Simple Breakdown Of Music Royalties

In simple terms, music royalties are payments made to creators like beatmakers and rappers for the use of their music. Here's how it typically works for both:

1. Beatmakers (Producers): Beatmakers create the instrumental tracks (beats) for songs. When a beat is used by a rapper or singer, the beatmaker can earn royalties. These come from different sources like:

   • Mechanical Royalties: Earned each time a song is sold on platforms like iTunes or streamed on services like Spotify.
   • Performance Royalties: Earned when a song is played on the radio, in live venues, or on TV.
   • Synchronization Royalties: When the beat is used in TV shows, movies, commercials, or video games.

2. Rappers (Artists): Rappers perform the lyrics over beats. They also earn similar types of royalties:

   • Mechanical Royalties: From sales and streams of their songs.
   • Performance Royalties: From radio plays, live performances, etc.
   • Synchronization Royalties: If their songs are used in visual media.

Both beatmakers and rappers can also make agreements on sharing royalties, especially if a beatmaker sells a beat to a rapper. The specific details, like percentage splits, are usually outlined in their contracts. This way, both parties earn as the song generates revenue from various uses.

Deep Dive Into Music Royalties

To dive deeper into music royalties, let’s explore the types of royalties, how they are collected, and how beatmakers and rappers get paid. We'll also look at a typical contract example.

Types of Royalties

1. Mechanical Royalties: These are paid when a musical composition is reproduced in any form, such as CDs, digital downloads, or streams. Mechanical royalties are collected by mechanical rights organizations in the U.S. like the Harry Fox Agency (HFA) or Music Reports Inc.

2. Performance Royalties: These royalties are generated every time a song is played publicly, whether on the radio, in a concert, at a restaurant, or through television broadcasts. Performance rights organizations (PROs) like ASCAP, BMI, or SESAC collect these royalties and distribute them to their registered members.

3. Synchronization Royalties: These are earned when music is used in sync with visual media (films, TV shows, advertisements, video games). The royalties are typically negotiated directly with the content producer (e.g., a film production company) and are not collected by any specific organization.

4. Print Music Royalties: Paid when music is transcribed to print, like sheet music or songbooks. This is less common in the context of beatmakers and rappers.

Collection and Payment

• PROs (Performance Rights Organizations): Artists and composers must register with a PRO to receive performance royalties. The PRO tracks where and how often the music is played and then distributes royalties accordingly.

• Mechanical Rights Agencies: For mechanical royalties, music publishers often handle the collection. In the absence of a publisher, independent services like the HFA can manage these rights for a fee.

• Direct Licensing or Negotiations: In the case of synchronization, royalties are usually handled through direct negotiations. A legal agreement specifies the payment terms.

Example of a Royalty Split in a Contract

Imagine a contract between a rapper and a beatmaker. The contract might specify:

• Beat Ownership: The beatmaker sells a beat to the rapper, granting them the exclusive right to use the beat.
• Royalty Splits:
  • Mechanical Royalties: 50/50 split between the beatmaker and the rapper.
  • Performance Royalties: The rapper gets 75%, and the beatmaker gets 25%.
  • Synchronization Royalties: They decide on a 50/50 split.
• Advance Payment: The rapper pays the beatmaker an upfront fee of $2,000 for the exclusive rights to the beat.
• Credit: The beatmaker is credited as the producer on all tracks using the beat.

Getting Paid

Both parties would provide their payment details to the respective collection agencies, and the agencies distribute the earnings based on the royalty splits agreed upon in the contract. Direct deposits are typically made quarterly or biannually into their bank accounts.

In summary, understanding the flow of royalties and having clear, contractual agreements on splits and rights is crucial for both beatmakers and rappers to ensure they are compensated fairly for their contributions.

How To Get Paid From Your Music

Collection agencies play a crucial role in ensuring that music creators are compensated for the use of their work. Here’s a detailed look at the different types of agencies involved in collecting music royalties:

1. Performance Rights Organizations (PROs)

These agencies collect performance royalties on behalf of songwriters, composers, and music publishers when their works are performed publicly, whether played on the radio, in a live venue, broadcast on TV, or streamed online. Here are the major PROs in the United States:

• ASCAP (American Society of Composers, Authors, and Publishers): One of the oldest and largest PROs, representing millions of works. ASCAP licenses music users, monitors music use across various platforms, and distributes royalties to its members based on performances.

• BMI (Broadcast Music, Inc.): Another large PRO that collects license fees from music users and distributes them as royalties to songwriters, composers, and music publishers based on the frequency of the music’s performance.

• SESAC (originally stood for Society of European Stage Authors & Composers): A smaller, invite-only PRO that operates in a similar manner to ASCAP and BMI but often offers more personalized services.

• GMR (Global Music Rights): A newer and more exclusive PRO known for managing the rights of a select group of highly successful artists and composers.

2. Mechanical Rights Agencies

These agencies manage the licensing and collection of mechanical royalties for the physical or digital reproduction of music (e.g., CDs, vinyl, digital downloads, streaming). In the U.S., this role is often handled by:

• The Harry Fox Agency (HFA): The leading mechanical licensing body in the U.S., the HFA issues mechanical licenses and collects mechanical royalties from music users on behalf of music publishers. The HFA also manages mechanical licensing for interactive streams and limited downloads.

• Music Reports: Another significant player in mechanical rights management, Music Reports specializes in licensing, accounting, and royalty distribution for digital music services.

3. SoundExchange

SoundExchange collects and distributes digital performance royalties for sound recordings. Unlike PROs that focus on the composition rights, SoundExchange focuses on the recording itself. It collects royalties whenever a sound recording is broadcast digitally (e.g., internet radio, satellite radio, cable TV music channels).

4. Sync Licensing Agents or Companies

These aren't traditional collection agencies but play a vital role in managing synchronization rights for music used in films, TV shows, commercials, and video games. Sync licensing typically involves direct negotiations between the rights holder (or their agent) and the company seeking to use the music. Royalties and fees are determined case-by-case.

International Collection

For music creators whose works are played internationally, these organizations also work with counterpart agencies in other countries to collect and distribute royalties globally. For instance, ASCAP, BMI, and SESAC have reciprocal agreements with foreign PROs to ensure their members are compensated for international use of their music.

These agencies ensure that all entities that use music pay for the rights to do so and that these payments are then distributed to music creators according to their contractual shares of royalties.