Music Industry Collectives – Why Are They So Important?

Music Industry Collectives

Most musicians I talk to are slightly confused by all the music industry collectives out there and how they can collect money from them. This is understandable: there is a lot to digest. Let’s look at the main music industry collectives and how you can get paid from them.

1) Performing Rights Collectives (PROs)

Every time a recorded song is played or ‘performed’ on television, on radio, in a restaurant/elevator/nightclub/elevator/airline, played live by a band, or otherwise performed in public in any form, that performance generates revenue for the copyright owners. No one may perform, reproduce, sell or otherwise use a copyrighted work without permission from the creator and/or legal owner.

This performing right is a major source of income for music creators. It would be impossible for every individual composer or lyricist to keep track of the millions of music users and public performances of their works around the world.

Similarly, it would be impossible and extremely costly for music users to obtain the permission of each of the hundreds of thousands of copyright owners each time they wished to perform or authorize the performance of music.

For this reason, performing rights collectives act as clearing houses that license the use of music and ensures that the creators of the music are compensated fairly.

In Canada, SOCAN is the sole performing rights organization. In the USA, ASCAP and BMI offer the same service.

These music industry collectives keep track of who is performing songs, charge users a licensing fee and then pay the owner their share of performance royalties.

These three music industry collectives alone administer performing rights in millions of musical works created by their North American members and the members of foreign affiliated PROs through its affiliation with over 40 foreign societies representing the music of over 100 countries. They issue blanket licenses for the performance of the musical works that are within its repertoire.

music industry collectives

2) Mechanical Rights Collectives

Once a recording has been made available for sale, the songs contained on that recording can be recorded by other musicians, so long as they obtain a mechanical license from the appropriate music publisher(s). This mechanical license grants permission to reproduce the copyrighted music on record/tape/CD/digitally, or for use in a film/TV/commercial or other program. Mechanical royalties due from the use of music on records, tapes and CDs are one of the key sources of revenue for songwriters and music publishers.

The Canadian Musical Reproduction Rights Agency (CMRRA) and the Society for Reproduction Rights of Authors, Composers and Publishers in Canada (SODRAC) are the entities that grant reproduction licenses in Canada. The Harry Fox Agency offers similar services in the USA.

These music industry collectives represent their members for the purpose of granting mechanical licenses. In return for this permission, music users agree to pay mechanical royalties. Rates for mechanical licenses are set by negotiation between the record industry and the music publishers and a single, standard rate applies to most reproductions. Currently, the mechanical rate in Canada is $ .083 per song per copy sold or otherwise distributed, where the playing time is five minutes or less with each additional minute (or part thereof) earning another $ .0154 cents to the rate. In the US, the rate is prescribed by the U.S. Congress, and is currently $.08.

For example, if a new Canadian band wanted to record a 10-song album of Neil Young covers, they (or their record label) would pay $0.83 per album sold or otherwise distributed in Canada.

music industry collectives

Reproduction licenses must be applied for and agreed upon prior to the manufacture of a sound recording or the synchronization of the music to the other media. Locating the owner of a copyrighted work would be incredibly difficult without centralized organizations like CMRRA and Harry Fox, as there are hundreds of thousands of titles controlled by multi-national publishers or by thousands of individual songwriters with small catalogues.

3) Retransmission Collectives

These music industry collectives came into being from a statutory enactment allowing copyright owners to receive royalties from cable television systems for retransmission signals. Retransmission tariffs are regulated by the Copyright Board through powers granted via the Copyright Act. Currently there are eight retransmission collecting bodies representing various copyright owners including SOCAN. For the purposes of collecting retransmission royalties, SOCAN collects and distributes royalties to copyright owners of music that is integrated in the programming carried in retransmitted radio and television signals.

4) CONNECT Music Licensing

This music industry collective administers licences in Canada for the reproduction of sound recordings, and the reproduction and broadcast of music videos on behalf of the copyright owners (usually record companies).  A licence from CONNECT music licensing ensures that owners receive compensation for the use of their sound recordings and/or music videos.

CONNECT is the licensing agent of all the major record companies in Canada and many independent labels, artists and producers. CONNECT’s members own or control the copyright of over 95% of all musical audio recordings and music videos produced and/or distributed in Canada.

music industry collectives

5) Streaming Royalties

This is one of the most important music industry collectives of the modern age. Digital royalties are generated when music is streamed through services such as Pandora and SiriusXM, and collected by an agency called SoundExchange. SoundExchange has paid out billions in royalties since their first distribution, and their website has a search function to see if you or your band are owed money.

6) RE:Sound (Formerly the Neighbouring Rights Collective of Canada)

This music industry collective collects money and compensates the performers on a recording rather than the songwriters (session players, singers, performers and record companies). Radio or TV broadcasters pay a tariff to collection agencies in order to compensate the performers and the labels that own the sound recordings. Note: neighbouring rights do not exist in the USA, but exist in many other countries such as Canada and most of Europe. In Canada, register with ACTRA to start receiving these royalties.

7) The Canadian Private Copying Collective

This music industry collective is an umbrella organization whose member collectives represent songwriters, recording artists, music publishers and record companies.  The CPCC is the non-profit organization responsible for collecting and distributing private copying levies on behalf of its member collectives.

As always, email me with questions!

How Your Music Makes Money (Part Two) – The Songwriting Copyright

Songwriting Copyright

How does your music make money in the modern world? While record sales are becoming less and less relevant, revenue streams generated from the Songwriting Copyright have greatly increased. This is because music is being used more now than ever before. This use generates money for the writers of the music.

The revenue streams flowing from the Songwriting Copyright include:

Public Performance Royalties

The owner of the songwriting copyright owns the exclusive right to perform or authorize others to perform the music publicly. These public performance royalties are collected and administered by a collection agency such as ASCAP or BMI in the USA, and SOCAN in Canada. “Performance” in the music industry can include any of the following:

  1. A performance of a song or composition – live, recorded or broadcast. For example, when a song is played during the broadcast of an NHL game. The broadcaster pays a fee to SOCAN, and that money flows to the writers of that song.
  2. A live performance by any musician. When your songs are played live at a venue by you or by someone else (as a cover), you get paid. Venue owners pay SOCAN specified fees, and those fees are distributed to SOCAN members based on set lists that the performing artists submit to SOCAN. So when OBS covers “Psycho Killer” during a live show, the writers of the song (Talking Heads) get paid. The same would happen if a band covered OBS.
  3. Performance through the playing of recorded music. This includes radio airplay and other similar performances. Radio stations pay significant fees to SOCAN every year for the right to perform recorded music on air, and these monies are paid out to songwriters based on the submitted playlists. So when my band’s recording of “Psycho Killer” gets played on radio, Talking Heads get paid.
  4. Music performed through the Internet. Similar to C, but for Internet broadcasts.

songwriting copyright

Mechanical Royalties

The author of a song has the right to be paid every time a copy of that song is made (or “mechanically reproduced”). So the record label or individual reproducing the song must pay the writer a fee per song, per copy manufactured. In Canada that fee is 8.3 cents and determined by an agreement between the recording and publishing industries, and the in US it is 9.1 cents and determined by legislation. Another real world example: when my band’s recording of “Psycho Killer” is sold on iTunes for 99 cents, 8.3 cents go to Talking Heads. If you are signed to a label, they should be paying you mechanicals for songs you write. If you are unsigned, contact CMRRA in Canada and the Harry Fox Agency in the USA for more info.

Synchronization Licensing Fees

Similar to a Master Use License, but for the writer and owner of the Songwriting Copyright. The synchronized song also generates performance income every time the television show, commercial, or film containing the composition is performed. In other words, the “backend” revenue from performance royalties can often far outweigh the “up front” sync fee, if the television show or film is played thousands of time around the world. A good example is the Cheers theme song “Where Everybody Knows Your Name”, which was written by struggling songwriter Gary Portnoy. The up front synch fee paid to use the composition in Cheers was quite modest, but the “backend” performance royalties as a result of Cheers airing so many times in so many countries has made Mr. Portnoy a millionaire several times over.

songwriting copyright

Private Copying Levy

Similar to the Blank Tape Levy discussed last issue. Money from the sale of blank CDs goes to songwriters across the country. If you are a songwriter, you are entitled to receive payments from this levy. Contact the Canadian Private Copying Collective to sign up.

Print Royalties

Print income is derived from printed copies of a song, from the sheet music. Sheet music consists usually of the melody notes and the lyrics which may accompany those notes. The copyright owner or administrator can license the right to print such sheet music to print publishers, in exchange for royalties. For most musicians, print income represents a small percentage of their total income from songwriting.

Lyric Display

Revenue generated by the display of your lyrics on a website. Paid to songwriter/composer by your publisher. While the right for composers to earn money based on the display of their lyrics is not new, the number of opportunities has exploded thanks to the Internet and the growth of licensed lyric aggregation sites like LyricFind.

There are many other miscellaneous revenue streams to consider in order to make the most of your career in music. YouTube revenue-sharing, ad revenue from Google Adsense, issuing samples of your music to third parties, creative fan funding campaigns, etc.

The music industry – and the way in which you can earn a living in it – will continue to evolve. As the saying goes, the only constant is change, particularly in the music business. The Songwriting Copyright will continue to be a major source of revenue for songwriters. As always, email me with any questions or comments.

Songwriting Copyright

KD Chosen as Music & Law Columnist for SOCAN

Received some great news this morning. I’ve been writing articles on the music industry for years, sharing them here and getting them published every now and then in magazines like Canadian Musician and DRUM! Magazine in the US. Today’s breakthrough is particularly special, as I’ve been a songwriter for most of my life. SOCAN has chosen me to be their “Music and Law” columnist for their website!! I’m incredibly honoured and appreciative. My first article went live last week. Here’s to many more.