Welcome to Royalties 101 by Curve. This course is designed to provide you with a sound foundation in royalties associated with music copyright. To achieve this, we will first learn about the recording industry: how does it work, who is involved and how does a label make its money? At the end of this course you will have a good understanding of the music industry landscape, revenue streams and contracts.
So, what is a royalty & what is music copyright?
Wikipedia defines a royalty as such:
For the purposes of the music industry, the ‘asset’ that Wikipedia refers to is either a song or a recording. So, in other words: royalties are artists and songwriters getting paid!
These royalty payments are enabled by copyrights. It defines the rights of who can copy intellectual property and for which type of remuneration. If it wasn’t for copyright, musicians would have no legal framework to collect royalties for their art. Copyright is what enables musicians to make a living, invest in their art, or support their presidential campaign.
To understand the music industry in its entirety, it is crucial to understand the difference between a song and a recording. The songwriter or composer writes the melody and lyrics. This forms one type of copyright, the composition, often referred to as publishing rights. An artist then makes a recording of that song. This recording forms a second copyright; the sound recording of the song, often referred to as the master.
Let’s take a look at an example. When Leonard Cohen wrote the melody and lyrics of his hit single Hallelujah in 1984, he instantly owned the copyrights of this composition. When Leonard Cohen then recorded this song as part of a sound recording, he instantly owned the copyrights of this sound recording. In this example, Leonard Cohen is the beneficiary of any royalties derived from both the publishing and master copyright. One decade on, Jeff Buckley recorded his brilliant cover in 1994, and would have gained the master rights of his own sound recording. Though he is still singing Leonard Cohen’s lyrics and melody. Any royalties derived from Buckley’s sound recording would therefore be due to Jeff Buckley, yet any publishing royalties from this cover would have remained with Leonard Cohen.
Whenever a songwriter writes an original composition, or an artist records a song, they are automatically granted their respective copyright. Both songwriters and artists can enter agreements with 3rd parties to exploit this copyright on their behalf. Songwriters can enter agreements with publishers, either for a limited timeframe or the full life of copyright, to represent their publishing rights and collect the royalties derived from exploitation of those rights. Similarly, performers can enter agreements with record labels to look after the master rights and collect the master royalties.
Copyrights and patents are always limited by time. So creators have a window to exploit their creation, before it becomes available to the public domain to be copied or adapted freely. The idea being that if a creation is still relevant to society beyond a point in time after creation, then it should be available to all to advance culture. The length of time it is ‘in copyright’ varies greatly, depending on the type of intellectual property and the territorial origin of the work.
For example, in the UK, the copyright of songs lasts 70 years after the last author dies, whereas the copyright of recordings in the UK lasts 70 years after the initial release of a recording. In the US; let’s say, it’s complicated; but for music written and performed today the copyright of both songs and recordings lasts 70 years after the last author dies. At least for now, because even though copyright may not be a Mickey Mouse business, the cartoon and its team of lawyers tend to have a significant impact on extensions being added on the life of copyright.
Exploitation of copyright comes in the form of distributing, reproducing, lending, performing or adapting the copyright. This means with each usage of a song or sound recording; be it a stream, download, physical sale, radio or television play, sync, public performance or license - a royalty is due to be collected by the copyright holders.
Subsequently, it is the publisher’s or record company’s responsibility to report royalties to the songwriter or artist. This is where royalty professionals enter.