Many artists I work with have a tough time understanding the different copyrights in a song, and the revenue streams that flow from them. I don’t blame them. Our copyright system has developed in bits and pieces over decades, so there are layers of complexity at play here.
In every recorded song there exists two main copyrights: one in the written song itself (the Musical Work Copyright) and one in the recording of the song (the Sound Recording Copyright). It is important to understand that the two main copyrights in a song are separate and distinct, and involve different rights and sometimes different owners.
Copyrights in a Song: The Musical Work Copyright
Whoever writes the composition is considered the owner of the Musical Work Copyright. For more on What Constitutes Songwriting, see my article here. The revenue streams generated from the Musical Work Copyright include performance royalties (from radio play, live performance of the song, etc.), mechanical license royalties (a fee paid per song for every copy of the song made), synchronization fees (if the song is ‘synced’ to film or television), and others.
If you sign a publishing deal, you are giving up certain rights in your Musical Work Copyright. For more on the different types of publishing deals, see my article here. If you don’t write your own songs, you are not entitled to revenues from the Musical Work Copyright, only the Sound Recording Copyright.
Copyrights in a Song: The Sound Recording Copyright
When a musical composition is recorded, a new copyright is created called the Sound Recording Copyright. The revenue streams generated from the Sound Recording Copyright include record sales revenue (both digital and physical), and master use license fees (to use the actual recording of the song in film/tv/etc.).
If you sign a record deal, the record label acquires certain rights to the Sound Recording Copyright.
How Can You Make More Money From Your Song Copyrights?
Some of the revenue streams generated from the Sound Recording Copyright include:
- Record Sales: This includes sales from traditional brick-and-mortar stores, physical sales through Amazon and the like, physical sales at live shows, and digital sales through iTunes, Bandcamp, etc. This revenue stream continues to decrease each year, but if you manage your catalog online correctly, can still be a significant income stream.
- Streaming Royalties: Digital royalties are generated when music is streamed through services such Spotify and Apple Music. The last study I read found that over 90% of master revenues in the music industry are from streaming. I would guess that this number will continue to increase.
- SoundExchange Revenues: Revenues generated from so-called “non-interactive digital radio” such as Pandora and SiriusXM are collected by an agency called SoundExchange. SoundExchange has paid out more than $7 billion in royalties since their first distribution, and their website has a search function to see if you or your band are owed money.
- Master Use Licenses: When a song is used in film or television or in a commercial, the owner of the master recording is paid a “Master Use License”. The amount of the master fee depends on the bargaining power of the parties involved, and how badly the producer wants the song in their production. Use of music in film, TV, etc. requires two licenses, a Master Use License from the master owner and a Sync License from the publisher or songwriter.
- Neighbouring Rights: Paid to the performers on a recording rather than the songwriters (session players, singers, producers and record companies). Radio or TV broadcasters pay a tariff to collection agencies in order to compensate the performers and the record labels that own the sound recordings. In Canada, register with one of ACTRA, Artisti, or MROC (not all three), and they will work with Re:Sound to distribute these royalties to you.
- Private Copying Levy: When consumers purchase blank CDs and like media, they pay a fee known as a private copying levy, which was created to compensate music rights holders for private copies made of their music. In Canada, sign up at www.cpcc.ca to access these revenues.
Some of the revenue streams generated from the Musical Work Copyright include:
- Public Performance Revenues: The owner of the Musical Work 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 radio play, live performance of your songs by another musician, performance in a broadcast (television, sporting event, etc.), performance on the Internet, etc.
- 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 8.1 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. Sign up with CMRRA in Canada and the Harry Fox Agency in the USA.
- Synchronization Licensing Fees: Similar to a Master Use License, but for the writer and owner of the Musical Work 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.
- Private Copying Levy: Similar to the Blank Tape Levy, but paid to songwriters. Sign up at www.cpcc.ca.
- 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.
There are more sources of revenue out there, but this is a solid starting point. 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. Try to stay up to date on these developments and revenue streams, and reach out to me with questions along the way.