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Music Royalty Types
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Ringtone Royalties
Ringtone royalties are generated from the sale of mobile phone ringtones. They are split between songwriters, publishers, and the owners of the master recordings. Collection methods vary by country and mobile platform.
Private Copying Levy
Private copying levy is a fee charged on blank media (CDs, USBs, etc.) and recording devices intended to compensate rights holders for private copying of music. These levies are collected by designated organizations and distributed to copyright owners. This model is more common in Europe and Canada.
Direct-to-Consumer Sales Royalties
Direct-to-consumer sales royalties arise when artists sell their music directly to fans via their websites or at live shows. The artist usually retains the majority of revenue, paying out portions to songwriters and publishers if they are not the artist themselves.
Compulsory Mechanical License Royalties
A compulsory mechanical license allows anyone to cover a song without the original songwriter's explicit permission, as long as the royalty rate set by law is paid. The statutory mechanical royalty rate applies, and the Harry Fox Agency often manages these collections and distributions in the US.
Sampling Royalties
Sampling royalties occur when an artist uses a sample of another artist's song in their music. Royalty rates are negotiated between the owners of the original work and the artist wishing to use the sample, often involving both master and mechanical royalties.
Karaoke Royalties
Karaoke royalties are paid when songs are used for karaoke performances. These are often part of performance royalties and are collected by PROs for songwriters and publishers.
Print Royalties
Print royalties are earned when a song's music notation is sold, such as sheet music or songbooks. These royalties are collected by publishers and distributed to songwriters based on contractual agreements.
Lyric Display Royalties
Lyric Display Royalties are garnered when lyrics are displayed or printed, often online or in apps. Collection is usually facilitated by lyric licensing companies who then pay the songwriters and publishers.
Mechanical Royalties
Mechanical royalties are paid to songwriters and publishers whenever a copy of their music is made. This includes CD, vinyl, cassette, and digital downloads. Collection is typically managed by mechanical rights organizations and distributed based on negotiated rates or statutory rates, such as the Harry Fox Agency in the US. The current statutory mechanical royalty rate is 9.1 cents for songs five minutes or less.
Grand Rights
Grand rights are royalties for large scale works like operas, musicals, or ballets when performed live. These are typically negotiated directly between the composer or their publisher and the performing arts organization.
Interactive Streaming Royalties
Interactive streaming royalties come from on-demand streaming services like Spotify and Apple Music. These royalties are paid to songwriters and publishers via mechanical rights agencies and performance rights societies. Various factors including the number of streams, location, and type of subscription determine the payouts.
Print License Royalties
Print license royalties are collected when a song's lyrics or music is printed in publications. The rates and distributions are typically negotiated between the publisher and the entity wishing to print the music.
Cable Retransmission Royalties
Cable retransmission royalties are paid when cable television networks retransmit broadcast signals. These payments are typically collected by PROs and distributed to songwriters and publishers based on agreements.
Small Rights
Small rights are linked to performance royalties but typically refer to performances of non-dramatic compositions like songs in concerts. They are collected by performance rights organizations and distributed to the composers and songwriters.
Neighboring Rights
Neighboring rights (or related rights) are earnings for the performance of a record. They provide compensation for performers and record labels when recordings are broadcast on radio or TV and played in public venues. Collected by organizations like SoundExchange in the US or PPL and PRS in the UK.
Blanket License Fees
Blanket licenses are fees paid by venues, broadcasters, and other music users to performance rights organizations for the right to play any music in the PRO's catalog. The fees are then distributed to rights-holders based on usage and other factors.
Performance Royalties
Performance royalties are generated when a song is performed publicly, such as on radio, in venues, or even as background music in businesses. These are collected by performance rights organizations like ASCAP, BMI, or SESAC in the US and distributed to songwriters and publishers.
Master Royalties
Master royalties are paid to the owner of the master recording when the recording is used commercially. This can include digital downloads, streaming, and use in media. Typically collected by the record label or independent artists if they own their masters.
Mashup Royalties
Mashup royalties are due when an artist creates a mashup of two or more songs. The artist must negotiate and pay appropriate royalties to the original copyright holders, which can include mechanical, synchronization, and performance royalties depending on the use.
Foreign Royalties
Foreign royalties are earned from the use of music outside the songwriter's home country. These are collected by foreign collection societies and then transferred to the home society, which then pays the rights holders. This often includes performance, mechanical, and sometimes synchronization royalties.
Synchronization Royalties
Synchronization royalties occur when music is used in sync with visual media like TV, movies, commercials, video games, or online videos. They are negotiated on a case-by-case basis and not subject to statutory rates. The royalties are split between publishers and songwriters, and sometimes recorded artists.
Digital Performance Royalties
Digital Performance Royalties are paid when music is streamed on non-interactive digital platforms such as Pandora or SiriusXM. These are collected by SoundExchange in the US and paid to record labels, artists, and publishers.
Theatrical Performance Royalties
Theatrical Performance Royalties are generated when music is used in a live theatrical performance. They are typically negotiated directly between the rights holders and the theatre company.
Home Taping Royalties
Home taping royalties were historically collected to compensate rights holders for the copying of music at home. This concept has largely faded with the decline of physical media but was once managed by rights organizations that distributed the payments to copyright owners.
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