By Deborah Riehl-Williams
Royalties are paid to recording artists and songwriter/publisher. The provisions for each differ. The main difference between the two is that recording artists are paid royalties based on sales of CDs, but not public performance of their work. This is because when radio stations play their music that is a form of marketing their album. Songwriters and publishers are paid royalties for public performance of music they have written, as well as, a small portion of recording sales. The only time artists can be paid royalties for public performance is when the song is played in a digital arena, which refers to a webcast or on satellite radio. Also, if a song is non-interactive, meaning the listener didn’t choose to hear the song and if they are a subscriber to a service. For example, streaming sites such as Pandora would account for this. The Digital Performance Rights in Sound Recordings Act of 1995 allowed this.
Royalties revolve licenses involved in the making of a single or album. Typically, when under a label you have to worry about monies being split between the producer, publisher, record label, songwriter and yourself. But, as an independent artist you will likely only have to worry about royalties being shared between you and a possible songwriter. If you and someone else collaborate to create a song, then you each own 50% of it and cannot do anything with the song without permission from the other. For example, if you come up with the lyrics for a song and a fellow artist creates the beat for the song, then you both jointly own the song. Any money made from that song also will be split between the two of you.
There are different types of royalties you should be aware of as an independent artist.
- Mechanical Royalties: Paid to the recording artist, songwriter, and publisher based on the number of recordings sold.
- Performance Royalties: Paid to the songwriter and publisher when a song is performed live or on the radio.
- Synchronization Royalties: Paid to songwriters and publishers for use of a song used as background music for a movie, TV show, or commercial.
- Print Royalties: Paid to songwriters and publishers based on sales of printed sheet music.
- Internet Royalties:
In addition to these royalties, the Audio Home Recording Act of 1992 brought about yet another royalty payment for songwriters and performers. This act requires that the manufacturers of digital audio recording devices and the manufacturers of blank recording media (blank cassette tapes, blank CDs, blank DVDs, etc.) pay a percentage of their sales price to the Register of Copyrights to make up for loss of sales due to the possible unauthorized copying of music. The Sound Recording Fund receives two-thirds of the money. This money goes to the recording artist and record company. In this case, the royalties would go directly to the independent artist. The Musical Works Fund receives the remaining one-third of the money to split 50/50 between the publisher and the songwriter. In this case, the songwriter would receive the royalties and if an independent artist did all of the work, then they would receive full payment.
It is especially important for songwriters to copyright their work, because they are the creators of the initial idea for a song. They come up with the words and melody for a song, but because they typically are stronger writers than singers, they prefer not to become artists. Once something is written and recorded in some fashion, it is technically copyrighted and your material. But, if it were to be stolen by someone else and the song became a hit, there would be no legal grounds to prove it’s your work unless formally copyrighted. Be sure to always copyright a song before having it recorded or possibly stolen by others. If a song is written without being copyrighted and recorded by a vocalist, it then becomes joint property of both individuals.
The same license process required within the U.S. stands if music is used in a foreign country. The agents there are to keep track and be sure that the proper people receive their royalty payments.