There is no easy way to explain royalties. It is probably one of the most complex aspects of the music business. Not only because accounting for people other than accountants is tough, but also because royalties vary from country to country and from platform to platform. Nevertheless, you must know about them in your music marketing journey. This is how you are going to make money! In this entry we’ll provide you with a basic definition and tell you some of the elements surrounding it.
Royalties: a Definition
Music royalties are payments you receive in exchange for the licensed use of your productions. The people who receive them are many (because there are plenty of people involved in creating music): songwriters, composers, recording artists, their representatives, publishers, and copyright holders—just to mention a few. The people or institutions paying are those who get to employ your music. Examples of these are TV channels, movie crews, radio stations, and venues. To complicate matters further, music royalties depend on the types of licensing and usage (mechanical, public performance, synchronization, neighboring, streaming services, and digital performance). Most of the time, there is a mediator between the people receiving the money and those who are paying.
In brief, in the music industry, you rely on royalties as the main source of payment for your creations. For this reason, contracts are necessary: they determine the type of bond between you, the creator, and the many distributors.
Royalties: All About Copyrights
As already mentioned, there are a lot of people involved in music production. If you are an emerging artist, first focus on learning how to protect your creations. Royalties are all about copyrights. Copyrights are a legal protection that provides you with the exclusive right to a particular work for a certain amount of time.
The protected rights are composition and master. Firstly, a composition right is one in which songwriters and their music publishers own the harmony, melody, and lyrics of a tune. This right begins right after you “pour” the song in a tangible medium (like a sheet music, a CD, or even a tweet). Secondly, the master right consists of owning a sound recording. Such is the case of songs that a record label has already accepted to distribute.
As a result, you get—for this particular copyright set—two types of royalties: those for the licensed use of the sound recording and those for the authorized use of the composition. From here onwards, the road becomes trickier—but let’s leave it at that for the time being.
Royalties: Conclusions
You have already experienced some of the difficulties when dealing with royalties. Just to clarify some aspects of this entry, remember that royalties are the payments you (and others) receive for the production of music. Remember, too, that these depend on your owning of the product (i. e., copyright). In other entries, we’ll explore some more of these aspects, such as types of royalties, so you can become more familiar with them and they don’t take you by surprise once you reach this point in your career.
