2021 Prediction: The United States Music Publishing Market Continues To Grow And Fragment, Creating More Silos For Unpaid “Black Box” Royalties — DIY Musicians Hit The Hardest
As the U.S. music publishing industry grows (in terms of revenue, volume of copyrights, and number of income participants), the rights administration and licensing sector becomes ever-more fragmented; giving way to cracks in its foundation through which royalties fall into the so-called “black box” — the industry name for the unmatched and unpaid royalties earned against unidentified works or unidentified or unreachable income participants that accrue in escrow only to be later forfeited and disbursed to entities to which the funds do not belong; primarily major music conglomerates and those acquiring catalogs of copyrights to expand their market share position.
Black Box Royalties Myths, Common Misconceptions Debunked at Music Biz 2018
A picture of a white board illustrating the growth and fragmentation of the US Music Publishing Market, specifically the music licensing and royalty ecosystem, drawn during Dae Bogan’s lecture in his class, “Music Industry Entrepreneurship and Innovation” at the UCLA Herb Alpert School of Music, Winter Quarter 2019
In 1909, when the first federal copyright law that protected music creators and rights-holders was enacted, there were no massive music rights organizations as we’ve come to know them today. Although unions had existed — the American Federation of Musicians was founded 13 years earlier in 1896, but focused more on work conditions than collective bargaining, as it does today — ASCAP was formed in 1914 to license the performing rights of composers, authors, and publishers.
Fast forward to 2021 when the newly formed Mechanical Licensing Collective will issue its first blanket digital streaming mechanical license to the likes of Spotify, Google, and Apple. There will be over a dozen music rights and royalty collection organizations issuing thousands of licenses, administering millions of pieces of copyrights, and processing billions of micro-penny transactions.
The music licensing and royalty ecosystem in 1909: Individual music composers, aristocrats who financed or commissioned works, and sheet music publishers.
The music licensing and royalty ecosystem in 2021: Traditional non-profit and private music rights organizations (ASCAP, BMI, SESAC, Global Music Rights, PRO Music Rights, SoundExchange, Mechanical Licensing Collective), royalty funds (AFM & SAG-AFTRA Intellectual Property Rights Distribution Fund, Alliance for Artists and Record Companies, Film Musician’s Secondary Market Fund, Sound Recording Special Payments Fund), unions engaged in collective bargaining (SAG-AFTRA, American Federation of Musicians), licensing clearing houses and agents (e.g. Music Reports, Harry Fox Agency).
If I wrote a popular commercial song that is exploited to the fullest extent — released on a commercial recording; performed live in concert; licensed for use in film or television; placed in a commercial; earns viral success on user generated content platforms and social music apps; covered many times; embodied in a music video; lyrics printed and sold on merchandise; used for a live broadcast sporting event; added to Spotify and Apple playlists where it takes off; picked up on terrestrial, Internet, satellite, and cable radio; etc. — I would need to ensure that my work is registered at all of the places where the royalties earned from the uses I’ve described are paid; the music licensing and royalty ecosystem. If I do not, then my royalties will leak into the black box.
The black box is estimated at over $2 billion — and growing — of which much of it is due to independent music creators, small music rights-holders, and the estates of deceased authors and performers who do not have the access, power, know-how or market share to navigate the web of black boxes; for which there are many.
When entities charged with maintaining these black boxes distribute the funds in market share distributions, the major labels and publishers win and the independent and DIY creators lose. It is unfair and unethical. But what are we going to do about it?
Some artists, knowing that they do not know exactly how this all works, have found creative business ways to “make up” for potential lost royalties. But for the rest — the majority — of DIY musicians, they’re generally left out of the discussion and left to fend for themselves, even when they think they’re doing everything right.
As the industry charges forward with new energy fueled by the growth of music streaming, we have to consider how the continued fragmentation of the music licensing ecosystem affects the most vulnerable — DIY musicians. Major labels have direct deals with DSPs and digital services that pay them advances and account to and pay them royalties. DIY musicians rely on music rights organizations, who are often disproportionately influenced by the majors, to handle these things for them.
I founded TuneRegistry to help DIY musicians be their own advocate, to demystify the music licensing and royalty ecosystem by aggregating the fragmented world of rights administration into one economical platform. To this end, our team has helped hundreds of small to medium-sized music rights-holders and DIY musicians unlock thousands of dollars in new found royalties and to register their works to ensure that they are identified and accounted to in the future. Not all music rights organization have joined our network, but we will continue to advocate and fight for the rights and entitlements of DIY music creators as long as we can.
Dae Bogan Included In Bobby Owsinski’s ‘The Music Business Advice Book: 150 Immediately Useful Tips from the Pros’
Bobby Owsinski is one of the music industry’s greats. His ability to curate music industry knowledge into easy-to-ready texts across his over 20 books has helped thousands of music creators and music industry professionals in their careers. I’ve had the pleasure of being on Bobby’s podcast, Inner Circle, and participating on several music conference panels with Bobby. He is truly an inspiration. In fact, it was partially my participation in the making of his book “Music 4.0: A Survival Guide for Making Music in the Internet Age” that inspired me to write my first, very short, ebook “The DIY Musician’s Starter Guide To Being Your Own Label & Publisher.”
I am honored, once again, to have been included in Bobby’s latest book, “The Music Business Advice Book: 150 Immediately Useful Tips from the Pros,” available on Amazon.
About the book:
The music business can prove to be a difficult career road when you’re first starting out, but it can be traveled a lot easier with some helpful guidance from a pro who’s willing to share a few hard-earned hints. The Music Advice Book is a compilation of the pearls of experience from 130 top music pros from various segments of the industry who have previously shared their most important tips on Bobby Owsinski’s Inner Circle Podcast over the course of almost 5 years.
These 150 tips cover everything from following your passion, learning to network, and working well with your musical team, to owning your own content and even figuring out how much to charge for your services. Also included are even some useful music production words of wisdom, as well as the indispensable “10 Rules Of Networking.”
The insights in The Music Business Advice Book are essential for those new to the music industry but valuable to seasoned pros as well.
Introducing, The American Society for Collective Rights Licensing (ASCRL) — The Organization That Wants To Help Visual Artists Collect Their Unclaimed ‘Black Box” Royalties
ASCRL homepage. Featured photo © Neil Zlozower
As many of you know, I’ve researched and have written extensively about unclaimed music royalties held in escrow or so-called “black boxes,” which are monies owed to music creators and rights-holders (and founded RoyaltyClaim to address this issue). Today, I want to draw your attention to a similar matter in the world of visual art (e.g. photography, illustration, stills, text design).
This morning I had the pleasure of speaking with Eugene Mopsik, the CEO of the American Society of Collective Rights Licensing (ASCRL). A successful corporate /industrial photographer with over 32 years of experience, Eugene was previously the Executive Director of the American Society of Media Photographers (ASMP).
Eugene and I talked about issues related to the representation and rights of visual artists and the monetization of their works outside of the United States. He and his co-founders of ASCRL are working to help visual artists claim their fair share of royalties that have long gone to the publishers of visual works.
Similar to musical works (aka compositions or songs) that earn mechanical royalties when the work is reproduced, visual works, in many cases, earn reprographic royalties. Whereas mechanical royalties outside of the U.S. are collected by mechanical rights organizations (MROs) in territories under the MRO’s jurisdiction, reprographic royalties are collected by reprographic rights organizations (RROs) in territories under the RRO’s jurisdication. And, much like the complex web of legal and regulatory issues that makes it challenging for songwriters to collect their ex-U.S. mechanical royalties, similar limitations make it challenging for visual artists to collect their ex-U.S. reprographic royalties.
Antitrust laws has made it difficult to form a collective licensing body. Consequently, the U.S. does not have a local RRO to enter into reciprocal agreements with foreign RROs for the purpose of passing through ex-U.S. reprographic royalties to be paid to U.S. visual artists. Once again, this is similar to the absence of a U.S. MRO for songwriters. Notably, however, the U.S. has made an exception for the collective licensing of performance rights in musical works.
Since 1914, songwriters and composers have been able to join a performance rights organization (PRO) for the collective licensing of performance rights and payment of performance royalties. In the United States, the American Society of Composers, Authors and Publishers (ASCAP), Broadcast Music Inc. (BMI), SESAC, and Global Music Rights (GMR) are PROs that represent the performance rights of songwriters and publishers.
Currently, when reprographic royalties are earned outside of the United States, they are collected by RROs. RROs then distributes royalties to the publishers of visual works and authors of visual works (visual artists) who’ve joined the RRO. The RRO passes reprographic royalties for works due to members of foreign RROs to the RRO in the respective territory. In cases where the publishers or authors of works are unknown or if the author is an unrepresented U.S. visual artist, royalties are held in escrow and eventually distributed by market share to publishers. In the latter, royalties that are fairly owed to U.S. visual artists are being distributed to publishers. This is what the American Society of Collective Rights Licensing aims to address.
Joining ASCRL is free. Members can submit their works and use the ASCRL claiming portal to claim their entitlements and unlock unclaimed royalties. To learn more about ASCRL or to begin the process of joining, visit http://www.ascrl.org.
CreativeFuture Releases ‘The DIY Musician’s Starter Guide To Being Your Own Label & Publisher’ Written By Dae Bogan
Over the last 10 years, I’ve had the honor of working with and supporting many DIY musicians in the development, launch and growth of their music careers. As an artist manager, indie label owner, music publisher, music retail executive and music tech entrepreneur I’ve directly contributed to the creation, promotion, release, administration and monetization of hundreds of releases.
It is from these experiences working with DIY musicians (and indies) and through my advanced education having earned a master’s degree in music business that I operate today as an entrepreneur, educator and advocate for DIY musicians.
I try to assist DIY musicians make sense of the music business through articles and insight, workshops, courses, webinars and now a short ebook.
I am excited to present The DIY Musician’s Starter Guide to Being Your Own Label and Publisher
The DIY Musician’s Starter Guide to Being Your Own Label and Publisher was written to (1) help DIY musicians become better advocates for themselves by demystifying some of the confusing concepts behind how the digital music industry operates, (2) to address and offer solutions to many of the challenges that DIY musicians face in their careers, and (3) to educate DIY musicians on the processes with which they must become familiar to increase the possibility of being properly compensated for the
use of their music across the digital music ecosystem.
In this guide, you will learn about the basics of music copyrights and the business implications of the difference between compositions and sound recordings. You will learn what it means to be your own label and publisher and the four different hats you wear in the world of music royalties. You will also gain practical knowledge and steps
for asserting your rights and capturing the royalties that your music earns across the digital music industry.
Get it FREE here.
How To Legally Record And Sell A Cover Song In 3 Steps
This post was originally written for and published on Dozmia’s blog.
If the popularity of user generated content (UGC) platforms, such as YouTube and SoundCloud, has taught us anything about the music industry in the Digital Age, it is that aspiring artists from anywhere can amass huge online audiences and earn global reach by putting out cover songs that spark a reaction.
Success stories like those of Justin Bieber, Tori Kelly, 5 Seconds of Summer, Charlie Puth, Shawn Mendes, and Ed Sheeran are no longer rare phenomena. Talented unsigned artists like Jade Novah and Austin Mahone have earned tens of millions of views and plays across their UGC accounts. Previously undiscovered talent have gone on to land brand sponsorships, live performances with major recording artists, appearances on TV, casting in commercials, and more– all without the backing of a major record label.
However, while recording and uploading cover songs to UGC platforms can be a great first step to building a fanbase, monetizing those songs on traditional digital music services can be a legal nightmare if not done correctly. Furthermore, knowing when, where, and how to capture all of the royalty streams that your cover recording earns will put you in a better position to reap all of the rewards from releasing a cover recording that takes off.
Here are three steps that you should take if you plan to legally record and release a cover song:
Step 1: Secure the proper licenses to reproduce and distribute the original composition.
The U.S. Copyright Act grants copyright owners six exclusive rights including the right to reproduce and the right to distribute their compositions in phonorecords. When you record a cover of an existing song, you are effectively using someone else’s copyrighted work and they must be compensated for the use when you distribute the recording in physical and/or digital media.
The law includes a provision that enables anyone to reproduce and distribute a composition by following the specific requirements set out in the compulsory license. These requirements basically state that you must notify the copyright owner of your intent to use their song and you must account to (provide reports and statements on usage) and pay statutory mechanical royalties to the copyright owner for each use.
The term “mechanical” refers to when songs were mechanically reproduced in phonorecords. The statutory mechanical royalty rates are set by the Copyright Royalty Board.
Currently, the statutory mechanical royalty rate for physical formats (CDs, cassettes, LPs) and permanent digital downloads (e.g. iTunes) is 9.1¢ for songs 5 Minutes or less or 1.75¢ per minute or fraction thereof for songs over 5 Minutes.
Harry Fox Agency (HFA), Loudr, and Easy Song Licensing are just three of the resources for securing a mechanical license.
HFA is a membership-based mechanical licensing agency owned by SESAC. HFA represents and issues mechanical licenses in the U.S. on behalf of their U.S. music publisher members. HFA’s website claims that they currently represent over 48,000 music publishers. This makes it easier for you to go to them for most of the top popular songs released in the U.S. HFA’s service for obtaining a mechanical license is called SongFile.
Through SongFile, you pay upfront for the number of physical or digital phonorecords that you project to sell. For example, if you will sell 1,000 CDs, then you’ll pay 9.1¢ x 1,000 = $91 per cover song, which will then be paid to the publisher(s) to compensate the songwriter(s). You can also secure a license for interactive streams. However, in the United States, some interactive streaming services already pays the mechanical interactive streaming rate, so you do not have to when releasing to these platforms in the United States. Spotify, for example, pays HFA for the mechanical license for songs used on their platform in the United States, so you do not have to worry about securing a mechanical license if you’re only releasing to Spotify.
The rates for interactive streams (e.g. Spotify) and limited downloads (e.g. offline mode) are determined by a formula that takes into account the service type, license type, whether or not it’s ad-supported, amounts paid to labels, and other factors. Spotify’s rate comes out to about $0.0007 per stream. Again, they pay this to HFA so you don’t have to!
Loudr and Easy Song Licensing are independent services that charge a small service fee (about $15 per song) to secure a mechanical license for any song that you’d like to cover. This is awesome because if you’re covering some obscure song from an indie band in Wyoming or an international songwriter from France, you wouldn’t be able to license the song through HFA’s SongFile, which only represents and licenses U.S. publishers.
When you’re getting a license through Loudr or Easy Song Licensing, do not select interactive streams. Like I mentioned above, Spotify is already paying this to HFA and other services are paying Music Reports, Inc. (MRI), which is a rights administrator that represents a number of digital music platforms. Outside of the U.S., digital services pay local collection societies, who then pay the publishers.
So, definitely secure a license if you’re releasing a cover song on a physical format. Definitely secure a license if you’re releasing a cover song as a digital download. If you’re releasing only to major interactive streaming platforms, then you may not have to secure a license because most of these companies pay HFA or MRI already.
Step 2: Get a unique code to distinguish your recording.
If you’re planning to do a cover of a popular song, chances are that many other artists have or will cover the same song. With multiple releases of the same song to the global music ecosystem, it is important to distinguish your recorded version of the original song from all others. This is done with a unique identifier called the International Standard Recording Code or ISRC for short.
The ISRC code is a unique 12-character alphanumeric code assigned to each version/mix of a recording (ie. QMZTA1700001). For example, if you have a live version and a studio version of your cover song, each will need its own ISRC. If you get a dance remix of your cover or do a stripped down acoustic version of your studio-produced cover, again each of these versions will require a unique ISRC.
When you distribute music digitally, almost all digital platforms require an ISRC for each recording. Your ISRC can and should also be embedded in the metadata of your recording file so that when your recordings are released as a digital download or on physical formats, the ISRC is attached to the recording.
Be very careful to only purchase ISRC codes from official ISRC Managers. ISRC Managers appointed by the US ISRC Agency, the Recording Industry Association of America (RIAA), are the only companies approved to assign ISRCs on behalf of the owner of a recording. These companies have guaranteed that they will abide by the Procedures for Assignment of ISRCs by ISRC Managers.
Other companies claiming to assign ISRCs on behalf of their clients are not authorized to do so and the ISRC’s they generate are invalid and risk collisions with codes issued by authorized registrants and ISRC Managers. This happens when fake ISRCs are issued or legitimate ISRCs are re-used. This results in erroneous metadata being disseminated across the digital music ecosystem, which can result in missing or misallocated royalties and disputes.
TuneRegistry is an all-in-one music rights and metadata management platform that’s also an approved ISRC Manager offering free and discounted ISRC codes included in its subscription plans. You can quickly and easily obtain ISRCs for each of your versions/mixes inside your account and immediately use the ISRC with any digital distributor to get your cover song distributed. You can view a complete list of approved ISRC Managers at http://www.usisrc.org/managers/index.html.
Step 3: Unlocking your royalties and getting paid.
The goal of virtually all aspiring artists is to have their music heard as wide and as far as possible. When songs are hits, earning national and even international reach can happen literally overnight. And even when there is slow momentum as buzz picks up across blogs and social sites, the right mention, the right placement on a playlist can break a song within a matter of weeks.
Whether or not your cover song blows up to international success, you may still earn and be due royalties for the exploitation of your cover song recording. Although you will not earn publishing royalties related to the underlying composition (remember, the original songwriter is the copyright owner and compulsory license enables you to record and distribute a cover), such as performance royalties that are paid out by ASCAP, BMI, and SESAC, you will own the master sound recording and will be able to collect master royalties.
Here are some of the income streams associated with the master sound recording and how you obtain the royalties:
- Sales Income – This is pretty straightforward. You earn income when your recording is sold in physical format or permanent digital downloads. Sales are generally passed on to you through your distributor.
- Interactive Streaming Royalties – When your recording is streamed on interactive platforms (e.g. Spotify), the service pays a streaming master use royalty to the distributor, who then pays you for the streams. The royalty rate is based on a formula that takes into account the type of use, the number of total streams, your share of streams, and territory.
- Non-Interactive Streaming Royalties – Webcasters and digital services that broadcast recordings over the Internet (e.g. Pandora, iHeart Radio), cable (e.g. Music Choice), and satellite (e.g. SiriusXM) in radio-style programming where the end users/listeners have limited to no control over the selection of music pay a royalty for the digital performance of sound recordings to SoundExchange. SoundExchange then pays out 45% of the royalties to the featured performers on the recording, 50% to the copyright owner of the master recording, and 5% to a fund for background vocalists and session musicians maintained by AFM & SAG-AFTRA Intellectual Property Rights Distribution Fund. It is important that you register your track title, the performers, copyright owner (which will be you if you’re independent and not signed to a label), and ISRC to SoundExchange. This helps them to identify you and match incoming usage reports and royalties from digital services to you as the income participant. After joining SoundExchange, you can easily keep on top of registering all of your tracks directly through your TuneRegistry account. This way, you’ll never forget to make sure that you’re raising your hand to capture your non-interactive streaming royalties.
- Master Use for Sync Fees – If your cover song gets licensed to a TV show, a movie, a commercial, or any other audiovisual media, you would need to obtain a synchronization license from the publisher of the composition. While you own the recording of your cover song, the copyright owner owns the composition and still give permission for the composition to be used in audiovisual media (this is a separate license from the compulsory mechanical license). The producer of the content will need to pay the synch fee for the composition and pay a master use fee for the master use license of the sound recording. These negotiations take place directly between the producer of the content (or their representatives) and the owners of the copyrights (you for the master sound recording and the songwriter or publisher for the composition that you’ve covered).
Now that you’re an expert on legally recording and selling cover songs, share the knowledge with your musician friends! No artist should be afraid to record and release cover songs — unless you’re releasing to YouTube, because that’s a different beast! The good news is, many publishers have opted-in to an agreement between YouTube and the National Music Publisher’s Association to earn a revenue share from advertisements placed on videos that feature recordings that embody their compositions. However, getting a license for YouTube could be down through We Are The Hits.
5 Royalty Streams Every Indie Artist Should Know
This post was originally written for and published on Repost Network’s blog.
With the rise of music distributors and digital music aggregators, it has never been easier for an indie artist to release and monetize their music across the global digital music ecosystem. The Digital Music Era has significantly lowered the barriers to entry to the top outlets for music search and discovery; and startup entrepreneurs continue to develop and launch new platforms to innovate search, discovery, sharing, and access.
Today, music fans can easily access music from their favorite artists or discover new artists to fall in love with, pitting major established artists against their up-and-coming indie artist counterparts. And the music industry is changing for the better as a result (the Recording Academy now recognizes music released on free services for GRAMMY Award consideration and Billboard has accepted YouTube and SoundCloud streams for the purpose of charting).
Innovation in technology has made it possible for any indie artist with decent enough production tools and access to the Internet to record and release new music at any time. And with thousands of artists pumping out new music, it is no wonder that the industry has grown to over one million new tracks entering the global music market every month.
Each of these tracks begin earning royalties from its first play on any of the 400+ digital music services and 3,000+ webcasters operating around the world. And all of these royalties, billions of dollars of royalties, flow through a complex network of pipelines into various buckets of royalty collection with the ultimate goal of trickling down to the appropriate music creators and rightsholders. While this sounds straight-forward for a number of reasons this is far from a smooth process; and millions of dollars in royalties are in fact not making its way to the music creators and rightsholders to which they are due.
Part of the reason starts with you, the music creator. It is especially important for independent artists to understand the various income streams that your releases generate and the ways in which you must be setup to collect your royalties.
Here is an awesome infographic created by Future Music Coalition that visually breaks down how creators are compensated. Below it, I highlight five royalty streams that every indie artist should be setup to collect.
If you plan to release music digitally, you should be aware of and setup to collect all of the royalty streams that your music earns. Your music earns royalties for the use of two different copyrights. The first is the copyright for the composition (song). The second is the copyright for the sound recording (master). These two copyrights earn royalty streams that are collected and paid out by different sources to different income participants, as explained below.
Royalty Stream 1: Performance Royalties for Compositions
With few exceptions, virtually all uses of your composition earns performance royalties. Performance royalties are earned when your composition is played on digital radio-like services (e.g. Pandora), when your composition is accessed and played through on-demand streaming services (e.g. Spotify), and when your composition is performed in venues, bars, and restaurants. All of these companies have performance licenses from one or more performing rights organization (PRO). In the United States, ASCAP, BMI, SESAC, and Global Music Rights are the PROs who issue blanket licenses for the performance rights in compositions to digital music services. In return, these services pay royalties to these PROs. The PROs then pay 50% to the songwriter(s) of the composition and 50% to the publisher(s), in accordance with the publishing splits reported to the PRO by the copyright owners. In order to collect performance royalties, you must join a PRO and register your composition (your songs) and the associated ownership splits (for example, 4 Writers might have equal ownership (25% each) or varied ownership (Writer 1 – 25%, Writer 2 – 50%, Writers 3 – 12.5%, Writer 4 – 12.5%)) to the PRO in a timely manner. One of the reasons music creators and rightholders do not receive the performance royalties that their compositions earn is because they have not joined a PRO or have not registered their songs with their PRO.
Royalty Stream 2: Mechanical Royalties for Compositions
Mechanical royalties are earned when your composition is reproduced and distributed in phonorecords (a medium in which a sound recording is stored). This includes compositions embodied in sound recordings stored in physical formats (CDs, vinyl, cassette), MP3 permanent downloads (e.g. iTunes), and interactive streams (e.g. Spotify). In the digital music sector, streaming services secure mechanical licenses either directly from copyright owners or by utilizing the compulsory license as provided by copyright laws. Regardless of how they secure their mechanical license, the major services pay mechanical royalties to Harry Fox Agency (HFA) and Music Reports Inc. (MRI), who then pay the publishers of the composition. One of the reasons music creators and rightsholders do not receive the mechanical royalties that their compositions earn is because they have not registered their songs with HFA or MRI, who help digital music services secure the mechanical licenses. For unsigned indie artists, this can be much more difficult if you do not have a publisher because HFA only represents eligible publishers who’ve affiliated with them. MRI is a rights administrator and will issue notices to copyright owners if their digital music service clients intend to utilize the copyright owner’s composition in a manner that requires a mechanical license. Spotify pays HFA mechanical royalties for the compositions used in their platform. Amazon Music pays MRI mechanical royalties for the compositions used in their platform. (Note that in the United States, iTunes passes the mechanical royalty to the distributor, who then pays the label. If you’re an unsigned artist, then you receive the income since you are your own label. Outside of the United States, iTunes and on-demand services such as Spotify pay mechanical royalties to a mechanical licensing society in the territory represented by the society. In order to capture these foreign mechanical royalties, a publisher or administrator must affiliate with and register the compositions with the foreign mechanical collection society.)
Royalty Stream 3: Permanent Download Royalties for Masters
A permanent download is generally a sales transaction through a digital retail store (e.g. iTunes). This income is passed along to the distributor, who then pays the label (less any applicable commissions). If you’re unsigned artist, then you receive the income since you are your own label.
Royalty Stream 4: Interactive/On-demand Streaming Royalties for Masters
Just like a permanent download, interactive/on-demand streams (e.g. Spotify) of sound recordings generates master use royalties that is passed along to the distributor, who then pays the label (less any applicable commissions). If you’re unsigned artist, then you receive the royalties since you are your own label.
Royalty Stream 5: Non-Interactive Streaming Royalties for Masters
Unlike a permanent download or interactive/on-demand streams of sound recordings, non-interactive streams are not paid to your distributor. Webcasters and digital services that broadcast recordings over the Internet (e.g. Pandora, iHeart Radio), cable (e.g. Music Choice), and satellite (e.g. SiriusXM) in radio-style programming where the end users/listeners have limited to no control over the selection of music (non-interactive) pay a royalty for the digital performance of sound recordings to SoundExchange. SoundExchange then pays out 45% of the royalties to the featured performers on the recording, 50% to the copyright owner of the master recording, and 5% to a fund for background vocalists and session musicians maintained by AFM & SAG-AFTRA Intellectual Property Rights Distribution Fund. One of the reasons music creators and rightholders do not receive the non-interactive royalties that their masters earn is because they have not joined SoundExchange or have not registered their tracks with their SoundExchange.
When you release music digitally, you should be aware of the various royalty streams that your music earns, where those royalties are collected, and how to claim your earnings. Your distributor is one source of income for two of the royalty streams mentioned. To unlock the rest of your royalties, you’d need a capable publisher and a record company or you’d need to stay on top of the administration yourself.
A great way to keep track of all of these royalties is a service we recommend called TuneRegistry.
TuneRegistry is an all-in-one music rights and metadata management platform for the independent music community. Easily organize and store your song details, recording metadata, credits and ownership splits, and release information in your TuneRegistry account. It’s your robust music catalog manager that’s accessible online, so you don’t have to worry about tracking down emails, storing through documents in various desktop and cloud folders, losing collaborator contact information, or any of the other messy issues that most indie artists face.
TuneRegistry is your one-stop source for keeping your music catalog in check.
The advantage of TuneRegistry over other catalog management systems is that we’ve integrated the registrations process directly to ASCAP, BMI, SESAC, Music Reports, SoundExchange, and many more. Save time, reduce errors, and unlock royalties with our integrated registrations module. We make it super easy to get your music registrations to the organizations and data services who need it.
Why United States Music Creators Earn Fewer Royalty Streams
This post was originally written for and published on Tradiio’s blog.
Did you know that music creators in the United States earn fewer royalty streams than their international counterparts?
In the United States, there is no national performance right in sound recordings. The US Copyright Act sets out several rights for compositions (songs), such as the right to reproduce and distribute compositions in phonorecords, but thanks to a combination of outdated rules and tough opposition from lobbying organizations that represent broadcasters, the law does not include a performance right for sound recordings.
This means that whenever a recording is performed on AM/FM radio in the US, broadcasters are not required to pay artists or record companies any royalties from the advertisements revenue that they earn on the back of those performances. Considering that there are over 15,000 radio stations across the US performing hundreds of thousands of plays of music each week, US music creators and labels are potentially missing out on millions of dollars in royalties.
Virtually all other developed nations outside of the US have a performance right in sound recordings, which is known as neighbouring rights. When a US artist’s recording is performed on BBC in the UK, it earns neighbouring rights royalties for the US artist.
The fact that recordings earn royalties outside of the US is good news, right? Not so much.
Because the US does not have a national performance right in sound recordings (no neighbouring right), no recording earns these royalties. This includes recordings by artists from countries that do recognize neighbouring rights. So yeah, insert your favorite European band who gets high rotation on US radio.
As a result, the countries who do recognize neighbouring rights do not send the neighbouring rights royalties generated from the performance of recordings by US artists in their territory back to any of the US music rights organizations. They keep it or distribute it to the artists and labels in their territory.
Generally speaking, most indie artists who earn neighbouring rights royalties outside of the US will never see this royalty stream unless the US government makes a change to copyright law. Although there are some small companies who try to capture neighbouring rights royalties on behalf of US music creators, they tend to focus on a select roster of more established artists, leaving up-and-coming indie artists with no support.
So what now?
Well, now that you know US artists earn less royalty streams from their music than their international counterparts, it is really important to maximize the royalty streams that they do earn.
Many independent artists miss out on royalties that their music does earn because they do not properly register their songs, recordings, and releases with the various music rights organizations and licensing agencies who collect and distribute royalties. This is understandable, as it can be a pain to keep up with the many different registration processes across a number of organizations (ASCAP, BMI, SESAC, Music Reports, Harry Fox Agency, SoundExchange, the Alliance for Artists and Record Companies, and more). It can be burdensome, time consuming, and often confusing to properly register a complete album. However, missing just one registration or filing registrations late can result in lost royalties, or even disputes over ownership.
This is where TuneRegistry steps in to help.
TuneRegistry is an all-in-one music rights and metadata management platform for the independent music community. Easily organize and store your song details, recording metadata, credits and ownership splits, and release information in your TuneRegistry account. It’s your robust music catalog manager that’s accessible online, so you don’t have to worry about tracking down emails, storing through documents in various desktop and cloud folders, losing collaborator contact information, or any of the other messy issues that most indie artists face.
TuneRegistry is your one-stop source for keeping your music catalog in check.
The advantage of TuneRegistry over other catalog management systems is that we’ve integrated the registrations process directly to ASCAP, BMI, SESAC, Music Reports, SoundExchange, and many more. Save time, reduce errors, and unlock royalties with our integrated registrations module. We make it super easy to get your music registrations to the organizations and data services who need it.
ETLA, The Research Institute Of The Finnish Economy, Publishes Report On State Of Digital Music Infrastructure – Calls For Transparency And Addresses “Black Box” Issues
I had the honor of being interviewed by researcher and author, Derek Sellin, for his industry report “Digital Music Industry – Background Synthesis” for ETLA Working Papers No. 48, published by Elinkeinoelaman Tutkimuslaitos – The Research Institute of the Finnish Economy.
Black boxes materialize for many reasons, including but not limited to: the inability to identify rights holders despite payments made for the use of their compositions; the lengthy time required for filing domestic and ultimately international copyrights, often begun only when a recording is actually released; multiple claims for the same rights exceeding 100% of ownership, resulting in indefinite disputes; international collaborations with less than all creators asserting their rights; international legal inconsistencies regarding what type of performances result in payments (most visible in the fact that radio play does not generate royalties for recording artists in the United States); and the slow and often manual processes to report usage and clear payments under international reciprocal agreements. – Dae Bogan
You can download the report at https://www.etla.fi/en/publications/digital-music-industry-background-synthesis/.
About ETLA
The Research Institute of the Finnish Economy (Etla) is engaged in applied economic research with emphasis on topics that are important from the Finnish point of view. The main focus is on issues that relate to productivity and drivers of its growth, to the functioning of the labour market, as well as to challenges in maintaining a balanced macro economy including sound public finances. Etla monitors economic development, compiles forecasts as well as assesses economic policy and comments on it.
Etla is a private non-profit organisation. Its operations are backed by the supporting association, the members of which comprise the Confederation of Finnish Industries and the Confederation of Finnish Industry and Employers (TT) Fund. The funding from the background organisations covers more than a third of the institute’s budget and forms a solid base for its operations. Read more.
Dae Bogan Contributes To Bobby Owsinski Music Industry Book Now Published: Music 4.0 A Survival Guide For Making Music In The Internet Age
I am excited and honored to announce that the music industry book in which I contributed is finally out and available on Amazon. “Music 4.0: A Survival Guide For Making Music In The Internet Age” by Bobby Owsinski is the definitive guide for any independent artists to understand the in’s and out’s of making, promoting, and selling imusic in the Internet era. My contribution is in Chapter 7: Marketing With Social Media. I talk about the Myspace platform and why I think every indie artist needs to incorporate Myspace in their overall digital marketing strategy.
Check out the book for amazing insights into how the music industry has changed with and what you should be doing in Internet age.
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