A closer look at copyright

Reading time : 5 min

Understanding the various rights linked to a song is crucial to developing your career further and maximizing your earnings.

This article aims at giving you a global overview of copyright to provide you with all the knowledge you need to make the best possible decisions to administer them.

What’s the difference between copyright and master rights?

As previously discussed in our article laying the difference between Copyright and Master Rights, two different types of rights make up a track:

  • Copyright (also sometimes called Author Rights or Publishing Rights
  • Master Rights

Copyright are the rights of authors, composers, and songwriters. These terms may sound like they encompass the same definitions, but it’s not the case. Instead, these words have a precise meaning, although always linked to the art of writing a song. Copyright also concern publishers in case a songwriter decided to sign a publishing deal.

On the other side, master rights concern producers & performers

To sum it up, copyright are the rights of songwriters, while master rights are the rights of producers and performers.

How do independent artists collect royalties? 

Independent artists are artists managing their careers from A to Z. It means that they very often do not work with a label or a publisher. They also often create their music on their own, meaning that they write, produce and perform the tracks they release. We’re talking about one person doing multiple jobs at once.

If that’s your case, you must first learn to see yourself as someone handling these three jobs: songwriting, performing, producing. To collect all the royalties you’re owed as a multi-faceted artists, you must understand that copyright and master royalties are collected by different entities. 

Who collects master royalties?

Let’s start by the end: if you do not work with a label and distribute your music independently through a digital distributor (e.g., DistroKid, TuneCore, Amuse), the royalties you can get as a producer and performer come from this digital distributor. Digital distributors such as DistroKid take care of paying out your master rights.

When it comes to so-called terrestrial broadcasts (TV, Radio, etc.), the topic is rather broad and will be discussed in a later article. For the moment, let’s say that there is a major difference between Europe and the United States:

  • In Europe, you’ll be able to collect and receive the master royalties stemming from a terrestrial broadcast through a specialized, national organization
  • In the US, it’s trickier: terrestrial broadcasts do not generate master royalties. It goes back to the roots of the relationship between labels and radio channels. Radio was considered as a way for labels to promote the recordings they represented, and it was thus legally decided that terrestrial broadcast shouldn’t generate master royalties. It’s a heated debate in the United States as it’s the only country in this situation
Master royalties for independent creators are often solely covered by the digital distributor. Depending on whether you live in Europe or North America, and depending on whether your music is played on terrestrial channels, you might also have to sign up with a collective rights organization specializing in master rights.

Who collects copyright royalties?

Let’s dig into copyright royalties now.

As a reminder, copyright royalties are the royalties you can perceive as an author, composer, or songwriter. Two potential cases:

  • You write music for other creators, and it means that it’s your main and only revenue stream
  • You write music for yourself, which you also perform and produce. It’s one of the various revenue streams you can get 

There is one crucial element to mention right ahead: there is a slight difference in the collection process between the United States and Europe.

The core principle is the same: within copyright, you’ll find two main types of royalties: Performing Royalties & Mechanical Royalties. We’re starting to see many complex industry terms, so let’s take a moment to make the difference between these two types of royalties, especially since we often mix them up. 

What’s the difference between Performing Royalties & Mechanical Royalties?

We pay Performing Royalties to play a composition in public. We can take the example of a restaurant playing background music to create a cozy atmosphere. Restaurants being public places, the owner must pay for a license allowing her to play the music. 

We pay Mechanical Royalties to reproduce a composition on physical goods such as CDs. It’s the type of rights a label would typically pay to produce CDs. They would have to pay mechanical royalties for each CD they manufacture. 

But wait a minute: we mostly listen to music on streaming platforms nowadays, so what about streaming services? Mechanical royalties are paid when a user chooses to play a specific song. Performing Royalties are also generated each time a track is being played. In Europe, streaming music generates both performing and mechanical royalties.

In North America, the system is slightly different as there is a difference between interactive and non-interactive plays. When you decide to play a track (interactive - you’ve looked for it and hit play), your stream will generate both performing and mechanical royalties. On the other hand, suppose you’re using a non-interactive music streaming service such as Pandora or listening to any radio on Spotify: in that case, your stream will only generate performing royalties.

We know it can get messy in our heads, so to summarize this, let’s have a look at the illustration below:

Copyright generate two types of royalties: performing and mechanical royalties. Performing rights are generated when a track is played publicly, while mechanical royalties are linked to the physical or digital reproduction musical works.

Which companies collect my copyright?

As always, we have to highlight a difference between Europe & North America.

It’s pretty simple in Europe: your national Collective Rights Management Organization (CMO) is taking care of collecting both your performing and mechanical royalties. It’s the same if you’re registered with an IME such as Bridger; your IME is taking care of collecting both types of royalties.

In North America, the system works differently:

  • On the one hand, you can find Performing Rights Organizations (PROs, such as BMI or ASCAP) who collect performing royalties.
  • On the other hand, certain organizations such as Harry Fox or the Mechanical Licensing Collective (MLC) collect mechanical royalties.

To put it more simply: European songwriters must sign up with one organization to collect 100% of their copyright revenues, while North American ones must sign up with two. It’s critical to keep that in mind when you consider signing up with an American PRO such as BMI, it's crucial to keep that in mind: do not forget the mechanical part you can also receive.

European CMOs collect both performing and mechanical royalties, while North American PROs focus on performing royalties and Rights Administration Entities/Mechanical Rights Organizations on mechanical royalties.

What do I need to remember?

Copyright are the rights of authors, composers and songwriters. When you write the instrumental part or the lyrics of a song, you’re a songwriter. Beatmakers are songwriters too. These copyright generate two types of royalties: performing and mechanical royalties. Collecting these two types of royalties vary between North America and Europe.

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