Royalties and Indie Music.
While understanding music copyright, publishing and licensing is quite difficult and totally out of league from what an artist has entered the industry for, it is important to understand in order to establish alternative means to generate revenue. I have written more about copyright laws in my blog Alternative Income for Indie Artists. Because of the constant changes in the non-universal laws and treaties as well as music regulations, copyright becomes an incredibly dense subject. Like this was not enough, every country does it differently from another, adding to the difficulty of understanding the subject.
The PRS’ offer ‘blanket license’ to the users which basically acts as a free pass to use all the material in the PRS’ catalogue, for a fee. These fee are then divide and sent to the writers / publishers as their deserved share. Interactive streaming services such as Spotify, contribute a share of their streaming income to the PRS’. This covers broadcasting networks and public performance licenses, which are scanned by automated systems of the PRS’ for their usage of works. Sometimes even ‘playlists’ and ‘usage sheets’ are required to delivered by broadcasters to the PRS’ for proper administration.
As mentioned before, PRS’ pay out directly to the publisher and the writers. To make sure that publishers do not get full control over the writer’s money, the PRS’ separate these payments. This also ensure that publishers do not get too much power over writers. Payments are typically made at the end of each quarter, about a year after the royalties were originally collected.
While we have been discussing about royalty payments to writers and publishers for public performances of their compositions, it is noteworthy that for a long time, there has not been any payment for performing artists and record labels for public use of their works in the USA.
However, with the introduction of ‘Digital Performance Right in Sound Recordings’ in 1995, featured performing artists and record labels became entitled to royalty payments for digital transmissions of their ‘master’ sound recordings. The digital transmissions include satellite radio services, non-interactive streaming services, and non-interactive webcasts. SoundExchange is the biggest PRS in the USA. It focuses on the collection of these funds and pays out 50% of the revenues to the copyright owner, which is mostly the label, 45% to the featured performing artist and the remaining 5% to non-featured artists, like backup singers. Indie artists should sign-up to SoundExchange, as a feature artist or master owner, in order to maximize this revenue stream. SoundExchange has recently switched to monthly pay-out schedule, to enable monthly cash-flow for the artists. You may also consider signing on to IPRDF as a non-featured artist. Both of these are free to sign up to.
Performing artists and master owners have been paid for public performances of their music for a long time, in a lot of countries around the globe. Over 80 countries entitle the master owners to these payments through acknowledgement and enforcement of the Neighbouring Rights Laws. However, the USA is still the exception here, that pays performers and master owners only for digital transmissions.
Do not underestimate the income generated from neighbouring rights as it can constitute more than a quarter of successful artists’ royalty income. The diminishing record sale revenues have made this an increasingly important income stream. It has been a pillar for performing artists who do not write but only record, in the countries that enforce neighbouring rights.
The royalties resulting from neighbouring rights are also collected by PRS’, just like the other public performance royalties. Most of the famous international PRS’ that collect your neighbouring rights royalties, are non-profit organizations which are either free to join or charge a small membership fee. Most of the famous artists are connected with these PRS’.
Your entitlement to public performance 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.
I am going to write more about licensing and royalties 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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