Royalty Entitlements for Indie Artists

Royalty Entitlements for Indie Artists.

An indie artist’s entitlement to public performance royalty payments as a performer or master owner are dependent upon a country’s legislation, however, the broad general rule is that you are entitled if the country where you recorded the song enforces neighbouring rights. You are also entitled when the country of residence of the master owner enforces neighbouring rights. In the US performers and master owners are paid royalty only for digital transmissions and not for public performances. You can read the details of this rule in my blog Maximizing Royalties for Indie Artists.

With countries that enforce Neighbouring Rights Laws refusing to pay out funds to a party who does not contribute to the pile, the performers and labels from the United States are missing out on large part of revenue that can be earned as public performance royalty. These royalties are large and new cost for the broadcasting industry in the US, because of which the industry has heavily lobbied against it. This is the reason for the USA’s reluctance in participating in neighbouring rights regulation.

Tip: there are certain PRS’ that enforce neighbouring rights, for both master owners and performers. Even if you’re based in the USA, you can sign up with these PRS’ to maximize your earnings by releasing abroad and getting broadcasted or played live there.

Rental, Lending and Home Taping

In many countries, feature artists and master owners are entitled to royalty payments for home recording, lending and rental purposes. When people make home copies of music and lend or rent out copies for others to use, the artists use a lot of revenue. These royalties are intended to cover that revenue, generating it from the sales of CDs and media playing devices. These royalties are collected by the AARC in the USA. Like the other royalty societies, AARC has agreements with other similar organizations abroad. AARC pay-outs are split 60% to sound recording owners and 40% to feature artists, based on digital and physical sales in the United States.

You may sign up to the relevant collection society in your country, to maximize this revenue stream. Make sure you research well on the collection responsibilities of these companies, as some have split up the rental/lending and home taping revenue collection responsibilities.

Synchronizations

Attention!

This is an important revenue stream, often called the hidden cream of the crop.

Usage of music along with visual output, as in video games, trailers, commercials, movies, TV shows etc. is called Synchronization.

The licences required by a user to use a track for a ‘synch’ are a ‘synchronization license’ and a ‘master use license’. The ‘synchronization license’ is obtained from owners of the composition, like the publisher on behalf of the writers and a ‘master use license’ is obtained from the owners of the sound recording, usually the label, if they’re using the master. Therefore, because the visual output is likely displayed to many people, royalties are due for ‘public performance’ of the composition and master. Be careful in collecting the ‘synch fee’ for these licenses from the client, in a synch deal. This can be in the form of an advance payment on royalties together with a lowered royalty rate or ‘buy out’ of future royalties for a flat fee.

Mostly publishers chase these opportunities and score a sync deal for the writers and catalogues they represent. As I have mentioned in my blog Publishing Income for Indie Artists, it is highly recommended that you find a publishing agent to help you with ways to use musical works and generate revenue from them. Publishers not only register your works with the right associations, they also create commercial opportunities and administrate your royalty income. Getting a good publisher is beneficial for both writers and performing artists. Of course you don’t have to get a publisher and can manage your repertoire independently. However, the publishing landscape is intricate and highly technical. The amount of diligence required for publishing, makes it a time consuming task.

I am going to write more about synchronization, its market dynamics and related revenue opportunities in my next blog. Please share your experiences in the comments section and I will add them in my future blogs.

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