music lecture 2 - understanding royalties and copyright

how does recorded music get monetized

through copyright

two types of copyright in the music business

composition and master recording

composition copyright

intellectual property of song. every artist automatically gets one

master recordings copyright

the recorded version of the song

the composition copyright is like the

blue print

the master recording is like

the type of car. a green, silver, etc. car but all drawn from the same design

fast car example

chapman has the composition copyright and her record label has the master. when luke combs did a version chapman had the composition copyright and lukes record label owns the master. luke combs gets very little revenue

why did luke combs perfrom fast car/why do artists perform covers

to gain fans, create fan experience, create broader brand image, he just wanted to do it

owners of composition copyrighty and master recording copyright receive

the revenue streams generated by the recordings

these copyrights are assets that can be

traded like any other asset

revenue stream generated from master recording copyright

master royalties

master royalties

paid out to master copyright owner whenever a reproduction of the original master recording is sold or streamed

- on average about 80% of the sale price goes to master royalties

- the label typicallly owns the master but the artist may negotiate to receive a portion of the master royalties (typical split is 85/15)

anyone who sells recorded music must get a

mechanical license to distribute the music

revenue streams generated from composition copyright

mechanical royalties

mechanical royalties

- paid out to the composition copyright holder whenever a reproduction of the master recording is sold or streamed

- name mechanical royalty is leftover from when all music sales were in physical or mechanical form

- set by the statutory mechanical rate

the mechanical royalty rate is set by

a 3 judge panel called the US copyright royalty board

streaming mechanical royalty rate

the mechanical revenue pool is 15.35 % (set by law). an individual artists share is equal to the total revenue pool/their share of listenship

if the revenue pool of mechanical royalties is 10 mill and the total streams were 100million and an artist had 1 million streams they would recieve how much mechanical royalties

100,000. they had 1% of the streams (1mill/100 mill) and then so they get 1% of the money (.01 X 10 mill)

controlled composition clausre

capped the number of song per album that could receive royalties at 10 songs. reduces mechanical royalty rate to 75% of teh statutory rate. for an artist who would make 100000 in mechanical roylaties it would now be 75k (100k *.75)

revenue streams generated from both the master copyright and composition copyright

performance royalties

performance royalties

- paid out to copyright holder whenever the song is performed live, played in visual media, played on the radio, played in a cofee shop, restaurant, gas station ,etc. anyway public

- split 50/50 between master copyright holder and composition copy right holder

- depends on the number of times a song is played and the audience size

publishing companies

provides an artist with an advance on their mechanical and performance royalties. promotes the music in public places to increase exposure such as in TV and movies. in exchange typically take 50% of the performance and mechanical royalties. all expenses must be recouped out of mechanical and performance royalties before an artist sees their cut. artist still retains composition copyright

sycnh licenses

- a license that allows the licensee to synchronzie the music with some form of visual media

- must be obtained from both copyright holders wheneve a song is used in a movie, tv show, or ad