Who collects my royalties? – Laws Regulations

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Collection Royalties Music Law Intellectual Property

Who collects my royalties?

Royalties are collected depending on the nature and source of the revenues. There are four (4) potential types of royalties in the music recording and music publishing industry:

(1) Mechanical Royalties: Domestic (US) mechanical royalties are collected by domestic record companies for records sold. Foreign mechanical royalties are collected from foreign Performance Rights Organization (“PRO”) by sub-publisher(s) for records sold in their territory.

(2) Performance Royalties: Domestic (US) performance royalties are collected by one of the three main Performance Rights Organization: (1) ASCAP; (2) BMI; and (3) SESAC. These PRO’s issue blanket licenses to music users for publicly performing their songs in the operation of their businesses and broadcasts. To ensure prompt and timely payment of performance income from a PRO, each songwriter and music publisher must first join as a member and properly register their songs and current whereabouts.

Foreign performance royalties are collected by foreign, government-owned PRO’s. To ensure prompt and timely payment of performance income from a foreign PRO, each songwriter and music publisher should enter into a “sub-publishing” agreement and properly register their songs and current whereabouts with the sub-publisher in each territory their songs are performed. The foreign performance societies contact each sub-publisher in their territory and request they designate an agent for the performance rights in all their songs. They then contact the users of those songs in their territory (e.g. local radio stations, nightclubs, TV, etc.), and grant them performance licenses to use all the songs of all the sub-publishers they represent. The foreign PRO’s then collect and pay the publisher’s share of performance income to sub-publishers, and pay the writer’s share to one of the American PRO’s (ASCAP, BMI or SESAC), which then pays the artist. If there is no foreign sub-publishers, the publisher’s share eventually is paid to the US music publisher via one of the American PRO’s, but this process takes much longer.

(3) Synchronization Fees: Synchronization fees are collected by the song writer and/or music publisher that grants a synchronization license to users or broadcasters of the songs, which then create a derivative audiovisual work in the form of movies, TV programs, commercials, etc.

(4) Print Music Income: Print music income is collected by the song writer and/or music publisher that grants a print music license to music printers which then prints sheet music or folios.

(Reprinted with permission of Ruben Salazar, Esq.)