Types of Music Royalties

Recording artists generally receive royalties for live performances.

Music royalties make a significant portion of a recording artist, publisher and songwriter's income; knowing the types of royalties will make it possible for a musician to enter into contract negotiations as an informed participant. These royalties can become a substantial source of income for an artist over his lifetime. Not all artists maintain the eligibility to collect royalties, as they sometimes hand over their rights to recording companies.


When a song sells, the recording company receives the profits from that song. A recording company is any group that records and publishes music like Columbia Records or Atlantic Records. A portion of the profits then goes to the songwriter, recording artists and publisher of the music. A mechanical royalty is the money paid to the songwriter, recording artists and publishers. This is usually a small portion of the actual sale amount.


When a song receives a public performance, the copyright holder receives a performance royalty. Not all songwriters own their copyrights; these rights are often sold to the recording company in exchange for an upfront payment or another beneficial arrangement. As of 2011, songwriters will generally keep their copyrights as the songwriters maintain the authority to receive royalties on a song throughout their lives. The copyright holder is not always the same as the publisher. A copyright holder is a person or entity that owns the rights to the work. The publisher only has permission from the copyright holder to sell the work, but often, it will attempt to purchase the copyright as well.


Synchronization royalties pay only the songwriter and publisher when the music plays as part of a film, voice-over, commercial or television show. The music is not the main feature in these cases and used as background music support. In the case of movies and television shows, if the song is later included on an album film score, the recording artist receives synchronization royalties as well as the publisher and songwriter.


Songs used in other countries are subject to foreign royalties. The songwriter and the publisher receive these royalties based on the agreements with the country performing the song. Recording artists do not receive foreign royalties since they do not physically perform the song. The royalties are collected from the artist's performing rights organization. In the U.S., the major organizations are BMI and ASCAP. These companies receive notifications from registered radio stations, television and other media companies when a song is played live or in some form of media. The performing rights organization then collects the money. In the cases where earnings are not being reported, the performing rights organization will investigate on behalf of the artist.


Print royalties can turn into a sizable income for artists when their music is printed and sold. The songwriter and the publisher will receive a portion of income from all printed music sales. The percentage varies greatly and is determined in the negotiation process between the publisher and the songwriter.


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