How music copyrights generate music royalties
As you already know, music copyright generates money for the owner of the music. But how?
At the same moment music is being created, copyright protecting the melody and lyrics is born with it, called performance rights. Another music copyright is made when the music is recorded, that is master rights.
Four main types of music royalties
Oftentimes, there are numerous stakeholders involved in sharing the music royalties from a song. Whoever owns all or parts of the music's rights will get paid when the music is being utilized and therefore creates a number of royalty streams. It can be when the music is being played on the radio, streamed on Spotify, or sold as vinyl and CDs.
Each royalty stream depends on what copyright is underlying. Either it’s master rights (covering the original sound recording) or performance rights (covering the lyrics and the melody).
From these two copyrights, there are four main ways to earn royalties:
Artists sign deals with labels, selling or licensing their master rights to them. It can be forever or for a limited period of time in exchange for the marketing and the promotion of the music. Labels then administrate earnt royalties and forward an amount to the artist, according to the contract.
Songwriters sign deals with publishers that take care of the admin side of royalties. Publishers control the publishing rights of your music and forward a share to the songwriters involved.
If an artist or songwriter chooses not to sign with a label or publisher, they will receive all the royalties themselves.
Master Rights Royalty Streams:
- Digital sales (streaming & downloads)
- Physical sales
- Neighbouring rights
- Sync licensing fees
Performance Rights Royalty Streams:
- Mechanical royalties
- Performing royalties - including public performances
- Sync licensing fees
What are mechanical royalties?
Mechanical royalties are generated every time a copy of the music product is made, traditionally when new CDs or other physical products are manufactured.
Mechanical royalties come from:
- Physical sales, such as vinyl and CDs
- Digital streaming of your tracks
- Downloads of your tracks
What are performing rights royalties?
Songwriters and publishers get performing rights royalties whenever a song of theirs is performed or broadcast publicly. These are collected by Performing Right Organisations (PROs) such as STIM in Sweden and forwarded to publishers, songwriters, and composers.
Performing rights royalties comes from:
- Public and Live performances
- Public broadcasts
- Radio airplay
- Digital streams
What are sync royalties?
In short, sync licensing refers to all the music that is used together with visual content, whether that be on TV shows, films, adverts, and video games. Sync deals look a bit different depending on where in the world you are based, in Sweden you get a fixed sync fee and royalties are being collected as performing rights royalties.
What are sheet music royalties?
This is the type of royalty that comes from sheet music sales and is usually split between songwriters and publishers.