What are Performance Royalties?

Mathew Ekundayo - Admin

Even if you’re new to the music business, you’ve probably heard about Performance royalties: the revenue earned whenever a song is played, whether it’s live, pre-recorded, or streamed.

Sounds simple, right? It’s when people start talking about the different kinds of royalties — and how to actually go about collecting them — that the subject suddenly seems a lot more confusing.

 


Understanding Song Structure

A song is split into two basic parts: the composition and the master recording.

The composition refers to the underlying melody, lyrics, and music. By contrast, the master recording refers to the specific recording of that piece of music. (A single composition can have many different recordings.)

In most cases, it’s the songwriters who created the song who have ownership of the composition or publishing, while the master recording is partially or fully owned by a record label or distributor.

The composition breaks down again, into two royalty types: performance and mechanical.

 


What is Music Publishing?

Music publishing is the exploitation of a song’s composition copyright. The composition of a song is the lyrics and melody as written by one or more songwriters. Music publishing only relates to composition.

It is the business of promotion and monetization of musical compositions: music publishers ensure that songwriters receive royalties for their compositions, and also work to generate opportunities for those compositions to be performed and reproduced.

 


Breaking Down Performance Royalties

In the simplest terms, performance royalties are earned whenever a song is performed in public. This doesn’t just include live performances in a literal sense; it also means the performance of a song recording, such as played on broadcast or satellite radio, over the sound system in a bar or gym, or streamed over a digital service like Apple Music or Spotify.

Some of the ways songs earn performance royalties include:

  • TV (a show, film, or commercial broadcast that includes music, not to be confused with sync fees for song placements)
  • Radio (broadcast, streaming, and satellite)
  • Live venues
  • Restaurants
  • Bars
  • Elevator music services
  • Supermarkets
  • Clothing stores
  • Gyms
  • Jukeboxes


Mechanical vs Performance Royalties

As a songwriter, it’s important to know the difference between these royalties and how they’re collected, whether they are earned from streams on Spotify or a live performance at a local coffee shop.

You might be wondering how performance royalties differ from mechanical royalties if they’re both owed to the composition owner. Well, mechanical royalties are earned by the reproduction — physical or digital — of a piece of music. This includes digital downloads, CDs, and vinyl records, as well as online streams.

Mechanical Rights Organizations (MROs) or Collective Management organizations (CMOs) are responsible for collecting mechanical royalties.

 


Who Collects My Performance Royalties?

In the most general terms, any time your composition is used, it earns performance royalties. These royalties are tracked and collected by a system of pay sources and collection societies that compare the tracked information to the registrations in their systems and assign those royalties to the correct owner. They then pay those royalties out directly to the songwriter and their publishers.

In the U.S., pay sources and collection societies like ASCAP and BMI — also referred to as Performing Rights Organizations (PROs) — track and collect performances in their territories, and pay royalties directly to the rights owners who have properly affiliated and registered their songs.

Much of this money comes from charging venues an annual fee based on such key factors as their capacity, location, and revenue. A similar rule applies to radio and television stations, which pay a blanket license fee based on their market share, audience size, and revenue.

Outside of the U.S., the system for royalty collection varies based on the country or territory. PROs or another common pay source known as Collection Management Organizations (CMOs) do the work of tracking and collecting royalties. The major difference between these two types of sources is that CMOs also collect mechanical royalties. As we’ve mentioned before, these processes can get complicated and time-consuming when it’s spread across multiple countries and continents.

As for how all of this compares to mechanical royalties, U.S. licenses are administered and maintained by Mechanical Rights Organizations (MROs) such as the Harry Fox Agency (HFA) and The MLC. Outside of the U.S., the collection is facilitated by CMOs. This often requires rights owners to be affiliated with each CMO — yet another potentially lengthy process. In Nigeria, MCSN collects both Mechanical and Performance royalties.

 


 

Types of Music Performance Royalties

 

 

 

  • Local Performance Royalties

A public performance license and royalty payment are necessary whenever a song is played or performed "publicly" (outside of a private circle of family and friends). That means if you’re having a BBQ and you play music through your backyard speakers, you don’t owe a public performance royalty. But if you’re at a BBQ restaurant that is streaming music into the dining area, the restaurant owner does.

Public performance royalties collect from multiple sources. These include:

  • Radio broadcasts
  • TV and film broadcasts
  • Bars/Clubs/Restaurants
  • Concert Venues
  • Streaming Services

Performance rates are negotiated on behalf of songwriters and publishers by Performing Rights Organizations (like MCSN, PRS, SAMRO, BMI, MCSN) charged with tracking, collecting, and distributing these royalties.

A performing rights organization, also known as a PRO, is an agency whose job is to monitor radio airplay and live performances. They then pay royalties to the songwriters and publishers who claim ownership of the songs.

PROs charge a blanket licensing fee for radio stations, venues, and even restaurants for the rights to host performances of the songs in the PROs’ catalog. This fee is scaled to the size of the station or venue; the larger it is the more they pay the PRO. The PROs use that money to pay songwriters and publishers.

 


 

  • International Performance Royalties

If your music is being streamed outside of your home country, you’re entitled to collect performance royalties and mechanical. Performance royalties are also generated when a song is played on broadcast or streaming radio, live in concert, in a restaurant, or on a television show. These are collected by pay sources in the local market and can be paid out through reciprocal agreements with your collection society.

Because you’re not directly affiliating with these organizations, you’re less likely to collect all of your international performance royalties if you rely solely on reciprocal agreements. If you directly affiliate with all collection societies where your music is performed, you’re more likely to retrieve your full payout, but affiliating and registering with dozens, or even more, international collection sources is an onerous and pricey task without a publishing administrator.

 


  • International Live Performance Royalties

Whenever you (or another performing artist) play your music in a public venue, you earn public performance royalties. In order to collect these royalties, you must submit your setlist to the collection society of the country where you performed. And in order to submit your setlist directly, you — or your publishing administrator — must be directly affiliated with that society.

As daunting as all of this might sound, you don’t have to go it alone. Working with a music publishing administrator like 1710Media ensures you can efficiently collect royalties and properly register your songs with our global network of collection societies.

 


How much royalty can I get from music publishing?

The amount of money you can earn from publishing depends on a few things. There’s no definitive, guaranteed number for everyone. Like sales and streaming revenue, the publishing royalties you earn are contingent on how much work you’re doing to promote your music and get it heard.

 

How do I collect all of my performance royalties?

The caveat for independent artists who write and perform their own songs is that, while you control both of your copyrights, it’s extremely difficult to collect all of the royalties earned from your composition copyright by yourself. This is because collecting every publishing royalty you’re owed requires you to register your songs with hundreds of organizations around the world and have a catalog large enough to qualify as a publisher.

You can certainly collect some of your publishing royalties on your own from domestic sources, but there’s a good chance you’re leaving royalties unclaimed from sources you don’t have the authority to collect from.

 


Can 1710Media help me with Music Performance Royalties?

Yes! As a Music Publishing Administrator, 1710Media administers your compositions by licensing, registering, and collecting royalties on behalf of your compositions, ensuring you are not leaving any money on the table.

If you sign up with us, we’ll handle all of the aspects of the collection for your publishing, including:

  • We manage all aspects of Registration, Licensing, and Royalty collection processes.
  • Worldwide collection: We register your music directly with royalty collection organisations in Nigeria and over 100 other countries.
  • Claim royalty back payments: You can claim royalties from as far back as 2 years ago in many cases.
  • Register live performances: Earn royalties from your past and present live performances.
  • Get royalties when your music is used in; Hotels, Clubs, Online, TV and Radio stations, Halls, Transport Facilities, and many others.
  • Keep 90% of all royalties: We charge a 10% administration fee for all royalty types.
  • You pay a one-time fee (per songwriter): We charge a one-time fee per songwriter. Not annual, not per-release, It's just one time.

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