Did you know that streaming sites have to pay performance royalties on top of mechanical royalties? That's right, every time they play you or your clients’ music, they owe both.
You may be aware that there are mechanical royalties separate from performance royalties.
But did you know there are major differences in how and how they're distributed? It pays to know who owes you and who to register with to make sure you are receiving everything that you’re entitled to.
Performance royalties are the payment that represents the right to broadcast a musical work. It helps to consider a performance royalty as being the payment for the recorded music. Whereas a mechanical royalty pays for the music that was written and reproduced. This is where the streaming led lawmakers to decide that both were taking place when streaming occurs – we dive deeper into that below.
When are performance royalties due?
To understand whenever the recording is broadcast or performed in a commercial environment. That means that venues pay performance royalties, radio stations, film, T.V., and now digital streaming sites all pay performance royalties.
It sounds simple, but it gets very complex rather quickly.
That is because there are two types of copyrights, composition and master. The composition covers the original songwriter, and the master covers any recording of the written song.
That means if somebody re-writes the song and it gets radio play, they are paid a public performance royalty for their recorded expression of the piece. The original songwriter is also paid a royalty for the reproduction of the original writing of the song – this is known as a mechanical royalty.
While some public performance royalties follow mechanical royalties, they go through very different processes.
It’s good to know that both are generated when a user streams a song. They are by definition forcing both a reproduction and a public performance at the same time – paying both the writer and performers of the piece. Of course, the songwriter and the performer are often the same people, but that doesn’t mean they collect their royalties all in the same place.
Where it gets a little murky, is that performance royalties aren’t all paid to the same organizations. Performance rights organizations like BMI and ASCAP collect from traditional radio and broadcast.
They don’t deal with streaming platforms. As such, copyright holders need to make sure that they are registering their works with the appropriate organizations. This is especially important when it comes to streaming.
What are Performing Rights Organizations? (And why you need to know)
Traditionally, performance royalties were paid by venues, T.V. and radio stations to Performance Rights Organizations (PROs). These are national agencies that collect and distribute performance royalties to artists and publishers - ASCAP and BMI in the US or the Performing Rights Society (PRS) in the UK.
In the UK, PRS takes care of royalties for their members when their music is streamed or downloaded, performed in public or broadcast on TV or Radio. While the PRS does take care of the performance royalties in the UK, PROs in the US operate differently.
They don’t for example, collect every stream of performing rights revenue. They only cover performance rights for venues, terrestrial radio, film and television. They do not cover performance royalties generated from streaming services – those are covered by a separate organization called SoundExchange.
For artists and publishers to make sure they’re collecting all their streaming revenue, they must register with the appropriate organizations around the world. This makes things extremely convoluted for music publishers and artists who are trying to get paid for their work.
Tracking down royalty payments from organizations all over the world just leaves so much room for money to fall through the cracks.
How Reprtoir Can Help
Reprtoir is a music management software that allows record labels and music publishers to manage their business from one place. The music industry has always been notoriously complex and the internet has only compounded that.
Using a platform like Reprtoir allows users to manage and track all-important analytics on audio and video content. You can even take advantage of the Royalties Manager, which simplifies the convoluted world of incomes, fees, advances and statements from all over the world. It allows you to deal with all of the different organizations that you need to and make sure you are getting all the royalties that you are entitled to.
Reprtoir is the music industry’s all-in-one solution for managing everything from one desk. It is an indispensable tool for publishers and labels. It pays to be organized.