You probably know that musicians don`t have the typical salary like a lawyer or a doctor, but they still earn good money. The reason is that having created a piece of music, an artist can subsequently earn money not only from concerts. After creating a track, as well as music mixing and mastering, its author can receive royalties for the use of the intellectual property.
What are music royalties?
Nowadays, in many countries, this issue is being actively discussed because actually any intellectual property (including music) is the basis for the development of world culture and economy.
In simple terms, music royalty is a reward that authors receive for using their work. Also, royalty is a payment for granting the right to use any copyright and the related right to a music track (when it`s released not only by a musician but under the auspices of a particular studio or producer).
According to the latest large-scale study published by CISAC (Confederation of Societies of Authors and Composers) in 2015:
- Annual worldwide royalties were a record 8.6 billion euros (data were received from 239 partner companies of the organization).
- Moreover, most of the awards are received by the musicians — almost 7.5 billion euros were paid for royalty music or 86.8% of the total.
- The leader for the regional distribution is Europe — 58.4% from global music royalties.
And if you compare the data by separate countries, you can see the following top-4 rating:
- USA — 17,95%;
- France — 12.65%;
- Germany — 9.35%;
- United Kingdom — 8.44%.
Thus, music royalties are a very common practice to provide material support to authors around the world.
Types of music rights
In order to use the audio correctly and prevent infringement of intellectual rights, it`s necessary to have a clear understanding of the music rights protection and the circle of copyright holders. First of all, initially, when creating any work, each musician receives copyright. Music copyright types:
- Property copyrights — they may subsequently be transferred/sold by the author and belong to any other person.
- Personal non-property copyrights — they are inalienable and can only belong to the author, and the waiver of such rights is null and void.
Due to the fact that a musical work may consist of several protected copyright objects, it may also have several copyright holders. For example, when the music was written by one person, the lyrics by another one, and the mixing and mastering was generally done by a third party fellow.
Different types of royalties
It is also worth understanding that there are different types of royalty (song can be played in different versions — it means that the reward will also be different). So, the main types of royalty include payments for:
- standard performance: the song is performed live or played online (including streaming), sounds in a public place;
- mechanical reproduction: the recording is reproduced in digital form or on a physical medium.
- syncing: the track is used in visual media (cinema, advertising, television).
In addition, musical royalties can be classified according to the payment type. For example:
- Royalties depending on the music track turnover. It is paid for a certain period based on the performance of the brand that collaborates with the author.
- Royalties as a fixed payment. It`s a regular fee which is tied to the contract and has a fixed percentage of sales, regardless of the turnover.
But don`t forget that there is also royalty free music. The official use of such audio allows the buyer to pay for the music only once and reclaim it for as long and as many times as necessary.
How do royalties work?
The royalties should be received by everyone who, in any way, officially took part in the creation of a piece of music (musicians, sound producers, copyright owners, and so on). Of course, if musicians work independently of the recording studios, then they receive the entire amount of royalties. To do this, they need to register the track with a local organization that will control the streaming and any use of the track. For example, in the USA, music is most commonly licensed through the Mechanical Licensing Collective.
If a lot more people are working on the track, then there are certain rules for the distribution of profits from streaming and the use of music:
- as a rule, 50% of the turnover is always received by the owner of the intellectual property;
- 45% are received by the main performers (musicians + vocalists), and if there are several of them, then this percentage is divided by their number;
- and 5% goes to side musicians.
Thus, this payment is due to every owner of musical intellectual property if it is licensed through an appropriate organization and is suitable for standard performances, mechanical reproduction, and syncing. A commission is required for each music use unless the track falls under the royalty-free category. Finally, the earnings received are distributed among everyone who took part in the audio creation.