In our third video about music copyrights and royalties, Disc Makers’ CEO Tony van Veen discusses what royalties and payments you are entitled to if you own and exploit the sound recording of your song.
In my “Understanding music rights and royalties,” I discussed the two basic rights to a song: the sound recording and the composition (or publishing). There are many royalties paid out for owning either or both of those rights, which I’ll be discussing in this video series.
Today, I am going to be discussing what royalties and payments you are entitled to if you own and exploit the sound recording of your song.
So, if you record and release a song, who owns the sound recording? If you’re an independent artist who paid to record your own music, typically, you own it. If you’re on a label, the label usually does. That part is pretty straightforward.
Historically, on any album or single, the bulk of the monies paid are to the owner of the sound recording. Those payments go directly from the distributor or platform to the label or artist who owns that recording — no middleman required (besides maybe your distributor).
Today, here are the ways the sound recording generates revenue.
Nowadays, as we all know, most music is consumed through streaming, and the bulk of streaming royalty dollars (80–85%) go to the owner of the sound recording. The remaining 15-20% is paid to the Performance Rights Organization (ASCAP, BMI, SESAC) for the “public” performance and to the owner of the publishing. So, if you distribute your music to the streaming sites through any one of the big digital distributors (CD Baby, TuneCore, DistroKid) and have signed up for their standard distribution, you will collect about 80–85% of the available streaming royalties.
With physical product, when a distributor sells a CD to a retailer, they typically owe the label around $7 to buy the CD from them. Of the $7 that goes to the label, about $1 was for the publishing and the rest was for the ownership of the sound recording.
Neighboring rights are complicated and I’ll address them in a separate video. Suffice it to say that in the US, neighboring rights royalties are generated from airplay of your music on non-terrestrial radio — that is, satellite radio like Sirius XM and Internet radio like Pandora and iheartradio. These neighboring rights royalties are paid to the owners of the sound recording and the artist.
YouTube rights and royalties are also complicated and probably deserve a whole video series of their own. Suffice it to say that when YouTube recognizes that your music is being used in a video — whether it’s your own or someone else’s — it will frequently be able to run ads on that video and part of the money from those ads will go to the owner of the sound recording.
Yes, there are still people out there who buy downloads! And just like with physical media, the bulk of the dollars iTunes pays the artist or label are for the ownership of the sound recording.
Social media royalties
The monetization of music rights via social media — particularly Instagram and Facebook — is still in its infancy and the exact formulas are evolving. However, some distributors, like CD Baby, can already deliver your content to those social platforms so users can place it in their story. When a user does this, royalty revenue will go to the owner of the sound recording.
Sync licensing fees
When your music is placed in a visual medium like TV, film, a game, or a commercial, it is synchronized, or “synced” to the video content. When a music supervisor for such video content wants to license your music — usually through a middle man — they typically pay an up-front fee to the sound recording owner to use that recording.
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Then, there are a couple of uses that could happen if you’re an independent artist but are fairly uncommon unless you’re well-established, namely samples of your music and remixes. In both cases, the owner of the sound recording needs to give approval and you get to negotiate a fee for the use of your recording.
So there you have it. Owning the sound recording allows you to drive revenue from quite a few uses. That said, most of the uses I just mentioned also generate publishing royalties for the publisher or songwriter. Typically, the publishing royalty owed for any one sale or stream or view or performance is smaller that the sound recording royalty or fee. The power of owning the composition, however, is that many people can record your song and you get your mechanical royalties paid over all those sales, plays, and views from various artists’ recordings of your song.
Check out the entire “Copyrights & Royalties” video series and more at Disc Makers’ YouTube channel.
Tony van Veen is the CEO of DIY Media Group, the parent company of Disc Makers, Merchly, and BookBaby. As a college student, he played in indie bands, created his own LPs, cassettes, and t-shirts, and sold them at shows. Today, he collects CDs, vinyl LPs, and concert t-shirts to support the artists he loves.
Understanding music rights and royalties
Should you “officially” copyright your music?
How Much Does Streaming Pay?
Placing your music in video games
License your music (and generate revenue)