Music Royalties 101

On this page you will find the various types of royalties and where you collect them from; including your rights to digital performance royalties, public performance royalties, neighbouring royalties and mechanical royalties within Canada, the US and UK.

Who Gets Royalties?

In short, the rights holders. If you’re one of the below mentioned, whose recordings have been broadcast, streamed or played in public and you own the rights, you may be entitled to royalties.

  • Music creators
  • Song-writers
  • Music publishers
  • Recording artists
  • Background performers
  • Session musicians
  • Record labels

Where Do They Come From?

Royalties are fees that, by law, the following music users must pay for licenses in order to publicly play your sound recordings.

  • Broadcasting companies (radio stations, TV stations, etc.)
  • Music streaming services (Spotify, Apple Music, etc.)
  • Various public businesses

How Do I Collect Royalties?

There are various non-profit organizations and collecting agencies around the world that are dedicated to collecting royalties from music users and distribute them to the proper rights holders.

Types Of Royalties

1. Sales

The most common royalty = sales of music (CD’s, iTunes, etc). If you’re independent you collect your own sales (see this page on distributing and collecting digital sales), if you’re signed to a record label, the label distributes your sales royalties to you.

2. Digital Performing Rights

SoundExchange (the digital performing rights organization), licenses music to digital music streaming service providers and webcasters such as:

These streaming service providers pay SoundExchange, and SoundExchange pays:

  • Sound recording copyright owner
  • Artists on the song

Many major labels and publishers have negotiated deals with major streaming services like Spotify and Apple Music directly, bypassing SoundExchange when dealing with royalties. It is completely within your rights to negotiate directly with these webcasters should you decide that is best. If you’re an independent, you may not have enough negotiating power to make a better deal, and the simpler route is to go through SoundExchange.

Royalties are distributed on a monthly basis if you meet the $250 minimum, or quarterly (March, June, September, and December). Register your songs with SoundExchange (it’s free to register), and when your songs are streamed online, you receive royalties anywhere from 6 to 12 months later, on an ongoing basis as your music is played.

3. Public Performing Rights

Public Performing Rights Organizations (PRO’s) are societies that license music to businesses/music users that play music publicly:

  • Radio
  • Venues
  • TV shows
  • Restaurants
  • Airports
  • Fitness and dance studios
  • Etc!

The business/music user pays the PRO, and the PRO pays the song-writer/rights owner:

  • Composers
  • Songwriters
  • Lyricists
  • Music Publishers

Wait, what about musicians and vocalists on the songs? Learn about Neighbouring Rights below.

Register your songs with a PRO in your country (as far as we know, all PRO’s are free to register), and when your songs are used in any of the above mentioned capacities, you receive royalties anywhere from 3 to 10 months later (depending on your PRO), on an ongoing basis as your music is played. For foreign music use, it could take longer, because your PRO has to collect from the foreign PRO first. Royalties are distributed to members on a quarterly basis. For example, SOCAN distributes every February, May, August and November. SESAC distributes every March, June, September, December.

Register your songs with one of the following organizations:

Canada
SOCAN (Society of Composers, Authors and Music Publishers of Canada)

United States
ASCAP (The American Society of Composers, Authors and Publishers)
BMI (Broadcast Music Inc.)
SESAC (Not an acronym)

UK – England
PRS for Music (Performing Rights Society)

UK – Ireland
IMRO (Irish Music Rights Organization)

Click here for a full list of the worlds PRO’s

 

4. Neighbouring Rights

Neighbouring Rights Organizations collect and distribute royalties to musicians (including session musicians and background players), vocalists and record companies.

Register with one of the following organizations:

Canada
Re:Sound (you may register directly with Re:Sound or through one of their 3 member-organizations below)
MROC (Musicians Rights Organization of Canada)
ARTISTI 
ACTRA/RACS (Alliance of Canadian Cinema, Television and Radio Artists/Recording Artists Collecting Society)

United States
AARC (Alliance of Artists and Recording Companies)
The AFM & SAG/AFTRA Fund (Screen Actors Guild/ American Federation of Television and Radio Artists)
**For SAG/AFTRA you do not “join” the Fund in order to collect royalties. If you have performed on a covered sound recording or motion picture/television program in an applicable category, you are thereafter known as a Participant.**

UK – England
PPL (Phonographic Performance Limited)

UK – Ireland
PPI (Phonographic Performance Ireland)
RAAP (Recorded Artists Actors Performers)

5. Mechanical Rights

Mechanical rights agencies collect music from licensees who mechanically reproduce a musical composition for use on sound carriers such as:

  • CD’s
  • Records
  • Tapes
  • Digital music retail sites
  • Streaming services (Eg. Spotify)

The licensee pays the mechanical rights agency, and the agency then pays copyright owners:

  • Songwriters
  • Music Publishers

For example, when a record label presses a CD, a mechanical royalty payment is due to the songwriter, as well as the publisher if the songwriter is signed to a publishing deal (via the collection agency).

For more information contact the following reproduction rights agencies:

Canada
CMRRA (Canadian Musical Reproduction Rights Agency)

US
AMRA (American Mechanical Rights Agency)

UK – England
MCPS (Mechanical-Copyright Protection Society via PRS for Music)

UK – Ireland
MCPSI (Mechanical Copyright Protection Society Ireland via IMRO)