For independent musicians and songwriters, having a strong understanding of royalties and rights is crucial before you sign a contract with a label or publisher. It is an exciting feeling and a major accomplishment to become a professional musician, but you want to make sure that maximize long-term earnings and control over your music. Read on for all you need to know.
Types of Music Rights
In the music industry, there are two kinds of rights you need to be aware of:
Master Rights
The actual sound recording of a song. The owner of the master recording has control over how it is used and monitored.
Publishing Rights
The composition of the song itself (lyrics and melody). These rights are typically held by songwriters and publishers.
Main Types of Royalties
You can make money from music via a few different royalties, such as:
Mechanical Royalties
Song reproductions, such as CD and vinyl sales and digital downloads.
Public Performance Royalties
Generated when songs are played publicly, including on the radio, in venues, or on streaming platforms.
Sync Royalties
Paid when songs are used in films, TV shows, ads, or video games.
Digital Performance Royalties
Generated when a song is played on digital platforms, such as Pandora and Sirius XM, specifically for non-interactive streaming.
Who Receives Royalties?
There are many professionals who can receive royalties, depending on the contract. This includes:
Recording Artists
Earn from live performances and master recordings.
Songwriters
Receive publishing royalties.
Record labels
Take a percentage of the revenue if they own the masters recording.
Music Publishers
Administer song rights and ensure proper royalty collection.
Importance of Ownership
It is also important to be aware of ownership as you will need to decide whether to retain ownership or your masters or sign them away. Owning your masters gives you full control and will maximize your earnings, but it can be a lot of work and could be limiting, so you need to be prepared for this and have insurance for financial protection. This is why many will sign away to labels who can handle the management and provide funding, marketing, and distribution for a cut.
Contract Consideration
Before putting pen to paper on any kind of contract, you need to evaluate how royalties will be divided, rights ownership, and the duration of the agreement. It will depend on your preferences, but you want to make sure that you are getting paid, retaining some control, and not locking into anything that could limit your flexibility.
It is the life goal of many musicians to sign a professional contract, but it is vital that you have a strong understanding of what this means, particularly in terms of revenue and royalties. This is why it is always recommended that you seek legal advice, read the small print, and make sure that the deal is in your best interests.
