Given the rapid expansion of music platforms and areas in which artistes and producers can earn, we look at a few types of royalties available for music makers.
What are Royalties?
Music royalties are compensatory payments received by rights holders (songwriters, composers, recording artistes, and their respective representatives) in exchange for the licensed use of their music.
How does it work?
Royalties or rights fees are paid by institutions that use licensed music such as radio stations, TV networks, streaming platforms event venues and businesses.
Type of Royalties
There are five main types of royalties used by copyright holders in music. In some cases, the same royalty can be paid in different ways based on the context of usage.
Performance Rights Royalties
Mechanical Rights Royalties
Print Rights Royalties
Sync Rights Royalties
Grand Rights Royalties
Performance Rights Royalties
These royalties are generated when music is performed publicly in places such as on the radio, restaurants, bars, clothing shops, clubs, malls, etc.
Venues that publicly play recorded music are subject to a performance rights license fee under copyright law.
However, Instead of paying a fee per song played, the venue or station pays a yearly license fee to Performance Rights Organizations. This allows them to ‘legally’ use the entire catalogue registered with the organisation.
The Jamaica Association of Composers, Authors and Publishers (JACAP) would be the local body responsible for licencing and collection on behalf of composers and songwriters of the played material.
Mechanical Rights Royalties
Mechanical royalties are paid out whenever a copy of a song is created, such as CDs, Vinyl records or digital downloads through retailers or labels. The idea came from the mechanical process it originally took to reproduce copies of music for distribution.
Mechanical royalty rates are set as per constitutions through Copyright Acts.
For Instance, in the US, the typical rate is $0.06 per 100 on-demand streams. So, if someone listens to your song 100 times on Spotify, the payout would be $0.06 and $1,000 for 1.6 million streams in mechanical royalties.
The Harry Fox Agency (HFA) is one of the main organisations that issues and collects mechanical licenses and fees in the States, while in Canada, the Canadian Musical Reproduction Rights Agency (CMMRA )
Print Royalties
As the name suggests Print refers to royalties that come from the sale of music compositions that are physical such as sheet music folios or Songbooks. While print has reduced significantly with technology, digital print rights for – Ebooks, and digital sheet music, are present to address such instances.
This royalty is usually calculated as 20% of the retail price for a single song of printed sheet music, however varies from digital print to physical print and whether they are using your full lyrics versus using a snippet as per Pooksomia.com
Synch Royalties
One of the most lucrative aspects of royalty is Synchronisation or Sync. This refers to the use of music in any form of video-based content for distribution to a mass audience, such as shows, films, advertisements, etc.
Sync fees are negotiated between the production company of the video creators and rightsholders ( artistes, labels, producers etc)
The most popular and perhaps most controversial is streaming Royalties.
Copyright holders such as artistes, record label producers etc..Digital streaming platform (DSP) – The split is determined by “share of content” or the number of streams a given artist has on the platform divided by all streams on the platform. Often times is less than a percentage of what each stream generates.
Grand Rights Royalty
One of the niched areas of Royalty distribution, similar to ‘Performance’ and ‘Print Royalties, is Grand Rights which speaks to music used for dramatic works, predominately live performances like Broadway shows and on-stage plays.
