How Does Music Generate Money?
There are a variety of ways to make money off of your music (see here) but for now we will discuss one aspect of the extremely lucrative business of music publishing. There are numerous possible music publishing revenue streams, including mechanical publishing, public performance (PRO), print, foreign royalties, grand rights and others, all of which are discussed in other articles. Each publishing entity has its own collections services, for example PRO’s (Performance Rights Organizations) such as ASCAP, BMI & SESAC which collect musical work performance rights.
Music Publishing is BIG business! In order to understand music publishing, you should at least have a basic understanding of copyrights and how they work. In previous articles I discussed PRO (Performance Rights Organizations) such as BMI and ASCAP. Briefly, PRO’s collect publishing on musical work performances for music writers, music producers and music publishers. But what about the performers on a song? Lets look at the difference between the PRO collections for writers and collections for performers.
SOUNDEXCHANGE administers sound recording performance rights while PROS administer musical work performance and pays out as follows:
50% label (usually) Rights owners of sound recording
45% to featured artist on sound recording*
5% to SAG & AFTRA IP fund for non-featured artists**
*song writers not paid out via sound exchange, just artist (unless writer is the artist)!
**pays out to featured artists, labels and session/background singers.
It is important to note that producers DO NOT get paid via SoundExchange unless they are a noted part of a group or band. For example, the Hip Hop group Gang Starr is made up of Guru (R.I.P.), the artist and performer, and DJ Premier, the producer and DJ. While DJ Premier doesn’t generally perform vocally on most Gang Starr tracks, as a listed member of the group Premier would be entitled to performance recording royalties via SoundExchange.
How many Copyrights does a song contain?
Every recorded song creates two main copyrights: a master (sound recording) and the written (musical/composition). It can be confusing trying to understand what constitutes what so this chart should help:
(from US Copyright Office website -11/2019)
To clarify, “a sound recording is how a song sounds while the composition is the written words or music or the combination of both. Controlling the sound recording copyright is what enables music labels to reproduce the song, sell it and make money from the song.” (Jason Bost, Esq. “Copyrights and Music: Why Copyrights Matter”).
If the Artist Doesn’t write the Song, how does the Artist make money on the song?
PRO’s collect on the musical/composition copyrights for the writers, producers and publishers, and SoundExchange collects on behalf of sound recording copyrights for sound recording owners (usually the record labels) and featured performers (i.e. artists). (Soundexchange.com). SoundExchange collects digital royalties on ‘non-interactive’ digital formats. Non-interactive formats are basically formats where the listener doesn’t pick the exact song to listen to such as Pandora and Satellite Radio.
How Much Does a Performer get paid for Collections on each Track/Song?
According to SoundExchange, there are three types of rates for statutory collections: Commercial webcasters (which are webcasters that are NOT government owned or non-profit based): $0.0018 for each non-subscription based performance; $0.0024 for each subscription based performance, thus a performer would need 55,556 streams or plays at $0.0018 to generate $100. There are minimum fees for various categories which may increase or decrease the fee paid to a performer. For a full breakdown of Non-Commercial webcasters and others such as SiriusXM radio, see SoundExchange’s breakdowns listed here.
If the Artist Wrote the Song and Performs the Song, who Collects the Money for them?
Many of today’s artist write and perform their own songs. Those artists would then be able to receive payments from their PRO (ASCAP, etc.) as a writer and if they are registered as a publisher (which they should be) as a publisher, and also collect revenue as a performer via SoundExchange. If you are an artist that performs your own or other people’s written material, registering with SoundExchange will provide an additional revenue stream. I’ve never heard of anyone turning down extra money, especially when that money is owed and due to them!