The different baskets of rights associated with a song are complicated, no two ways about it. No one sits around their bedroom with a guitar dreaming about the difference between master recordings and performance rights; how those rights are broken up, especially if you work with multiple songwriters, guest artists, or samples, is obtuse and confusing. With all that being said, understanding how these rights work is vitally important -- we’ve all seen “Behind the Music,” and if you don’t have a least a rudimentary understanding of who owns what, you’re liable to leave big piles of money on the table. No one wants to end up looking sad on VH1 as their Porsche collection is repossessed, so read on to learn everything you need to know.
Let’s start with the rights associated with the Master Recording. This is pretty much what it sounds like -- it’s the recorded version of the song. The rights to the master recording are generally owned by whoever paid for the recording -- sometimes that’s the artist, sometimes that’s the record label. Whoever owns the master recording can then license the recording for a number of different uses.
First, they can license the track to be reproduced or manufactured, so it can be pressed onto vinyl or a compact disc or any other format. Then they can license the track to be distributed, either physically or digitally via mp3 or streaming service.
The owner of the master recording can license the track to be broadcast and performed in public -- this means being played on the radio, TV, or internet, and also in public spaces like bars and restaurants. Payouts for these plays vary by territory -- in many countries, excluding the USA, master license holders are compensated for terrestrial radio airplay. The owner can also license the track to be synced in a movie, TV show, or commercial. As record sales decline, the ability to license music for use in film and TV has become an important income stream for many artists.
But wait, there’s more! The owner also has repackaging, editing, and remixing rights. This means that if someone wants to create a legitimate remix of a work, they need to seek permission from the owner of the master. And the owner has the ability to grant a sub-license, for instance if they want a track to appear on a compilation. Last but not least, the owner can grant storage rights, which give online services the right to store recordings in databases.
At this point, it may seem like all the power lies in the hands of the owner of the master -- and that’s pretty close to the truth. There’s a reason artists fight to get their masters back from labels they feel aren’t serving their interests, or pay big bucks once their contracts are up. However, there are ways for performers and producers to be paid even when someone else owns the master. It varies from artist to artist, but generally performers have a certain number of “points” on record -- for instance, if they have 15 points, then they get $1.50 each time an album sells for $10. The catch -- many labels only start paying these royalties once an artist has “recouped” -- meaning that until they’ve “paid back” advance costs, they see nothing from master recordings. If an artist has a relatively small advance and does well, they can possibly recoup in a timely fashion; if an artist has a giant advance and spends it all on producers, guests, and marketing, they might be stuck owing the label for a long time. There have been cases of an artist selling a million albums and not fully recouping. Producers are generally also paid with points, although some just take lump sum payments for their time.
Then there are “neighboring rights,” and if you’re an artist in the US, you can stop reading right here. While songwriters are compensated when their tracks are played in public, performers and master rights holders aren’t, at least in the US. And while many other countries do pay performers and rights holders, because of a lack of reciprocity, they don’t pay American artists. With the rise of digital radio, which does require neighboring rights payments be made no matter where an artist hails from, things are changing, but terrestrial radio still gets a big break. Call your Congressperson.
So, that’s the master recording. Take a break, watch a cat video on YouTube, and then we’ll talk about rights associated to musical works, compositions, and publishing.
Here’s the easiest way to think about this -- the master recording rights go to the people who paid to record the song, while the publishing rights go to the person who wrote the song. In some cases, these are the same people; in other cases, it’s not. Things get crazy when you have multiple co-writers on a track, which happens fairly frequently.
The first thing that needs to happen when someone writes a song, whether it will be recorded by themselves or someone else, is that they need to register it. Most songwriters register their work with a performing rights organization, who can help them collect their performance royalties and represent their interests. In the USA, ASCAP, BMI, and SESAC are the main bodies; other territories have their own organizations. Each service offers a slightly different set of benefits, so it’s worth researching to see which would be the best fit, but they all help songwriters collect the performance royalties owed to them. Songwriters also need to register with a publisher; there are many to choose from, with Sony/ATV, Warner Chappell, and Universal Music Publishing among the largest.
The first set of rights associated with songwriters is similar to the rights associated to master rights holders -- physical sales and digital download sales, along with interactive streaming. If you wrote a song that gets sold on a CD or mp3 or streamed on a service like Spotify, you get paid. You might have heard the term “mechanical rights” -- that’s just another way of saying this. Technically, the songwriter is being paid for the right to manufacture or reproduce the song, but this means that they get paid when a CD is sold or a track is streamed. Mechanical royalties and synchronization fees are paid by record companies and film and TV producers directly to the copyright owner, usually the publisher, or his or her representative.
Songwriters get paid if someone reproduces their lyrics or compositions in print or online -- if someone quotes a song in a novel, for instance, or produces and sells sheet music to students, the songwriter should be compensated for that. Some lyrics sites have tried to circumvent this, but at the end of the day, it’s pretty clear that if someone reproduces lyrics for a commercial purpose (kids drawing in notebooks, you’re in the clear), they need to pay up.
Songwriters also get paid if a song they write is performed in public, either on TV, on the radio, or in a retail establishment. These payments are usually collected by the performing rights organization.
Online radio stations pay songwriters, and film and TV companies and advertisers are also required to compensate them if they use one of their compositions.
This is all a tremendous amount of information, but it definitely benefits artists and songwriters to spend time being diligent amount making sure everything is covered. If you’re working with a great publisher, PRO, and label, chances are many of your revenue streams are being collected already. But it’s always worth digging into your data to see if there are any international streams that have not been collected, and reaching out to see if those can be paid out.
One of the biggest problems artists have when it comes to getting paid is their metadata is incorrect. Contrary to what some artists might believe, there’s no vast conspiracy to defraud them of their hard-earned money -- but there are data entry interns who make mistakes and DJs who get sloppy when it comes to recording information. It’s ultimately up to the artist and songwriter, especially if they’re not well known, to make sure all their associated data is correct.
Touring: Until only a few years ago, smaller touring songwriters were out of luck when it came to collecting performance royalties, as the major PROs only monitored the top two hundred grossing tours. Now they have all launched programs where artists can submit setlists and venue information, and be compensated for their performance. All live music venues are required to pay a fee to PROs.
Merchandise: If lyrics are being reproduced on merch, then the publisher and songwriter need to be compensated. In reality, given the number of “make-your-own-shirt” startups and bootleg merch, this is unlikely to happen. If a major clothing brand is using your work, feel free to go after them, but cracking down on super fans who love your material is likely to spark a backlash and not result in any financial gain.