Our third installment in our royalty series discusses performance royalties. While similar to mechanical royalties, performance royalties have slightly different requirements in order to be paid out.
So, what are performance royalties? A performance royalty must be paid out whenever a public space plays or performs a song. The term “public space” applies to the following areas:
- Gyms
- Restaurants / Bars
- Stores
- Digital Platforms (Apple Music, Spotify, Pandora, Amazon Music etc.)
- Any form of media (films, shows, advertisements)
What type of copyright are performance royalties?
As we mentioned in our previous article, royalties can be classified under composition (publishing) rights or masters (recording) rights. In the case of performance royalties, they classify under both. There are two types of performance royalties: Songwriting performance royalties and Recording performance royalties.
How are Performance royalties paid out?
Both songwriting and recording performance royalties are paid out to a performance rights organization (PRO). To recall, performance rights organizations, also known as PROs, are organizations each artist registers with to receive their royalty payments.
Each public space pays out to a PRO, these organizations are then tasked with distributing ther payments to the rightful entities.
Films, Advertisements, media forms and Performance Royalties
Typically, an agreement between the music rights owner and the entity seeking to use the song in their media is struck. These agreements, or sync fees as they are better known, are negotiated by both parties. This is to say, performance royalties are not the only form of payment the media pays for music, and it is certainly not the main source of payment. However, because any form of media is considered a public space, performance royalties must be paid out, adding additional income on top of sync fees.
Digital Platforms and Performance Royalties
Digital platforms pay their songwriting performance royalties to PROs. However there are also digital performance royalties that specific types of digital platforms must pay.
According to Soundcharts, digital performance royalties can be classified as royalties that “non-interactive” digital streaming services must pay to recording artists. Soundcharts defines “non-interactive” services as platforms where users are not allowed to choose the song (Pandora, IheartRadio, any other digital satellite). Thes digital performance royalties are paid to Soundexchange.
Streaming platforms such as Apple Music and Spotfiy are excluded from paying digital performance royalties. They are, however, still responsible for paying PROs songwriting performance royalties.
Terrestrial Radios and Performance Royalties
As stated previously, radios get a ‘blanket license”. This license allows radios to play any song without paying out royalties for each individual song. Radios, however, must keep track and record all songs played throughout the year and provide it to the PRO in charge.
Public Spaces and Performance Royalties
Like radios, any public space acquires a license. The same process must be repeated with any local space seeking to play music.
Conclusion
Performance royalties are just one of many sources of income available to artists (if they are the rightful owners.) As we continue to build the foundation for knowledge in music, artists should take the time to reflect. Does the artist own their rights to the song? Are artists registered with the right organizations to receive their payments?
Navigating this process can be difficult. Not sure if you are registered with the correct organizations? Let us help you every step of the way.
