Understanding Music Royalties

music royaltiesThough most musicians play for the love of music, artists who play professionally also view their music as a source of income. Concerts, apparel, and recording contracts are all part of their income stream, but one of the most important components are music royalties.

Music royalties are a form of payment for using a piece of music. These payments are made by a business or performer—the licensee or franchisee—using the music to the artist and/or songwriter who created it—the licensor or franchisor.

Like any business model, there is not one-size-fits all arrangement, and there are different types of music royalties, the ins and outs of which are best explained by an entertainment law attorney. However, we will briefly outline some of them here.

Types of music royalty and licensing arrangements

Mechanical royalties are one of the oldest forms of royalty payment, dating back to the time when music was disseminated on vinyl records. Under this model, artists or songwriters are paid for the number of albums either produced and/or sold.

Performance royalties are paid when an artist performs someone else’s songs at a live venue, and can go both to the artist who originally recorded the song and the songwriter. Licensing to play songs or perform them live are administered by organizations like BMI (Broadcast Music Incorporated) or the ASCAP (the American Society of Composers, Authors, and Publishers). These organizations also monitor the media, collect payments, and administer the royalty payments.

A blanket license can be purchased by a business or a performing artist to play or use any number of songs they like (from a specific list), instead of dealing with the troublesome paperwork of each and every individual song. The artist or business makes a blanket payment to the BMI or ASCAP—hence the name of this royalty type—and they in turn issue payments to the original artists and songwriters.

In a publishing or record deal, a label or publisher can charge an artist or songwriter to handle administering the dissemination of their music, along with managing tours and marketing. The record label will collect a percentage of any royalties that the artist or songwriter receives in payment for these services.

Synchronization royalties are paid when a business wants to use a piece of music accompanied by visual images. This is most common in commercials, though it might also occur in films or television. The business producing the visual media needs a synchronization license, which they can purchase from one of the aforementioned organizations like the BMI or ASCAP.

How have music royalties evolved?

As you can see, there are a number of different types of music royalties. Selecting the right one and setting up a contract accordingly can make or break an artist’s ability to collect fair payment for their creative endeavors and avoid the emotional hardship of watching their music unfairly used or stolen, which is why it’s important to work with a Miami music lawyer with a strong working knowledge of the music business.

The structure of music royalties was meant to protect artists and songwriters. Music royalties did not even exist in practice until the 20th century. They were structured in response to the abusive practices of Tin Pan Alley, where the music of illiterate musicians would be stolen by unscrupulous individuals.

Fast forwarding to the 21st century, you might think that artists and songwriters are better protected, but they are not. Though we’ve moved on from disseminating songs as sheet music and piano rolls, the increase in internet technology has proliferated the illegal sharing of music, leaving many artists and songwriters without the pay they deserve. Moreover, even with a structured system of royalty payments, a one-sided arrangement can leave an artist or songwriter with little income for their creative work.

A lawyer who understands all sides of the contract…

Royalties are a complex arrangement between the songwriter, artist, record label, and businesses that disseminate and use music. It helps to work with a Miami entertainment contact lawyer who is not only a competent legal professional, but who knows the ins and outs of the music industry. Mr. Manos of Manos Schenk is not only a competent Miami entertainment lawyer, but he is both a recording artist and a studio producer, so he understands all sides to the contract and can help draft up a long lasting agreement that makes everyone sing.