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Royalties in Music Industry

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Yuki Morimoto

on 22 August 2013

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Transcript of Royalties in Music Industry

Royalties in Music Industry
Three Major Royalties
Performance Rights and Royalties
The Major Players
Live Performance
Internet & Satellite Broadcast
Synchronization Rights and Royalties
The right under copyright law to synchronize music with motion pictures for the purpose of distribution
Mechanical Licenses and Royalties
Royalties earned by a copyright holder for the sale of music through“mechanical” devices such as phonorecords
Mechanical Licenses and Royalties
How do Artists and Musicians make money?
Synchronization Rights and Royalties
Who are involved in Royalties?
1. Songwriter
2. Publishers
3. Performer
4. Record Label
Performance Rights and Royalties
The songwriter is the person (or people) who write the lyrics and melody for songs.
The publisher is the person (or company) who works with the songwriters to promote their songs.
1. Marketing
2. Sale
3. Copyrights
4. Catalogs
Anyone who licenses the song in order to publicly perform it is the performer, or performing artist.
Elvis Presley
Red Hot Chili Peppers

The recording company creates, markets
and distributes the recordings.
(Image Source: J9's MusicLife )
A performance-rights license allows
music to be performed live or broadcast
Performance Rights Organization in USA
1. The American Society of Composers, Authors and Publishers (ASCAP)

2. Broadcast Music, Inc (BMI)

3. Society of European Stage Authors and Composers (SESAC)

4. SoundExchange <Only Digital Broadcast>
Songwriters & Publishers
ッレRecent Trend (ASCAP Annual Revenue)
$985 million
$995 million
$935 million

$941.7 million
A Stable Earning Source for the Music Industry
Digital Media (SoundExchange)
Pandora, Spotify, ITunes Radio, Satellite TV & Radio
1. Cassette Tape
2. CD
3, Vinyl
4, Digital Download (ITunes, Amazon etc )
1. Songwriter
Create a song (Demo)
2. Publisher
3. Record Label
4. Recording Artist

Recording Contract
(8% - 25% of the entire Record Sales)
5, Retailer
Selling the products to customers
Send the demo to the Library of Congress
Copy Rights
(Owned by Publishers and Songwriters)
Products (CD, Vinyl,Data)
Harry Fox Agency (HFA)
Songwriter &Publisher
songwriter and publisher split mechanical royalties 50/50 for each record sale
ex) CD $15
Recording & Mastering
Master Rights
(Owned by Labels and Artists)
25% Packaging & Distribution
Fees ($3.75)
Royalty Base $11.25
If 1 million copies are sold and Recording Contract is 10% (11.25 x 1000000 x 0.1 = $1,125,000)
10% Freebies, So $1,125,000 x 0.9

$1,012,500 (Recording Artists)
11.25 x 1000000 x 0.9 (90%) x 0.9 (90%) =
$9.112.500 (Record Label)
Record Label

Mechanical Royalties
$.08 for songs 5 min or less in length
$.0155 per minute for songs that are over five minutes long
Work & Money Flow
<Statutory Rate>
Recent Trend
The Music Industry diminishes year by year
A U.S. mechanical agency founded by the National Music Publisher's Association as an information source, clearinghouse and monitoring service.
1, Sound Tracks of Movies
2. Background Music for TV Shows or Commercials
3. Live Performances like Theaters and Plays
4. Webcasts
1. Illegal Downloads
2. Online Streaming Services

According to the Recording Industry Association of America (RIAA),
30 billion songs
were illegally downloaded between 2004 and 2009.
$0.07 to $0.1per song
$0.005 per stream
Thom Yorke (Radiohead, Atoms For Peace)
This guy is really mad at the online streaming services
He pulled out both his solo's & Atoms for Peace's Catalogs from Spotify
Still do not have an established earning structure
Can be lucrative if they open up more distribution channels all over the world like iTunes (35 countries, 2013)
Pay too little to artists!!!!!!!! Raise the royalty rate!!!!!!!!
Keep the royalty rate low until Spotyfy is established!!!!!!!
23 times!!!
Song Structure, Melody and Lyrics
1. Songs from original recording
2. Cover Songs
Copyrights (Songwriter and Publishers) and Master Rights (Record label and Recording Artists)
Copyrights (Songwriter and publishers)
Current Trends in both traditional and digital medias
1. Work & Money Flow 2. Copyrights 3. Master Rights
Work Cited
Bourreau, Marc, Michel Gensollen, François Moreau, and Patrick Waelbroeck.
"Journal of Cultural Economics." ABI/INFORM Complete. Springer Science & Business Media, Aug. 2013. Web. 10 Aug. 2013. <http://libproxy.csun.edu/login?url=http://search.proquest.com.libproxy.csun.edu/docview/1400587723?accountid=7285>.

Koebler, Jason, and Elizabeth Flock. "Google Makes Searching for Illegal Content
More Difficult After Pressure From Movie, Music Industry." U.S News & World Report. N.p., 10 Aug. 2012. Web. 11 Aug. 2013. <http://www.usnews.com/news/articles/2012/08/10/google-makes-searching-for-illegal-content-more-difficult-after-pressure-from-movie-music-industry>.

Luckerson, Victor. "Radiohead’s Thom Yorke Leaves Spotify. Will Others Follow?
Read More: Http://business.time.com/2013/07/16/radioheads-thom-yorke-leaves-spotify-will-others-follow/#ixzz2biHBhPyW." TIME. TIME, 16 July 2013. Web. 11 Aug. 2013.

Obringer, Lee Ann. "How Music Royalties Work." HowStuffWorks. N.p., n.d. Web. 10 Aug. 2013.

Roisen, David. "Music Industry Groups Draft Online Royalties Agreement.
"ABI/INFORM Complete. N.p., 25 Sept. 2008. Web. 9 Aug. 2013. <http://libproxy.csun.edu/login?url=http://search.proquest.com.libproxy.csun.edu/docview/884355129?accountid=7285>.

Sisario, Ben. "As Music Streaming Grows, Royalties Slow to a Trickle." The New York Times. The New York Times, 18 Jan. 2013. Web. 9 Aug. 2013.

Strasser, Richard. "Mechanical Royalty." Music Business: The Key Concepts. London: Routledge, 2010. 92. Print

"Music Downloads Do Not Trigger Performance Royalties." ABI/INFORM Complete.
American Society of Composers Authors & Publishers--ASCAP, Aug. 2007. Web. 10 Aug. 2013. <http://libproxy.csun.edu/login?url=http://search.proquest.com.libproxy.csun.edu/docview/222870795?accountid=7285>.

"SoundExchange Releases List of Recording Artists and Record Labels with
Unclaimed Digital Performance Royalties." ABI/INFORM Complete. PR Newswire Association LLC, 15 Aug. 2012. Web. 10 Aug. 2013. <http://libproxy.csun.edu/login?url=http://search.proquest.com.libproxy.csun.edu/docview/1033469419?accountid=7285>.

"SoundExchange Announces $204.4 Million in Digital Royalties Paid Since Beginning
of 2012 to Artists and Labels." ABI/INFORM Complete. PR Newswire Association LLC, 23 Aug. 2012. Web. 10 Aug. 2013. <http://libproxy.csun.edu/login?url=http://search.proquest.com.libproxy.csun.edu/docview/1034697509?accountid=7285>.
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