Perspectives
Artist Royalties: Simplified
As an artist, one of the more confusing topics is royalties. What they are, and how they are collected is often a mystery to artists starting out. There are different organizations that all collect different aspects of the song’s royalties. While you collect digital master royalties by someone that is called a distributor, there is another royalty that may be missed out on: songwriter royalties. These are paid in two different forms: performance and mechanical royalties. These are collected and administered by different entities depending on the use. It’s important for artists and businesses to be aware of these organizations, to ensure that they are collecting all the royalties they are entitled to for their art.
ASCAP: The American Society of Composers, Authors and Publishers, or ASCAP, is a non-profit organization known as a Performing Rights Organization, that pays performance royalties to songwriters, composers and music publishers when their music is played publicly. It is one of the largest performing rights organization in the world and distributes the license fee collected from granting businesses and other organizations licenses to play your music. Instead of asking the owner of the copyright directly, it issues blanket licenses for songs represented by ASCAP without worrying about individual licenses.
WHY THIS IS IMPORTANT FOR YOUR BUSINESS: Without a license, it could lead to copyright infringement claims against you or your business. Using copyrighted material without a license may expose you to copyright infringement liability. When music is played in a bar, shop, on TV, or on the radio, all of these require a public performance license to use that material. It does not matter where you are located or the size of your business, if you play music at your establishment, you need to obtain a license (subject to limited statutory exemptions).
WHY THIS IS IMPORTANT FOR YOU AS AN ARTIST: Without ASCAP, you may be losing out on money every time your song is played. Royalties, a topic we will do another blog to cover, are important to understand and why you need to ensure that your music is protected. When your music is played publicly, you can easily have it tracked and distributed based on performance data and reporting by ASCAP and you receive royalty income.
BMI: BMI, or Broadcast Music Inc., is another performing rights organization that licenses music to businesses to ensure that creators are paid, and businesses are licensed. BMI and ASCAP both perform the same job, but have different price and payment models, as well as different music that they license.
WHY THIS IS IMPORTANT FOR YOUR BUSINESS: Similar to the reasons for ASCAP, you need a license to play music. Both platforms will be able to license different forms of music, so the important thing is to ensure that what genre and artist you want to play, is licensed under the correct company.
WHY THIS IS IMPORTANT FOR YOU AS AN ARTIST: Again, we are looking at similar reasons to ASCAP. Both do the same job, but there are different benefits and payment forms to look into for each organization. It is important to fully evaluate both organizations and see which fits best in your individual artistic needs.
MECHANICAL LICENSING COLLECTIVE: The Mechanical Licensing Collective, or MLC, is all about collecting mechanical royalties. It was created as a nonprofit organization and administers blanket mechanical licenses to streaming or download services, and collects those royalties then pays it out to songwriters and publishers. When music is distributed through different streaming sites, such as Spotify or Apple Music, the services pay royalties to the MLC under a blanket compulsory license and then sent to the songwriter and publishers. It makes it easy for the streaming platforms to comply with a blanket mechanical license, and then be administered through one organization. Generally, royalties are distributed on a monthly basis, based on a statutory royalty rate under US copyright law. These royalties will be held for at least three years, so copyright holders may have royalties sitting to collect.
WHY THIS IS IMPORTANT FOR YOU AS AN ARTIST: This is another avenue that most people miss when it comes to collecting royalties for you as an artist. Most people have heard of BMI or ASCAP, but forget that there is an entirely different world when it comes to streaming sites.
There are some other organizations to explore, but we have covered three of the major organizations within the royalty space. It is important to understand the impact each has on your career and royalties, so you are able to collect all the profit you are entitled to. Here at WFJ, we can help counsel you on what you need to sign up for, and how to do it correctly.
Paige Kochanski is an attorney in WFJ’s Entertainment Law group. Her work focuses on music, film, and creative content legal matters and they regularly assist clients with contracts related to music, songwriting, publishing, copyright and more. She is passionate about helping businesses and individuals navigate entertainment matters with clarity and confidence.