Republic Network 13th Jan 2022

How to make money from your music: royalties, part 2

Royalties feature in the second chapter of "How to make money from your music", this time focusing on who is entitled to them and what the processes are for claiming them.

A few weeks ago we launched our series “How to make money from your music“. And we did so with a chapter dedicated to explaining what royalties arehow many types there are and what each of them consist of. A blog entry that allowed us to remedy the misunderstanding that seems to prevail around this topic within the music and entertainment industry. And above all, to establish the basic knowledge that will help you take your career one step further on the road to success.

Royalties are again the main topic of today’s chapter. This time we focus on unravelling who is entitled to them and what are the processes for claiming them. As in the first chapter, we will focus on the four types that we consider most relevant: performance royaltiesmechanical royaltiessynchronization royalties and streaming royalties.

Before going into each of them, we should first clarify some concepts. The author refers to the person who has participated in the creation of the original composition. The publisher, on the other hand, is the owner or administrator of the production rights of that composition. And the record company, if one, is the owner of the rights to the recording of that same composition. Three figures that in practice could be one single person. Let’s see how it works for each of the royalties.

Performance royalties

The income generated by an original composition on the basis of performance royalties is divided into two equal parts. The author(s) receive 50% and the publisher(s) receive 50%.

What is the process to claim this royalty?

You have to register with a copyright management society (SGAE, ASCAP, BMI, SACEM, PRS for Music…). All those who use an original composition in a public way, be it radio, television, streaming platforms, clubs or restaurants, pay general licenses to these collecting societies. And then they take care of the distribution accordingly.

Important: An artist can be both the author and the publisher, i.e. they can receive the entire income from this royalty. However, it is essential that he or she is registered as his or her own publisher. Otherwise, the remaining 50% is lost. How do you know if you are both author and publisher? It ‘s very easy. If you have never sold the production rights of your original composition, you are a publisher.

Mechanical royalties

The income generated by an original composition on the basis of mechanical royalties belongs entirely to the publisher(s). Although it is true that there are some internal subdivisions. The mechanical royalties that belong to the composition are divided 50% to the author(s) and 50% to the publisher(s). And the mechanical royalties that belong to the master or recording are divided between the performer/s and the owners of the rights, which are usually the record companies.

What is the process to claim this royalty?

You have to be affiliated to collecting societies, MRO: Mechanical Rights Organisation (MCPS, Harry Fox Agency, SACEM, GEMA…). We use the plural because you have to be affiliated to multiple collecting societies from different countries and, as you can imagine, this involves a lot of bureaucratic procedures in several languages.

Important: As with performance royalties, an artist can receive 100% of the corresponding revenues.

Synchronization royalties

The revenue generated by an original composition on the basis of synchronization royalties is divided in two. 50% goes to the publisher and 50% to the owner of the rights to the original recording.

What is the process to claim this royalty?

In the first chapter we explained that “synchronization royalties are the royalties you receive when an element in which you hold copyright to is included in or synchronised with visual media“. This implies that in almost all cases there is an agreement prior to the use of the original composition in such visual media.

Streaming royalties

The revenues generated by an original composition on the basis of streaming royalties come from different sources. On one hand, there are those linked to performance and mechanical royalties whose claiming processes we have already seen. On the other hand, there are those related to the streaming itself, which belong exclusively to the owner of the sound recording.

What is the process to claim this royalty?

Royalties from streaming will be paid by our chosen distribution company, or if we have a direct licence, we will be paid by DSP itself. For mechanical and performance royalties from streaming you need to be affiliated to multiple management societies in different countries in various languages.

Once again, bureaucracy seems to stand between artists and the income they are entitled to from their music. That’s why there are platforms like Republic Network where we make sure that our clients receive all the money they are entitled to from all countries without losing any percentages along the way.

Republic Network

Republic Network is a technology company with offices in Estonia, Spain, the Dominican Republic and Colombia, endowed with a highly qualified professional team in different sectors of the music and entertainment industry.