Types Of Music Royalties Explained / Split Sheet
There are different types of music royalties in the music business.
In our previous lesson, I explained the concept of music streaming royalties, the mode of operation and many more.
Also, the breakdown between music right and streaming royalties were clearly explained in our previous lesson.
In this very lesson, I would be breaking down the types of music royalties and split sheet in details.
NB: Information pertaining to the types of music royalties is somewhat complicated , sometimes same type of royalty could be paid in a different manner, depending on the context of use.
Now, lets begin with the breakdown on the types of music royalties before we move to the concept of split sheet.
Basically, there are six (6) main types of music royalties.
The Six Types Of Music Royalties
1. Streaming Royalties
Streaming Royalties is the type of music royalties that musicians make whenever the music are steamed on streaming platforms like spotify, itunes, google play, pandora, tidal, Shazam, boomplay, audiomack, soundcloud, apple music and many others.
NB: One must sign up with music aggregators or distributors in order to get their recordings (music) copyrighted and monetized on the digital music streaming platforms.
2. Mechanical Royalties
Mechanical Royalties is the type of royalties Musicians make anytime their copyrighted composition is duplicated or reproduced and distributed in either physical or digital form.
Example includes; the reproduction of cassette, compact disks (CDs), copying or downloading of songs, Vinyl, amongst others.
3. Neighbouring rights and Royalties
Take note, there are two basic types of copyright in music;
a. Composition right
b. Sound recording right
Neighbouring right is very similar to public performance royalties, except that the royalties of neighbouring rights are paid out to the copyright holder of the sound recording, performing artists and or recording labels.
Neighbouring right royalties are collected by Publishing Right Organizations (PROs), such as Ascab, BMI, SESAC, PRS, etc in their respective market, and then distributed to sound recording owners.
In most part of the world like Ghana, terrestrial radio does not Compensate sound recording owners – whereas airplay in other countries does generate neighbouring royalties.
4. Public Performance Royalties
Public performance royalties are royalties that are collected when portion of a song composition is featured or played in a commercial environment.
Public Performance Royalties can be categorized into two main sessions;
a. The royalties paid by music streaming services.
b. Royalties generated by conventional public broadcasters such as Tv channels, clubs, pubs, radio, restaurants, venues, etc.
The Public Performance Royalties are also managed, collected and distributed by Publishing Right Organizations (PROs).
(Public Performance Royalties have a broader concept beyond this article, In our next article Kingsmotion would give a detailed account on how it works and how artists can patronize to increase their earnings).
5. Sync Licencing Fees
Sync licensing royalties are paid out when music is synchronized to any other type of content, including video content for ads, TV shows, movies, video games, and — though this is pretty rare — audio-only sync. Anytime a song is used memorably as a component of any other type of content.
In order to sync a song, music users need to get a license from both sound recording and composition owners — accordingly, the owners of both subsets of music copyrights earn money on sync licensing (which makes sync licensing different from other types of royalties).
6. Digital Performance Royalties
Digital royalties are the type of royalties or fees that service providers such as Pandora, SiriusXM, and webcasters are required by law to pay for streaming musical content. These types of royalties are paid by the services to SoundExchange, and accompanied with playlists of all the recordings played by the service provider.
How Royalties are Divided
Under the law, 45 percent of performance royalties are paid directly to the featured artists on a recording, and 5 percent are paid to a fund for non-featured artists. The other 50 percent of the performance royalties are paid to the rights owner of the sound recording.
The concept of music split sheet / how split sheet works
While perhaps not appropriately made due, the method involved with working together in the production of a song can work up pointless lawful dramatization.
A split sheet is a composed understanding between individuals engaged with the production of music. It recognizes every contributor and lays out possession rates among them. In most cases, a larger part of specialists and makers in Africa don’t actually utilize split sheets.
The percentage settled upon in a split sheet are significant because they direct how much every contributor would get in royalties.
A split sheet is generally drawn up between the writer, publisher and producer, although the most essential of split sheets would include only the composer of a music work.
The offers in percentages are split further in situations where extra contributors are involved.
“All around the world split sheets are acknowledged as the best practice in the music business.
A well-constituted split sheet ought to safeguard the rights of all parties and should have every one of the components of a copyright contract.”
A larger part of creatives are loath to administrator and a considerable lot of them approach lawful issues with unresponsiveness.
Various creatives likewise find it hard to talk about how potential pay ought to be shared; raising a split sheet after an astonishing studio meeting can alarm.
This inclination, nonetheless, frequently catches up with artists after the publicity of the innovative strategy has passed. Whenever money comes into the image, legitimate debates frequently become the dominant focal point.
This is an obstruction for financial backers who would rather not engage in messy, and expensive litigation.
Conclusion on the types of royalties
If you are an artists, you should make sure that you are collecting all the types of music royalties explained above.
Its somewhat difficult to monitor and collect all these types of royalties by yourself and that is why you should sign up with the respective music agencies / music distributors to collect all your royalties.
If you are featured on a music as an artist, you should always make good use of the split sheet to collect all desired royalties.