If you are an independent artist and you already know what are royalties in music, it’s time that you understand how are royalties split on a song. There are different categories of royalties in music, like Performance Royalties, Mechanical Royalties and Sync Royalties. They can either be reserved for the songwriters and the publishers, or for the artists that played on the master and producer. In some cases, the same royalties goes to both parties. If you are the only songwriter of your music and you record and produce it on your own, the royalties are all yours! You own 100% of it. However, if there are more people involved in the making of your art, you should probably know how your royalties will be split.
Composition Copyright and Sound Recording Copyright
Let’s start by understanding that there are two different kinds of copyright regarding the composition and the sound recording. The first one is the Sound Recording Copyright, which goes to whoever recorded “the master”. It is about the actual sound recording of the music, and not the song or composition. Either the musicians playing on the record or the record label can own these royalties.
The other type of copyright is about the composition, or the “song”. It’s not about who is playing it, but about the actual songwriters. Either the songwriter or the publishing company can own these copyrights. So if you write a song and another artist covers it, you are still going to own the composition copyrights. However, you are not going to own the Sound Recording Copyright. That’s for the artist who’s playing your composition. The same goes if you cover somebody else’s song. You will get the Sound Recording copyrights, but not the Composition copyrights. If the artist has a publishing company or a record label, the publishing company may own the composition copyright and the record label may own the sound recording copyright.
How are sound recording royalties split on a song
“Producer Points” is a term you’ll definitely come across if you are researching how your royalties are split. They are basically the percentage of the royalties the producer of your song is going to get from your sound recording royalties. It’s usually major record deals that work with this point system. If you are an indie musician, you probably won’t need to worry about that. Producers typically get anything from 3 to 7 Producer Points. That means that if the artist gets, for example, 20% of the royalties in a record deal and the producer gets 5 points, the producer is getting 25% percent of the artist’s share of the royalties. That’s because 5 points equals 25% of the artist’s original 20%. The label still keeps 80%.
For indie recordings, the system is usually based on the percentage of the net royalties, not on producer points. In an indie deal, the producer may get, for example, 20% or 25% of the artist’s net royalties. The result is actually not that different from the point system, where 5 producer points out of the artist’s 20 points equals 25%.
The producer may also get an upfront fee for their recording services. This fee is negotiable and can vary depending on the producer’s percentage of the net royalties. If you have money for a larger upfront fee, say $2000, you may negotiate a smaller percentage of the net royalties for your producer. The same works if you don’t have that much money for the fee. You can negotiate a smaller upfront fee and a larger percentage of your net royalties to your producer.
How are composition royalties split on a song
As we just saw, producers get the royalties from the recording of the music, or “the master”. The publishers, however, get the royalties for the composition, or “the song/songwriting”. So whoever writes the song owns the composition copyright. This goes for both the lyrics and the music. As you know, the process of writing a new song may involve more than one person. In this case, every artist involved in the composition process has a right to receive composition royalties.
Of course this is especially conditioned to the songwriters personal negotiation with artists involved. Traditionally, even if a person just contributed one or two words for the whole music, they will probably get an equal share of the copyright as everybody else. If four musicians, for example, write a song together, they will divide the composition royalties four ways.
If the producer helps write the song, they will also get publishing rights. But only if the producer actually helps write it. Otherwise producers will just get the Sound Recording Copyrights. This is true for most musical genres.
In the rap world, however, publishing splits a bit differently. If the producer writes the beat, they will sometimes get 50% of the composition royalties. The other musicians, like the lyricists, will have to share the other 50% that are left. Remixes royalties also work differently. The artist that remixes the music often receives a fixed amount of money to do the remix and no rights for the royalties whatsoever. Those still belong to the original writers.
Publishing rights and how they are split on a song
Now that you know how publishing royalties are split on a song, let’s talk about how they are generated. Basically, every time someone other than the copyright owner uses the music the songwriter receives royalties. So let’s say that you wrote a song by yourself and you own 100% of the publishing royalties. Whenever someone streams your music on downloads it online generates publishing money. The same goes for when someone performs your music live, presses it to a CD or vinyl, plays it on the radio or television.
Performance royalties are shared 50/50 between the publisher and the songwriter, so each gets 50% of the revenue. If you are both the songwriter and the publisher for your own music, you will receive 100% of performance royalties. These royalties are generated from live performances, FM/AM radio plays and internet radio plays.
For mechanical royalties it’s the same thing. Assuming you are both the publisher and the songwriter of your music, you’ll get 100% of mechanical royalties. These royalties come from streaming, digital downloads and physical copies of your music, like CDs and vinyl.
In order to receive the correct amount of your publishing royalties as a songwriter, you have to register your own share with your publishing company. The same goes for all the other songwriters in a composition. If you participate in the writing of a song with 3 other artists, each songwriter has to register the percentage they are getting with their own publishing companies. This is an important step, because as an independent musician nobody is going to register this for you. You have to do this yourself, so don’t forget!
Magroove can help you even better
This is a complex subject, but there are tools to help you deal with your royalties. Magroove can help you collect all your digital royalties from services like Spotify, Deezer, Apple Music and Tidal. You get 100% of your royalties and we distribute your music to the biggest platforms. With Magroove, you will also have access to a website builder tool, so you can easily set up your band’s website. Check out our blog for more information about royalties and the music industry.
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