Understanding the legal side of the music business is essential in order to know what you own, what is being given away and, above all, who’s collecting the royalties they generate that you are owed.
“What’s your share of the master rights on this recording?” – “Have you negotiated your publishing splits?” – “Do you have any co-producers on this song?”
If you’ve never heard these kinds of questions before or are unfamiliar with those terms, let’s fix that. Whether you’re signed or independent, knowing your terminology and the basics behind them will help you make better, more informed decisions for your career.
Groover will help you better understand all things copyright and ownership so you can sign contracts that make sense for your career, and ultimately benefit your bank account. In this article we outline the difference between publishing/composition rights, master/recording rights and synchronization (sync) rights.
1. Publishing/composition rights
Instead of boring you with the dictionary definition of what copyright is, let’s jump straight into what it does in a musical context.
In short, copyright in music is what protects a fixed original work for 70 years after the death of the last creator of the work. “Fixed” in this case means the work has been made tangible in any way. This could mean being written down, recorded in voice memos, texted, scribbled on a napkin, you name it. If it can be heard or seen, it’s been fixed and the writer(s) automatically own the copyright.
- Who is entitled to publishing copyright?
The writers and producers split publishing rights. Publishing rights should only be given to those who partook in the actual creation of the song. Thus, if a writer and producer are the sole creators of a work and agree that they contributed equally, the publishing splits would be 50% for the author and 50% for the producer. There should be no involvement of labels, managers, or distributors in a publishing split agreement unless they helped make the song. Composition rights are for the composers of the song only.
The only other potential stakeholder of publishing rights of a work would be a publisher. Music publishers are often in charge of overseeing the copyright ownership of the songwriters they have contracts with, and are the ones who register the songs with royalty collection agencies so their songwriters get paid. However, if you are familiar with the way the business works and are comfortable overseeing these administrative aspects of your career yourself, you do not need a publisher, and can register yourself as a your own publisher with these collection agencies.
In the US, there are a number of organizations who run the music copyright world, and we refer to them as PROs (Performance Rights Organizations). The major PROs in North America are ASCAP, BMI, SESAC, and SOCAN, and you are free to choose whichever one you think suits you best. Their job is to collect the royalties generated from music streams and plays, and distribute them to the songwriters, composers, and publishers of the work. This can only happen if you are registered with them, and if your songs are registered with them under your name. Song registration is simple, but should only happen when all parties have agreed on the split percentages. This is usually negotiated by managers or labels, but can absolutely be done by the artist and producers directly.
- How does my song generate royalties?
Songs generate 2 types of royalties that are collected by such agencies. These are:
– Public performance royalties: when a musical work is performed or displayed publicly (on TV, on the radio, at a grocery store, in bars, when streamed, or even played in concert).
– Mechanical royalties: when a musical work is reproduced (as a digital download [iTunes purchase, ringtone], printed as a CD or vinyl, or streamed on on-demand DSPs). The name comes from having to physically reproduce a work when labels wanted to distribute it before the internet came along.
These royalties are often collected by separate agencies. The PROs mentioned above only collect performance royalties. In the US, there is one main entity that collects the mechanical royalties paid by digital streaming platforms (DSPs), called the Mechanical Licensing Collective (or MLC). It then hands off the royalties to other agencies, most notable the Harry Fox Agency (HFA) in the US, which represents all major music publishers. The HFA only collects mechanicals, while PROs only collect performance royalties. Some services like Songtrust collect both, but they often take a slightly larger percentage because of this double service.
2. Master/recording copyright
“Master” is short for master recording, and is essentially the final version of the song that is sent out to distributors. Master rights are the second type of copyright that exist in music, and they are split between any party that partook in shaping the final product of a work and allowing it to come to life in the public space. This is primarily the artist who recorded the song, but would also include the writers and producers, labels (who promote and market to make the song heard, unless you’re independent), engineers (who mix and master the final song file), featured artists (who provide vocals), and distributors (if you’re independent). It is worth noting that the producer’s share of a master recording is usually very small, as their contribution primarily involves the creation of the song, not the life that comes after it.
Example: if you are an independent artist and you’ve written, produced, recorded, mixed, and distributed an EP entirely on your own, you are the sole owner of your master rights, and will therefore be the sole collector of master royalties, in addition to your publishing royalties.
Let’s say someone wants to record a cover of your song. If you own your publishing rights, you automatically get compensation as the writer of the song being used. However, that artist will be collecting the master royalties, as they are not using your sound recording of the composition. Does that make sense?
Master rights are important to understand because ownership of them often leads to legal battles amongst labels and artists. Depending on your contract, the label may actually be the sole owner of your masters, and they are the ones who have a say in where your song is played and how it’s used. That was the crux of the recent debacle between UMG and TikTok; because UMG controlled the masters of so many artists, as was agreed upon in their contracts, it had the power to remove every artists’ master recordings from the platform. This is also why sped up, slowed down, or reverb versions of those artists’ songs were still being used – they were not the master recording. As the writer and/producer of a musical work, you will always own your publishing/composition rights, but as the performing artist, there is no guarantee of master rights ownership unless you are independent or have negotiated it into your contract.
- Who collects master royalties?
Master royalties are collected by distributors. When you are signed to a label, they act as your distributor and are thus an intermediary, only passing on your cut of the earnings once they’ve taken their share. Independent artists have it easy here. If you are unsigned, you can choose how to distribute your music completely by yourself, and have quite a few options.
Here are the 3 types of distribution to consider:
– Self-distribution of a physical copy of your work (vinyl, CD) by hand or at shows
– Physical distribution by another party (in-store sales)
– Digital distribution (streaming platforms, downloads, Youtube)
There are many ways to go about distribution. Today, it is much easier to use an online distributor to get your music on streaming platforms and social media, and then get creative with how you will direct people to your artist page yourself. When you use an online distributor, they will make sure your music is on all the DSPs you specify, as well as social media platforms to be used as sounds for videos. They will also pitch your music to editorial playlists on DSPs to further your exposure, should you choose to write a pitch. Once everything is out, they will keep tabs on how your music is performing, and collect the master royalties for you in exchange for a one-time charge or percentage of each payment.
Some partners may even offer to distribute your music free of charge like Amuse. It’s up to you to make your choice in this competitive market.
| Read more: Digital Music Distribution – Workshop #3 Groover Tips
- What are neighboring rights?
Just as publishing/composition rights owners collect public performance royalties, so too do the owners of the sound recording… though not everywhere. Neighboring royalties are also what we call payments earned when royalties are generated in other countries. Neighboring royalties are generated whenever public performance royalties are. To jog your memory, this can be from TV, air time on the radio, use at a concert, in an H&M, etc.
Every country has its own legislation when it comes to neighboring rights. For example, the US does not recognize neighboring rights. That means that only the owners of the publishing rights are paid performance royalties. This is a small win for songwriters, as radio and TV plays can mean a big pay day!
Just because neighboring rights aren’t recognized in the US doesn’t mean you’ll never see performance royalties as a shareholder of your masters. You can still collect these royalties from other countries by registering with services like SoundExchange, which keep track of your international earnings for you. The US does authorize the collection and redistribution of neighboring rights via Sound Exchange from digital radios (iHeart Radio, Sirius XM, Pandora, etc.), allowing artists and labels to receive compensation for sound recordings played in North America.
3. Synchronization rights
When a visual media, such as a movie or video game, wants to use a song for their project, they need a synchronization license. Unlike master and publishing royalty rates, sync rates are negotiated directly with the potential user of the music, often the music supervisor of a show, movie, or game.
As we now know very well, two types of musical copyright – publishing and master – must be dealt with in order for music to be used legally. All owners of copyright have a say in the negotiation of a rate that must be paid by whoever the music supervisor is representing, grouped in a single fee called a “Sync fee”. Depending on who the studio that wishes to work with you is, you could be paid a one-time lump sum of tens of thousands of dollars for the use of your music. The bigger the company, the more you can ask for!
Once a rate has been agreed upon, a license is granted to the production studio and they are free to use it. Their use of your music is called a sync placement. You do not receive royalties from sync placements, as the license is a one-time payment, but the exposure you receive will likely lead to future royalties from streaming.
In summary
To conclude, remember that every song has two types of copyright: composition rights (lyrics and melody) and sound recording rights (the final version of the song).
Composition rights are split between the composers of the work (writers and producers), and the publisher. Sound recording rights are split between the performers and the label (as they have distributed the music). If there’s no label, the distributor used will own that share.
Performance royalties are earned when a song is played publicly and/or streamed, and these belong to the owners of the composition copyright. As the owner of the sound recording rights, you are also paid performance royalties, but only outside of the US. Public performance royalties earned internationally are called neighboring rights. The US only authorizes performance royalty collection for sound recording owners if it is done through SoundExchange.
Mechanical royalties are generated when a work is reproduced, either physically or by digital download/stream. These royalties are collected by composition rights owners only, never the sound recording owners.
As an independent artist, you are entitled to a far bigger piece of the royalty pie than would be an artist signed to a label, especially if they do not write their own songs. In order to collect everything you are owed, we recommend registering for Songtrust (to collect both mechanical and performance royalties), and SoundExchange (to collect neighboring royalties). If you use a digital distributor, they will collect performance royalties on your behalf. After signing up with these agencies, negotiate splits with your collaborators and register your songs, and enjoy the paychecks that start to roll in!
– Article translated by Elinore Trompeter –
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