Let’s explote how song royalties are split
Today’s post provides basic answers to the question, “how are song royalties split?” We will briefly explain the current understanding of splits for the following types of music:
As a reminder, a musical composition consists of music and any accompanying words. We can therefore infer from US Copyright Law that royalties should be split between:
– lyric writers and
– anyone who added musical notations and/or sounds to lyrics written by themselves and/or another party.
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Sound recording splits
Keep in mind that US Copyright law states that music producers and artists are authors of sound recordings except in the case where they are hired under a WORK FOR HIRE contract with a third party.
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Four kinds of song royalties that can be collected
Different kinds of royalties can be collected by music creators. They include:
These royalties are paid on live performances of the song and are collected by agencies like BMI, ASCAP, and AllTrack.
These royalties are paid on sales of the digital or physical copies of a recorded song. This service is administered by agencies like Harry Fox Agency and Music Reports.
Digital performance royalties
SoundExchange collects performance royalties when streaming service providers such as Pandora stream musical content. Membership is FREE.
Digital audio mechanical royalties
Under US Copyright Law, digital audio mechanical royalties are collected the Mechanical License Collective as of January 2021. Registered members are paid when digital service providers stream or sell downloads of a song.
The Mechanical License Collective allows for music creators and music publishers to register their works to a musical works database. These music works can be updated in the system.
Membership is FREE.
How performance royalties are split
Performance royalties are paid out by Performance Rights Organizations as follows:
– Music publisher is paid 50% of royalty fees.
– Copyright owners earn 50%.
How mechanical royalties are split
For each copy or download, the songwriter is owed 9.1 cents per song. For the tracks over 5 minutes long, a mechanical rate of 1.75 cents per minute applies.
For streaming services, mechanical royalties go side by side with the public performance royalties, making what is known as an “All-In Royalty Pool”. In the US, all in royalty pool is currently set at 11,8% of the streaming platform’s total revenue — with a plan in place to increase that percentage to 15,1% by 2022 (Soundcharts, 2020).
Digital royalties for sound recordings
SoundExchange by law pays royalties on the performance of digital sound recordings as follows:
– 45 percent of performance royalties go to the featured artists.
– 5 percent is paid to non-featured artists.
– 50 percent is paid to the rights owner of the sound recording.
Now, this needs some clarification since there is a law that says that the owners of a sound recording are the artists and producers except in the instance where they work for hire. There are no allocations for the producer of the sound recording.
How does the copyright owner of the musical work get paid for the lyrics and music without which there would have been no sound recording? Is this by synchronization royalties?
For clarification, the law says that
The copyright in a sound recording covers the recording itself. It does not cover the music, lyrics, words, or other underlying content embodied in that recording.
NOTE: Distrokid does a great job of collecting and paying out streaming royalties directly on their platform. Members can also spilt royalties among teams for direct payout to them. Go here for a discount off the first year.
Go here to register.