company in America whom the Copyright Royalty Board has trusted to collect digital royalties on behalf of featured recording artists, independent artists, and Master Rights Owners.
A Synchronization Royalty is paid for a song to be used in synch with a visual. For example your song being synch with visuals from TV, Film or Video Games. A Synchronization Royalty is payed in two ways. 1) Is to the copyright owner (Record Label or Music Publisher) for the use of the song with a visual(synch.) 2) For the performance of the song in that project. Whether it be on TV, Film, or Video Games.
Music Publishing Royalties
A Music Publishers job is to go out and try to license your songs to get performed and played. Some may think that’s what a performing rights organization does but it’s not. A PRO doesn’t go out there and promote your songs, where as a publishing company does. Once they manage to get your songs license they take their cut for all their promotion and administration efforts, and send you a publishing royalty. Expect a publishing royalty every 3-6 months depending on the publisher.
There are many other ways an artist can get paid off of a publishing deal and to find out what they are please read Music Publishing Contracts