performance royalties

Performance royalties and PROs

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In our fifth video about music copyrights and royalties, Disc Makers’ CEO Tony van Veen discusses performance royalties, the PROs (ASCAP, BMI, and SESAC) who collect them, and why you’re probably not getting all you deserve.

Along with mechanical and sound recording royalties, performance royalties are another royalty you are entitled to if you own the composition (or publishing) to your song.

What use of my music generates a performance royalty?

A performance royalty is owed to the songwriter and publisher of a song whenever that composition is “broadcast” or performed “in public.”

This includes…

  • Performances in public venues. These could be live concerts at clubs and arenas, but it could also be music played over the speaker system at a restaurant, bar, gym, or dentist’s office.
  • Plays on radio. This includes terrestrial radio, satellite radio, and Internet radio.
  • Uses on network and cable TV, in movies, commercials, and games.
  • Plays on online music streaming services like Spotify, Apple Music, and Amazon Music.

How do performance royalties work?

When a public venue or restaurant uses music to create the right ambiance, they are benefiting from those songs. They have to pay for that benefit — the performance royalty. However, they don’t necessarily know what is playing, nor who the songwriter or publisher is, so how do they know who to pay?

This is where performance rights organizations (PROs) come in. You know them — ASCAP, BMI, and SESAC are the most prominent ones, but there are others, including the new and indie-friendly AllTrack. These PROs charge the venues a sort of subscription fee that differs based on the size of the venue, and then the PROs somehow figure out whose music is played and which publishers are owed royalties.

How do I collect performance royalties?

First, you need to be the songwriter or publisher and, second, you need to affiliate with a performing rights organization such as ASCAP or BMI (if you’re in the USA). Outside the USA you need to register with the PRO in your country.

So I just need to become a member of a PRO to collect all my performance royalties?

No! For starters, just being an ASCAP or BMI member doesn’t give them the information about which songs to compensate you for, which means you need to register every composition you own with your PRO.

How do the PROs know when and where my music is played?

It turns out a significant amount of the royalty calculations made by the big PROs involves extrapolating and estimating… in other words, guessing. I mean, how would they know what music gets played in every bar or restaurant or dentist’s office around the country or the world? They DON’T!

PROs receive cue sheets from radio, collect data from streaming services, do census surveys of top venues, and perform sample surveys of smaller venues, but it seems like much of their royalty calculations are based on estimates from the data they get from larger venues. In other words… they make an educated guess.

If they don’t know, then how do they pay accurately?

They won’t like it when I say it, but they can’t! For starters, they estimate royalties based on market share. Which means the most prolific and popular songwriters will always get credited with plays that they probably didn’t deserve. And the small indie songwriters — even those who are duly registered with a PRO — are much less likely to be credited with any market share-based plays. In addition to that, there are significant royalties owed to songwriters who are unaffiliated with a PRO which can’t ever get tracked and ultimately get distributed to the big guys.

So how do I make sure I get paid all I’m owed?

The funny thing with the inner workings of the big PROs is that you never really know if you’re getting all you’re owed. Global royalty collections take a long time. Plays in every country have to be tracked and collected by that country’s PRO, who has an agreement with the PRO in your country to remit the funds. And we don’t exactly know how the funds are tracked or estimated or assigned to any one songwriter or publisher. As a little guy, you’re pretty much guaranteed to get your music under-reported.

But there is one thing you can do to get guaranteed payments from your PRO for your original compositions: submit your setlist from every gig you play. Both ASCAP and BMI have a process where you can submit setlists of your performances, plus some venue data, and you’ll get paid. ASCAP’s program is called ASCAP OnStage, and BMI’s is called BMI Live. You can access them through your PRO’s member portal. It takes a bit of discipline to do, but it results in a guaranteed royalty payment.

Mechanical royalties and performance royalties

As an independent musician, navigating the world of music royalties can be complex, but it’s crucial for your career. Among the various types of royalties, performance royalties and mechanical royalties are fundamental in ensuring you get paid for your work. Let’s break down the key differences between these two types of royalties:

Mechanical royalties

Mechanical royalties are generated from the reproduction of songs. This encompasses physical mediums, like CDs and vinyl, as well as digital reproductions like downloads and streams.

Collecting organizations

In the U.S., the Mechanical Licensing Collective (MLC) is a notable entity for collecting mechanical royalties. Globally, various organizations and music publishers play a role in this process.

Performance royalties

Performance royalties are generated when a musical composition is performed publicly. This includes any live or recorded performance, like a radio broadcast, a stream on a digital platform, or music played in a restaurant or a store.

Collecting organizations

These royalties are collected by Performance Rights Organizations (PROs) such as Broadcast Music, Inc. (BMI), American Society of Composers, Authors and Publishers (ASCAP), and Global Music Rights (GMR).

What’s the difference between mechanical royalties vs. performance royalties?

Source of income

  • Performance royalties: Earned from the public performance of a song (radio, live concerts, background music in businesses).
  • Mechanical royalties: Earned from the reproduction and distribution of a song (CDs, vinyl, digital downloads, streaming).

Collection method:

  • Performance royalties: Collected and distributed by PROs.
  • Mechanical royalties: Collected by organizations like the MLC or directly by music publishers.

Rights holders

Both types of royalties are crucial for recording artists, music publishers, and record labels. However, performance royalties are primarily earned by composers and publishers, while mechanical royalties are designated for songwriters and their publishers.

Understanding the distinction between performance and mechanical royalties is essential for any music creator. Whether it’s a live performance, a song played on a radio station, or a track streamed on a digital platform, knowing how these royalties work ensures that you, as an artist and rights holder, are fairly compensated for your work. Stay informed about the royalty collection mechanisms and collaborate with music publishers and PROs to maximize your earnings from both recorded music and musical compositions.

Do I need to start a publishing company to collect my public performance royalties?

Yes and no. It’s important to know that BMI splits its performance royalties 50/50 between the writer and the publisher. As a writer you can only collect 50% of the available royalty, so you also need to register as a publishing company to collect your publishing share. ASCAP allows you to collect 100% of the royalty as the songwriter.

If you don’t have a publishing company, there is a relatively easy workaround. In my previous video about mechanical royalties, I discussed the concept of a publishing administrator. This is a company that, for a minor fee, collects your publishing royalties for you while you retain all your rights. For example, if you distribute your music via CD Baby Pro, CD Baby will do all of it for you: affiliate you with your PRO, register your songs with the PRO, and function as the publishing administrator for your songs, allowing you to collect both the writer and publisher share for any public performances of your music.

So, in summary, to maximize your performance royalty payouts:

  • Join a PRO
  • Register your songs with them
  • Submit your setlists to them
  • Distribute your music by using the publishing administration service of your favorite digital distributor

Tune in again next time when we’ll be discussing one of the most misunderstood — and perhaps under-collected — royalties of all: the neighboring rights royalty.

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.

Professional songwriters offer advice on how to write a great song

Tony van Veen in the Disc Makers lobby

About Tony van Veen

Tony van Veen is the CEO of DIY Media Group, the parent company of Disc Makers 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.

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