The performance right refers to compositions being publicly performed outside of a normal circle of friends and family. It came about in 1847, when the composer Ernest Bourget walked into a French venue named Café Morel and ordered a glass of sugared water. The venue refused to serve him, reasoning they make too low of a profit margin selling water. Right at that moment, the performing artist in the venue played one of Bourget’s compositions. Without a glass of water and without compensation for his music being played in their venue, Bourget left annoyed and decided to sue the venue shortly after. Bourget won the lawsuit and it resulted in the establishment of SACEM, the oldest performance collection society in the world.
Performance royalties are managed by performance collection societies, also commonly referred to as Performing Rights Organisations (PROs). An example is SACEM in France, but each territory will have its own legally mandated PRO. These organisations are government mandated to manage the performance royalties within its borders.
Once a performance royalty has been collected and matched to a Work in a PRO's repertoire, that PRO then pays through this royalty – partially to a publisher (or publishing admin body) and partially direct to the songwriter/s. The two separate shares are referred to as the publisher’s share and the writer’s share. Songwriters will thus need to become a member of a PRO to collect their writer’s share. A common split is 50/50, but some PROs will pay their songwriter members a share as high as 66.66%.
Thanks to reciprocal agreements with other societies, a society will represent a global repertoire within its own mandated territory. It is very common for PROs to collect royalties for a song written by a member of a foreign collection society. In this instance, the PRO will then forward the writer’s share to the writer’s society, who takes it from there. How the publisher’s share flows largely depends on the publisher’s collection network, more on that later.
Songs played on the radio and television are a big driver of music consumption. The obvious examples are radio programmes or music videos played on MTV, but soundtracks added to film or tv programmes and even jingles also fall under this performance usage. These stations will remunerate the master rights holders via a blanket licence with the local neighbouring rights society. The publishing rights holders will in turn be paid via a blanket licence permitted by the local performance collection society. This “blanket” licence refers to the stations gaining permission to use any music in the society’s repertoire as part of the one licence agreement.
Radio and television stations will pay a flat fee or royalty rate that scales with the size of the station. The exact tariff is decided by the local collection society. An important task for the societies is to then assign this revenue to the correct rightsholders. It can work out which songs were used via cue sheets provided by the radio and television stations. But more modern techniques involve music recognition technology scanning the radio and television stations and automatically compiling the tracklists, in a way not too dissimilar to how you search for songs via Shazam.
In the below image, we see how the income flows from the radio or television station to the collection society, who then pays the writer’s share directly to the writer and a publisher’s share to the publisher. The publisher will have generally agreed to pay part of its publisher’s share as an additional royalty to the writer.
You don’t just consume music when you turn on the radio or hit play on Spotify. Music is quite often all around us. Obvious examples are music venues and festivals, but also your local pub, karaoke bar, supermarket or hairdresser may play music to their customers. For this performance usage, each of these sources will need a licence in place with the copyright holders. For your local pub to sign an agreement with each label and publisher before they are permitted to play music would be an extremely boring and cumbersome task. It is for this reason that the collection societies come into play. These societies offer blanket licences, giving these stations or venues access to the entire repertoire of music for a set fee.
These venues will pay the master rights holders via a licence with a neighbouring rights society. The publishing rights holders will in turn be remunerated via a licence permitted by a performance collection society. So it is worth noting that venues playing music need both licences in place. For higher levels of convenience and lower levels of frustration with local pub owners, the neighbouring and publishing societies sometimes work together to provide a one-stop licence.
The composite and value of the licence will vary largely with the type of usage. Looking at PRS’s tariffs, for example; the performance fee of a festival will be a percentage of its ticket sales, the annual performance fee of a gym depends on its surface area and that of a hairdresser will depend on the number of treatment chairs.
For societies to know which songs are played in each of these venues, to then report this revenue on to the correct rights holders, is practically impossible. For live performances, they can, if provided, base the royalty payout on setlists provided by performers. Also music recognition technology can play a role, though due to the many impracticalities of installing this technology in all public venues, it has not yet fully taken off. Instead, quite often these performance royalties are split pro-rata, based on the usage of music expected in these venues, often based on radio play data. It means that if a songwriter had a 1% share in all radio revenue in the country, they can also expect a share of 1% in this pot of so-called black box revenue.
In the below image, we see how the income flows from the public venues to the collection society, who then pays out the writer’s share directly to the writer and the publisher’s share to the publisher. The publisher will have generally agreed to pay part of its publisher share as an additional royalty to the writer.
Also online royalties, such as streaming and downloads, are partly collected by performance collection societies. However, due to its complexity and close relation to mechanical royalties, we have dedicated a separate chapter to these online rights.
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