As time has gone by and the music industry has changed, there have been, accordingly, adaptations in the field of royalties. Traditionally, there used to be four types of royalties. Nowadays, due to alterations such as the emergence of digital streaming, we can count six.
As seen in our “Royalties 101,” for you to get paid, you must own the product. You must own the copyright for your music in order to benefit from royalties.
Mechanical
You get this payment every time someone reproduces or distributes your composition in either a physical or digital form. In other words, mechanical royalties give you an income from reproduction and distribution. This type is due to all music formats, ranging from cassettes to streaming services.
Public Performance
This type of royalties generates an income from the music you perform, record, play, or stream in public. In other words, the songs, which feature a specific composition, play in a commercial environment. Currently, experts divide them into two: streaming services and conventional broadcasters. Some examples are streaming services themselves and radio, respectively.
Synchronization (aka Sync)
These royalties result from your music being synchronized with visual media. For instance, whenever someone features your creations in films, commercials, video games, advertisements, and music videos. The process for obtaining them gets more complicated, as you need a license from sound recording and composition owners. It is called a master use license.
Neighboring
Since there are two types of copyright in music—composition and master—neighboring rights refer to those royalties paid for the public usage of music. In particular, the copyright holders of the sound recording performing artists or their record labels are the instances that get economic remuneration. These are very similar to public performance royalties, but are a feature of its own because of legal reasons. In other words, these royalties depend on the local legislation from which you produce the music. With both public performance royalties and these, you’ll have to deal with performance right organizations (PROs).
Streaming Services
Even though these are contemplated within mechanical royalties, streaming services ones deserve a category of their own. This is the consequence of the rise of these kinds of services to listen to music. They work as follows: labels and recording artists ally with distributors to place your recording on streaming platforms. Thus, you get your due payment from this.
In this scenario, these platforms negotiate the rates of payment with the people who own the music. Moreover, the revenue pool—i. e. the profit divided as previously agreed on on the contract—stems from the total number of streams (or “share of content”) divided by all streams on the platform.
Digital Performance
Digital performance royalties are extremely close to neighboring ones. It doesn’t seem obvious at first, but the fact is that they join in getting you paid for the usage of your music in performances. For example, digital internet, satellite stations, and cable radios must pay the owners of the compositions if they’re employing them.
This means that every digital radio platform needs a license to use copyrighted music. In addition, depending on your country, you might need to register to some institution to collect this type of royalty. In the United States, you register to SoundExchange, for instance.
