The Music Business Buddy
A podcast that aims to educate and inspire music creators in their quest to achieving their goals by gaining a greater understanding of the business of music. A new episode is released each Wednesday and aims to offer clarity and insight into a range of subjects across the music industry, all through the lens of a music creator for the benefit of other music creators. The series includes soundbites and interviews with guests from all over the world together with commentary and clarity on a range of topics. The podcast is hosted by award winning music industry professional Jonny Amos.
Jonny Amos is a music producer with credits on a range of major and independent labels, a songwriter with chart success in Europe and Asia, a senior lecturer in both music creation and music business at BIMM University UK, director of The SongLab Ltd and the author of The Music Business for Music Creators.
www.jonnyamos.com
The Music Business Buddy
Episode 39: Understanding Rights Management and Collection
The music industry is rife with complexities, especially when it comes to rights management, and this episode is designed to unpack everything you need to know to ensure you're not leaving money on the table. Join us as we explore the intricate world of copyrights, neighbouring rights, and the pivotal role of collective management organisations (CMOs) in safeguarding your earnings.
We kick off by addressing the foundational concept of copyright and its significance for every music creator. Understanding who owns what is essential to navigating the music business and ensuring that you receive your rightful earnings. Our discussion moves on to neighbouring rights, an often-overlooked area that can represent a substantial revenue stream for many artists.
Ever wondered how performance royalties work? Or how sound recordings impact your earnings? We break these down clearly, providing you with actionable insights to maximize your income as a creator. The spotlight also shines on CMOs, the organizations responsible for collecting and distributing royalties—learn how to align with the right one to ensure you’re fully covered.
Each segment is packed with valuable takeaways and resources that prompt you to consider your own engagement with music rights. The knowledge shared here will help you become more autonomous in your craft. Subscribe now and arm yourself with the information that could make a significant difference in your music career! Are you ready to take charge of your music rights? Join the conversation and let’s dive in!
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The Music Business Buddy. The Music Business Buddy. Hello everybody and a very, very warm welcome to you. You're listening to the Music Business Buddy with me, johnny Amos, podcasting out of Birmingham in England. I'm the author of the book the Music Business for Music Creators, available in hardback, paperback, e-book format. I'm a music creator with a variety of credits I'm a consultant, an artist manager and a senior lecturer in both music creation and music business. Wherever you are, whatever you do, consider yourself welcome to this podcast and to a part of the community. I'm here to try and educate and inspire music creators from all over the world in their quest to achieving their goals by gaining a greater understanding of the business of music.
Speaker 1:Okay, so in today's episode, we are talking about rights management, so we're going to look at things like what collectible rights exist. Where do copyrights sit in relation to things like sound recording copyrights, neighbouring rights, digital performance rights? What is the difference between a PRO and a CMO? All that kind of stuff? Okay, let's get into it. All right, let's start off with what collectible rights there actually are. I see four different categories. I see mechanical rights, digital performing rights, neighbouring rights and copyrights. Let's break them down.
Speaker 1:Let's start with copyright. Ok, so let's just boil this back to a little bit of simplicity for a moment. So song copyright creators have the rights over how their music is used by people and by companies. So if a third party uses a song without permission, it's an infringement of a copyright. So a copyright is defined by the music creator's decision-making process, which led to the composition of these three things lyrics, melody and harmony. Not the arrangement, not the production we're going to come to that later but we're just talking about the compositional rights the. So that's lyrics, melody, harmony of a song. So a songwriter is often referred to as the first owner of a copyright, which means that they wrote the song and before they did anything with it, like assign it to a different party, then they are the first copyright owner. However, if there are multiple creators of a copyright, ownership is split between all the parties and control of copyrights can be assigned to a music publisher. Now, if you're not sure what a music publisher is and what they do, just skip back to episode six, where I have an episode called what actually is music publishing. So feel free to skip back to that right now if you wish, if you want to learn more about what music publishers do. Otherwise, stay with me and go there later.
Speaker 1:Okay, let's move over to neighbouring rights. Okay, so now there's a lot of misunderstanding out there about this subject, right? So, and also where the name comes from. I'm just going to try and simplify this as much as I possibly can. So neighbouring rights relate to the public performance of a master sound recording. So we're now over to the recording. We were in the song a moment ago when we talked about copyright, but now we're into the recording.
Speaker 1:So when a recording of a song is broadcast or played in a public place, neighbouring rights royalties are collected by collective management organisations, often just abbreviated as CMOs, and they're then distributed to master rights owners and performing musicians, so people that played on the recordings. I'll come back to that in a moment. So the process is used to collect master rights royalties, kind of very dependent upon the CMO's protocols and the country in which it's based in or what rights it actually does collect on, because there are some variables to this around the world which I'll come back to in a bit as well. But to put it as simply as possible, cmos identify and track the use of sound recordings. They also negotiate fees with music users that wish to use those recordings of those songs and then they collect and distribute royalties to the rights holders and to the performers that played on those recordings, those recordings.
Speaker 1:So the term neighbouring actually relates to how the rights neighbour those of a compositional copyright when a song is used in public. So compositional copyright royalties are collected by a performing rights organisation and it might be fair to say that this subject is perhaps one of the least understood areas of royalty collection is perhaps one of the least understood areas of royalty collection. It's also probably the fastest growing area of global rights management. I have seen in recent years an increase in the amount of neighbouring rights being collected. In fact, let's just roll back for a moment, back to episode 19, where I was interviewing Jason Tarver, who is a production music composer, and a very successful one at that and a bloody great bloke as well where he talked about this. So he's seen an increase in his neighbouring rights.
Speaker 2:Let's just roll back to this so you can hear what he said. I mean you have three or four basic income streams. As I see it, arguably just three. I mean the obvious one is the PRS. I mean that's where most of the money is now. Mcps, yes, and the third one, which is perhaps a slightly more emerging source, is NR Neighbouring Rights. So I guess, as relates to your question, prs, yes. As relates to the performance royalty, which is very confusing to people, that term, I think performance royalty.
Speaker 1:Yeah, yeah.
Speaker 2:It suggests performance.
Speaker 1:Whereas if you performed it, but only once, and then it was documented and then broadcasted.
Speaker 2:Right, exactly, so let's think of it as performance of the piece of music, not your performance, whereas neighboring rights is your performance on said piece of music and your nr you will receive via. Well, if you collect it yourself, you'll receive it yourself, or if you go via an agent, like most people do, you will see it via your collection agent.
Speaker 1:Interesting stuff. Okay, what a top guy he is. He's lovely Anyway. So there are various collective management organisations, or CMOs, in the world. So in the UK we have PPL, in Germany they have GVL, they have PPCA in Australia.
Speaker 1:There are lots of different variables to what they collect on and their protocols that are attached to it, but in some countries neighbouring rights are often referred to as related rights. So if you hear people talking about related rights, that's usually what they're talking about. Let's break down neighbouring rights, okay. So if we just take the royalties attached to collecting on neighbouring rights, there is a 50% share that goes to a rights holder and there's a 50% share that goes to the performer share. So neighbouring rights are split in two. Right, you've got the rights holder share, which is half, and then the performer share, which is the other half. So the other half the performer share that relates to featured artists, which is the recording artist that released the record that has their name on the record. But there's also non-featured performers and this can be anybody that played on that recording, so that might be a bass player or horn player, so any kind of musician that committed to being a part of a recording and they have performed on that recording. By the way, that also extends to producers that did any programming. So for example, if you've got software instruments, you know somebody had done the programming on those, whether they played a MIDI instrument or clicked something in. That's programming right. So that also would be noted as a non-featured performer.
Speaker 1:Now in the case of an independent artist so ie an artist, a recording artist that is performing and owning their own records that are not signed to a record company both categories of those shares will be distributed to the artist. So in the UK, for example, ppl collects what is referred to as equitable remuneration. I think I've said that right. Equitable remuneration. That's better For performers when their recorded music is performed in public spaces or broadcast in media. So this is a statutory right that in theory cannot be governed by a recording agreement. So PPL revenue for performers is not the same as a royalty. Now, I mentioned earlier that this is a rapidly growing area and Jason testified to that in his own experience. Perhaps the reason for that is because there are now more people more aware of this, more companies that are actively involved in chasing up neighbouring rights royalties. There are more rights management companies now than I think there's ever been before, so there's a lot more awareness of it Now.
Speaker 1:The primary reason why neighbouring rights are often uncollected in many countries is usually in the difficulty of identifying and claiming the royalties due to the lack of information exchange between countries and their CMOs. So another issue concerns differences in neighbouring rights policies and protocols in specific territories, and this is kind of where it gets a little bit confusing, because in theory, if you sign up, for example, to PPL in the UK, then it should be that they collect worldwide on your behalf, or you would hope. But just for instance instance, there is currently no reciprocal agreement in place between ppl in the uk and ppca in australia, because ppca does not recognize the rights of international performers for ongoing royalties as it only collects on domestic performer shares. So this works both ways. As you know, like, for example, australian artists, performers will not see any performance share of their rights collected in the UK. The reasons for this lie in sort of complex jurisdictional issues which, you know, maybe will be solved one day. Who knows, maybe someone's listening to this right now and going that's not right. I need to fix that. If you are that person, give it a go. It should be fixed really, but anyway. So there are complexities like that to be aware of. Okay, there are also digital performance royalties. So let's just simplify this.
Speaker 1:Neighbouring rights are not really recognised in the USA in the same way as they are in many other countries. In case anyone's wondering why, it basically stems from a historical stance that many US-based record labels adopted in the 20th century, whereby they did not wish to charge broadcasters for the use of recorded music, as they saw the benefit, you know, in the free promotion to be gained from their recorded works being used in radio and television. Now, that made perfect sense in the 20th century. It doesn't really perhaps make as much sense in the modern era, but to this day, no royalties are paid out for the use of recorded music in the USA. So performance royalties are collected for the underlying copyrights of the songs, but not for the use of the recordings. I hope that makes sense. Okay, now there are.
Speaker 1:However, there's a bit of a kind of subtext. So there are, however, digital performance royalties that are paid to rights holders for the use of recordings on non-interactive platforms, so that's things like satellite radio, internet radio, and also by digital service providers that stream recordings to the public. So digital performance royalties are collected by CMOs and distributed to rights holders and performers. The primary CMOs for digital performance royalties are let's see Sound Exchange in the USA, resound in Canada, so that's Re. So R-E colon sound, resound in Canada. By contrast, by the way, ppl in the UK distributes royalties to UK performers and rights holders for both neighbouring rights and digital performing royalties. Oh, there's a lot of information there. I hope that makes sense.
Speaker 1:Ok, the final collectible right that exists to think about in this context are mechanical rights, so this is for songwriters and music publishers. Mechanical rights, so this is for songwriters and music publishers. So mechanical rights relate to the reproduction and distribution of songs that sit in either a traditional physical format like a DVD or CD or vinyl cassette, something like that, but also digital formats such as downloads, and also fixed digital formats such as streaming. So the rights are not owned by the performers or the artists or the record companies, but by the composers, the songwriters, the music publishers, those that look after the song copyright and control the song copyright. Mechanical rights, they only relate to that. They only relate to the compositional right and not to the copyright, the sound recording. That can be the confusing area sometimes of people, but users of the composition, so that might be record companies, streaming services, online music stores.
Speaker 1:They must obtain a mechanical license from the rights holder to reproduce and distribute the recorded product of that song. So mechanical rights have no link to the public performance or broadcast of a song. They relate to the units of sales, downloads, streams, the statutory rate for mechanical royalties. It often fluctuates, but to simplify the understanding of those rights, well, let's just put it in context, right? So imagine a commercial songwriter that composes a song for an artist in South Korea. So the artist is including the song on an album, let's say, which is being released by a record company. The songwriter will receive performance royalties for the song through their designated performing rights organisation and will also receive their mechanical royalties. The mechanical royalties will relate not only to streams and downloads but also to the song being reproduced and distributed in physical formats, as it's, you know, often released on a cd and later perhaps a dvd in that particular market. So mechanical rights for music compositions are typically collected by cmos, which are also responsible for licensing the actual mechanical rights to users.
Speaker 1:So in certain specific organisations collect and distribute mechanical rights royalties. So for example, in the UK, the Mechanical Copyright Protection Society, that's MCPS, collects and distributes mechanical royalties to its members, and its members are songwriters, music publishers, composers. The MCPS works together with the Performing Rights Society, which collects on broadcast and performance royalties. So you see how those two are different. One would be for the usage of the song on a kind of broadcast and performance level and the other, being the MCPS, would be when the song is mechanically reproduced in some kind of physical format. So that's not just physical as in traditional physical, remember, this is fixed digital it streams and it downloads as well. So just, you know, collectively those two. They operate as a joint venture CMO called PRS for Music and that administrates both performance and mechanical rights under the same umbrella organisation. But they collect and distribute, as you know, entirely separate entities.
Speaker 1:If you're wondering, by the way, about your streaming royalties here, so if you think about it like this, so all of your streaming royalties are broken down into the 80-20 rule, so 80% of what you earn through your streaming would be in relation to the master recording. So that's why, if you were to independently distribute through, let's say, ditto music, distro, kid, or whoever you're releasing music through, they will be collecting 80% of the income for you. There is a remaining 20% there, obviously, and that relates to the songwriting, the composition, the music publishing side, right? So that relates to the song. So 80% of it relates to the recording, the other 20% relates to the song. Now, there are differences here in different countries, but how this works in the UK is that remaining 20% is collected equally by PRS and MCPS. So 80% recording, final 20%, is split into those two 10s and 10% is collected by PRS. The other 10% is collected by MCPS. If you're wondering why that is, by the way, it's basically to do with the idea that fixed digital is used by mechanically reproduced devices. So if we think of streaming as being sort of invisible in a way, but we need a mechanical device to be able to access it, such as a tablet, a phone, a laptop, and it is for that reason that MCPS jointly collect on that. I hope that helps with that.
Speaker 1:Okay, so on to the collection societies and collective management organisations, right? So collection societies they manage the rights to the music and collect and distribute royalties to rights holders. They don't control the rights. The control belongs to the rights holders. But they do enforce the rights of rights holders and issue non-exclusive licences for the use of music right, non-exclusive licenses for the use of music right, and there are absolutely lots and lots and lots and lots of companies around the world that operate either as a collection society or as a CMO. So, for example, if we were to look at the USA, you've got ASCAP, you've got BMI, you've got SESAC, you've got Harry Fox Agency. On the mechanical side, you've got SoundExchange, who we mentioned earlier. You've got Pro Music Rights we mentioned earlier. You've got pro music rights. These are all companies that collect on different things. I mean askap, bmi and cessat all collect on the same thing, but they're just different people to choose from right, different companies to choose from.
Speaker 1:But let's say, for example, you're dealing with uh, let's say you're in um, I don't know guatemala, then it would be a e I. If you're in jamaica, it would be A-E-I. If you're in Jamaica it would be J-A-C-A-P, j-a-c-a-p. I guess that's how you say that. I may have that wrong. That's how I would say it anyway.
Speaker 1:But you know there's different countries, have different collective management rights organisations or different collection societies, or sometimes both. There is a lot of variation to them. It's fairly easy, by the way, to find out with you know a search engine or maybe chat GPT rather than Google for this, because it'll give a slightly more accurate answer. But if you were to look for the relevant organisations for your country, it should be pretty easy to find. If you don't know, if you can't, you know, find the appropriate organisation for the country that you live in, it doesn't necessarily mean that you don't have one, by the way, or that you can't sign up to one. So it could be that one of the companies covers your territory. So, for example, sacem SACEM or SACHEM in France also extends to French Polynesia, for example, and PRS for Music in the UK also extends to Gibraltar, malta, bermuda, the Bahamas, amongst others.
Speaker 1:There may be even more than that, perhaps. So be sure to just do your research on which organisation covers your geographic location and what rights are covered. So you know. It's worth noting that you know many of the major collection societies only actually cater for the residents of that country that they are based in. So, for example, bmi can collect through ZAMCOPs in Zambia, but COSAN in Nigeria and CODA in Denmark, but will only pay out the collections to US residents that are BMI members. It's never simple, is it? However, many of the collection societies that are listed that you can find have entered into numerous sort of strategic partnerships with each other to facilitate a much wider collection. You know, in theory these could extend further over time to the point where you know maybe they could allow eventually for a much more kind of full global collection for anyone, for anywhere in the world, as, hopefully, as technologies continue to develop.
Speaker 1:The grown-up. Truth, though, is that actually it doesn't always kind of work the way that people think it does. For example, it could be that all of a sudden, let's say, a collection society from a different country gets in touch with you and says, hey, I've got some money for you. Now, you know, in theory it could be that they have the correct kind of protocol in place to be able to go to your CMO. Let's say, if you're UK based, they should, in theory, be going to PPL and going hey, can you assign this to this particular rights holder? That should happen, but it doesn't always because of the kind of the protocols and the different measures and steps between all of those strategic partnerships. So in theory, it should be really really clean, but the truth is it isn't partnerships. So in theory, it should be really really clean, but the truth is it isn't, and so sometimes it just means that other countries might reach out to you and it kind of feels confusing.
Speaker 1:I hope I've explained that well. I mean, there are a few examples that I can recall, even in the past couple of years actually, where people have consulted with me and said why am I getting money from such and such? And you know, kind of look at the tracking of it and go, oh, that's why, in theory, they should be doing this, but they've just come to you. So you know, there are things like that out there that look confusing, but I like to think that in due course in the future, that there will be a much, much more kind of rigorous and also kind of collective system for be able to tracking, you know, neighbouring rights, for example, and it's definitely getting better. It really is. It's considerably better than it used to be, but there is still room for improvement on that and I think it will come. I really do think it will come in the future.
Speaker 1:Okay, so let's just summarise for a minute, right? All that stuff is very, very technical, isn't it? There's a lot to remember, but you just have to apply it to you. Please don't ever think, by the way, if you're thinking well, you know that some of that stuff is not relevant to me right now. I think it is actually because it will be relevant to you in your future. By the very fact that you're listening to this podcast right now, in this moment, wherever you are and whatever you're doing, it should tell you that you actually you're very serious about your music making and where you want to take it in the future. So at some point you will have to know about this sort of stuff, and it's better to know it for yourself than to rely on others to do that collecting for you.
Speaker 1:Yes, there are accountants. Yes, there are lawyers. Yes, there are record companies. Yes, there are managers. Yes, there are lawyers. Yes, there are record companies. Yes, there are managers. There are lots of people. But I like to think that really the book stops with us as music creators, because it's then, and truly only then, that we really understand how the business around our music. Okay, enough of that for now. Please feel free to reach out to me anytime you like, but until then, have a fantastic day and may the force be with you. The Music Business Party. The Music Business Party.
