Understanding Song Royalties in the Music Industry
When a song hits the airwaves or lands on a streaming platform, a complex financial ecosystem kicks into action, distributing royalties to various stakeholders. This article delves into how royalties are typically divided among songwriters, publishers, performers, record labels, producers, performance rights organizations (PROs), and streaming services. We will also explore the role of specific entities like Sound Exchange and the consequences of a shady practice from the past.
Main Recipients of Song Royalties
Song royalties are distributed among several parties depending on the rights involved. The main recipients include:
1. Songwriters
These are the individuals who write both the lyrics and the music. They are often the primary beneficiaries of songwriting royalties, which are calculated according to the contracts they have with publishers and recording labels.
2. Publishers
Music publishers represent songwriters and collect royalties on their behalf. Publishers often take a percentage of the earnings as a fee, and they manage the copyrights and administer the songwriting agreements.
3. Performers
Artists who perform the song may receive performance royalties, especially if they are the songwriters. Otherwise, they may earn money through performance fees. This is particularly true for live performances or recorded performances, where they can negotiate additional fees for their performances.
4. Record Labels
If the song is recorded and released through a label, the label takes a share of the royalties from sales and streaming. This is often fixed in the record contract, and it can vary based on the terms agreed upon between the label and the artists or publishers.
5. Producers
Producers who work on the recording may also receive a share of royalties, depending on the contract they have with the artists or the record label. This is usually negotiated in the recording and production agreement.
6. Performance Rights Organizations (PROs)
PROs like ASCAP, BMI, and SESAC collect performance royalties and distribute them to songwriters and publishers. These organizations track public performances of songs and ensure that royalties are paid for radio play, performance venues, and public performances.
7. Streaming Services
Services like Spotify, Apple Music, and others pay royalties based on the number of streams. These royalties are then distributed among the rights holders, including publishers, songwriters, and artists.
The Role of Sound Exchange and Mechanical Rights
For artists under a record contract, a portion of the royalties can be distributed to performers through organizations like Sound Exchange. Sound Exchange distributes royalties to performers and record producers based on the number of times their songs are played on radio, TV, and other digital media.
Furthermore, mechanical rights are a vital aspect of song royalty distribution. The Copyright Act grants performing rights organizations like BMI, ASCAP, and SESAC the exclusive right to license the public performance of copyrighted music. This means they administer the distribution of royalties to songwriters based on the performance of their songs.
Shady Practices and Publishing Credits
Interestingly, some shady characters, like Morris Levy, capitalized on a loophole in the music industry where putting your name on a record as a writer would entitle you to royalty payments. Morris Levy, a record producer, added his name to the credits of several songs to receive royalties he was not entitled to. This practice occasionally took away revenue from the original songwriters and producers.
Notable Case: Morris Levy and ASCAP Conviction
Morris Levy became notorious for his involvement in music production and distribution. According to Wikipedia, he was convicted of extortion in 1990 as part of an FBI investigation into alleged infiltration of organized crime into the record business. His actions were a cautionary tale of how certain practices in the music industry could lead to detrimental outcomes for true creators and producers.
Conclusion
The distribution of song royalties is a multifaceted process that involves numerous parties. Understanding the roles and responsibilities of each stakeholder can help ensure that creators are fairly compensated for their work. By navigating the complexities of music contracts and agreements, artists and producers can protect their rights and receive the royalties they rightfully earn.
References:
ASCAP – American Society of Composers, Authors, and Publishers BMI – Broadcast Music, Inc. SESAC – Society of European Stage Authors and Composers Sound Exchange () Morris Levy – Wikipedia