Unit 39: Sound & Music Industry - Royalties

Unit 39 - Sound & Music Industry

Task 4: Royalties

When a band writes and records a piece of music, that becomes shared property of the band, their record label and publishing company. Therefore, if somebody wants to use their recording, they would have to pay for that privilege, so they would be paying the artist (both performers and writer) and depending on the sort of deal they've negotiated and the nature of the bands contract the money they paid would be split between their label and publishing company. Songs can be used in many different situations, and each would entitle the artists to money as their song is helping to do something, for example using a song in an advert is helping to sell a product or service, so the artist deserves money for that. Songs played in public places like shops and bars will earn the composer PRS royalties and the performers PPL royalties, and the public place will need to pay for a license from both of these companies before they can play music.

Firstly it's important to establish two different kinds of royalties, performance royalties and writing royalties. These two types of royalties are dealt with by seperate companies, and given for different reasons, depending on the nature of the songs use. For example, a studio recording of a bands song that they'd released being used on an advert would get the entire band a performance royalties for everyone who performed on the track, however if an artists song was covered by another artist to be released again, the composer of that song would recieve writing royalties, so if only one member of a group is credited with the composition of the song, they would recieve all of the royalties for the money made from that song, and the other performers wouldn't recieve anything unless the songwriter said otherwise. This is why it's said that money is to be made in songwriting, and often the songwriters in a group end up better off than the other band members, which often leads to tensions and break ups in groups.

For performace royalties there are many ways a song can be used to generate royalties:

·  Television - A song can be used to accompany an advert, in a television programme like a drama or a comedy or event live at a sporting event or as a theme tune for it. This usage of a song would generate a performance royalty for a group, as their song had been used to promote or help improve what was being shown on television, so they would be entitled to a payment because of that. The payments would vary in amount depending on whether the music was used in on or off peak time, and also depending on the size and popularity of the channel it was used on.

·  Internet - Again advertising may use a song and play that advert on internet sites like YouTube, and also just having a song played on YouTube, Spotify or iTunes will result in a very small royalty because that viewing of a track has both publicised the website and drawn peoples attention to related adverts on the website.

·  Radio Play - A song being played on the radio would result in performance royalties, and these royalties would vary in amount depending on the time of day/station etc.

·  Use at events/ Public use - If a song is used in a public place like a shopping centre, or during the interval of a sporting event or concert to entertain then performance royalties would be due.

The royalties mentioned above would be issued by Phonographic Performance Limited (PPL) who collect and distribute royalties for all manner of artists. The places that play music publically have to have a PPL license and a PRS to play music, so royalties can be collected for the performers and composer, as playing music publically generates a royalty for both, otherwise the place playing the music is in breach of the law. It's also worth mentioning that the money made by a band from the sales of their music both physically and digitally and their merchandise would be classed as a royalty, although it isn't dealt with by either of these companies.

The Perfrorming Rights Society (PRS) are the company that take royalties from the use of songs for the composer of that song, not neccessarily for the people who performed on it. Royalties are due to PRS for the things mentioned above about PPL like public use, television, radio and internet, but their are also additional things that can result in the composer of the song making royalties.

·  Covers - If a song you have composed is used by another artist, they have to pay the composer a percentage of the money they make from it. Obvious examples of this would be X-Factor winners releasing covers of songs they did on the show like Matt Cardle covering Biffy Clyro's "Many Of Horror", meaning that a percentage of the money he made off it would be going to Simon Niel of Biffy Clyro who wrote it.

·  Professional Composition - If your job is to write songs to give to other artists, then you will earn royalties from it. It's very similar to the last point, but an exception could be that in some cases a label may employ a songwriter by contract to write songs for artists on their label, so they'd be paid a salary with occasional bonusses for very successful songs, and not see royalties like a freelance songwriter would.

PRS also cover performance royalties, which is when your track has been performed live or a recorded version, either at a live venue, on television or the radio. These can be collected as a one off from a venue that happened to play your song in an interval that night, or if you play live at many venues on a tour royalties can be claimed at each one. The amount like anything obviously varies depending on the size of the venue, ticket prices at the gig and the turnover expected to be made by the venue/in house promoters if they have them. Larger venues have a percentage of ticket sales taken by PRS to cover their license, so having your song played at one of these would make more money than a smaller venue with a set annual fee.

This sort of on peak/off peak variant applies to songs being used on TV and radio as well. For example if your song is used on the radio at 5pm, it will make more in royalties than if it's used at 2am because the two different times have a massive variation in audience size, which effects the money generated.

The other side of royalties to cover is mechanical and synchronisation royalties. These are yet another source of income for bands, and a dealt with by other companies again. Firstly mechanical royalties, which are collected by the Mechanical-copyright Protection Society (MCPS) who are a sub-company of PRS, and are earned when somebody wants to put your music on their product, like a DVD, compilation CD like "Now That's What I Call Music" and CD's included with magazines to promote the magazine itself. This is also aplicable to album samplers issued by labels to promote the artists releasing music on their label, so even though they're the label issuing the music, they have to pay to MCPS to put that recording on the sampler so the band or artist gets a royalty for that. These royalties link in with synchronisation royalties which are for the use of music with visual images, be that in a film, programme, video game, advert or promo. Instead of being dealt with by a comany though, they just have to be approved for use by the label and publishers, as like I said in the introduction the bands music will be joint property of themselves, their label (the recording of the song) and the publishers (the song itself). Depending on the negotiation a band has with their label and publishers the percentages of where the royalties for the use of the song goes will vary, but the most straight forward would be 50% to the artist, then the other 50% split 25% each between the label and publishers, but of course this can vary depending on the size and fame of the artist, the profile of their label and the publishers they use.

In conclusion, royalties are a crucial part of an artists income, and they can come from many different places, generate a little or a lot of money and are dealt with by many different companies who take a cut from the artist or label/publishers for their work. Royalties are themselves issued quarterly (every 3 months) and unclaimed royalties are distributed between the highest earners at thar company. They are a cornerstone of a bands livelyhood, and are often the reason for bands tension when they realise one member is better off than the others, and that they're being conned by a little section of their contract, meaning the label is making money off them. All in all however, if the band is managed correctly and lwayers check their contract before signing then they can suppliment their income vastly throught royalties.