Boost Your Music Income: Learn How to Collect Performance Royalties
Discover how understanding performance royalties can significantly boost your income as a songwriter or publisher.
According to a 2022 report by the National Music Publishers Association (NMPA), performance royalties generated $2.7 billion in the United States, making up 48% of all publishing royalties. Here’s a breakdown of performance royalties and how they work so you can collect your money.
What are performance royalties?
Performance royalties are payments made to songwriters and their publishers when a song is played in public. Examples include radio, TV, concerts, and the internet.
Who collects performance royalties?
Performance rights organizations (PROs) track, collect, and distribute performance royalties. In the US, the main PROs open to the public are ASCAP and BMI. SESAC and GMR are also PROs, but they are not open to the public.
How many types of performance royalties are there?
There are two types of performance royalties:
Traditional: When music is played in places like radio, TV channels, stores, clubs, and restaurants.
Streaming: When music is played on streaming platforms like Spotify, Apple Music, and Tidal.
In both cases, performance royalties are split between songwriters and publishers.
How do performance royalties split between songwriters and publishers work?
If a PRO collects $100 in performance royalties for a song (after admin fees), it splits the amount into two groups:
$50 for the songwriter (writer’s share)
$50 for the publisher (publisher’s share)
The publisher then divides the $50 according to its contract with the songwriter.
Songwriters who act as their own publishers must register with their PRO as both a songwriter and a publisher to collect the full $100. If they only register as a songwriter, they will receive just $50.
If a songwriter prefers not to register with a PRO for their publisher’s share or finds it difficult, they can sign an administration deal with a publisher.
How do traditional performance royalties work?
PROs administer blanket licenses that allow businesses to use the PROs clients' songs for a fixed payment. For example, a traditional radio station must obtain a blanket license from its local PRO to broadcast songs. The station then reports to the PRO the music it played, and the PRO distributes the license money to the respective songwriters.
When a performing artist gives a concert, they must report their set list to the venues. The venues send the list to the PROs, who calculate the public performance royalties owed to the songwriters. This also applies when a singer or band performs covers at weddings, restaurants, and corporate events.
How do streaming performance royalties work?
Streaming performance royalties are part of a common royalty pool created by the U.S. Copyright Royalty Board (CRB). This pool includes both performance royalties and mechanical royalties. The CRB sets the amount that streaming platforms must pay to songwriters and their publishers through their PROs.
How to collect performance royalties
Songwriters need to create an account with a PRO to collect the first half of their performance royalties (writer’s share).
To collect the second half (publisher’s share), there are three options:
Songwriter Collects Directly: PROs like ASCAP offer the option to register as both a songwriter and a publisher to receive the full distribution of those royalties.
Songwriter Creates a Publishing Company: PROs often let songwriters create an account as a publisher, but there are requirements, such as having an official company for that purpose.
Songwriter Signs a Publishing Deal: Songwriters can sign a publishing deal with a music publisher.
If you are an independent songwriter, companies like Songtrust offer writer-friendly admin deals. DIY distributors like CD Baby, TuneCore, and ONErpm also offer admin deals.
Real life example
Imagine that Sally Songwriter has an 80-20 publishing administration deal with Petra Publishing LLC. Sally will receive 80%, and Petra 20%.
Sally’s song, "Single Hit," made $100 after the PRO kept 10% in admin fees.
Step 1: The PRO splits the $100 in two groups:
$50 for the writer’s share (Sally Songwriter)
$50 for the publisher’s share (Petra Publishing)
Step 2: Petra Publishing splits the $50 of the publisher’s share per the 80-20 deal:
$40 for Sally
$10 for Petra
Result:
Sally Songwriter gets $90
Petra Publishing gets $10
Negotiation Tip for Publishers:
“On an 80/20 deal, the publisher will generally take 40% of the publisher’s share in performance royalties. (They should clarify this in the rates for specific royalties - mechanical, sync, covers, print, performance…) So 40% of 50%, being 20% overall.” – Christopher Brown.
Who collects performance royalties outside the US?
In the US, PROs collect performance royalties. However, in many Latin American countries, collective management organization (CMO) are the entities who collect these royalties.
Examples of CMOs include:
SACM: Sociedad de Autores y Compositores de México
SAYCO: Sociedad de Autores y Compositores de Colombia
SADAIC: Sociedad Argentina de Autores y Compositores de Música
SGAE: Sociedad General de Autores y Editores de España
SGACEDOM: Sociedad General de Autores, Compositores y Editores Dominicanos de Música
SCD: Sociedad Chilena del Derecho de Autor
ABRAMUS: Brazil
Note that US-based PROs have reciprocity agreements with CMOs worldwide, allowing them to collect performance royalties for songwriters and publishers globally.
Conclusion
Understanding performance royalties and how they are collected is crucial for songwriters and publishers to maximize their earnings. By registering with a PRO and potentially setting up as your own publisher or signing a publishing deal, songwriters can ensure they receive both the writer’s and publisher’s shares of their royalties. This knowledge empowers you to manage your music rights effectively and tap into the substantial revenue generated by public performances and streaming. Don't miss out on the money that rightfully belongs to you.
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