How do Music Royalties Work?

With the increasing use of the internet to stream, download, and buy music, how the artists get paid is getting increasingly more and more complicated. Only an experienced Entertainment Lawyer can ensure an artist is not exploited and received compensation for their work.

A little known fact with the music industry is that there are two separate copyrights for recorded songs; the rights to the song and the rights to the sound recording. The artist owns the composition of the song, but the sounds recording generally belongs to a record company. So if you only own a portion of your song, how do you get paid?

Incoming revenue from owning the rights to the song typically come in for ways: Record sales, concerts and other performances, sales of sheet music, and synchronization rights (when your song is used in a movie or is on TV).

Record sales, also called mechanical royalties, give you the right to record a song. Your Entertainment Lawyer will write into your contract what your statutory royalty rate is and you'll be paid that rate per song per copy sold. These mechanical rights are also compulsory, which means another artist doesn't need to get permission from the original songwriter to record the song. Mechanical royalties are paid by the label to the writer of the song, whether the writer performed the song or not.

Public performances only apply to actual composition copyright, not to sound recordings. This is great for the artist since any money generated from a performance goes straight to the artist and not the record label. This includes music played on the radio or in your favorite gathering place. Fees are paid to the songwriter by Performance Rights Organizations such as ASCAP, BMI or SESAC, from fees collected from radio and television broadcasters for the rights to broadcast the artists work.

Sales of sheet music is a royalty paid to the songwriter and publishers of the music based on sales of printed sheet music.

Synchronization royalties are paid directly to the songwriter by a producer of a movie, TV show, or advertisement. This enables the producer to use the songwriter's music in their movie, TV show or advertisement.

With the advent of the internet, music royalties have become more and more complex. File sharing and streaming of music has become more commonplace and music industries are struggling to stay on top of this moving target. With the right Entertainment Lawyer, a contract will be generated that details all royalty sources and ensures payments are received for all artistic work done.