What type of royalties do collecting societies manage?

Posted on 05 Sep 2013 |

Davide D'Atri, Soundreef

When an artist writes a song, they automatically become a right holder and have a number of rights in relation to it. Since it’s expensive and impractical for artists, labels and publishers to manage these rights themselves, most ask a collecting society to administer them. For more about collecting societies, see our previous blog post.

This article will explain what rights an artist has in relation to his or her songs, what can be done with them and which of these rights can be managed by collecting societies.

What rights does my song have?

Every song has two main set of rights as soon as it is created:

  • Composition rights. This means the rights to the actual idea for the composition (that is, the idea for an artist’s song). In the past, musicians wrote their songs down on paper and these rights were designed with this in mind. Most songs are now written electronically, rather than on paper, so this concept has become increasingly difficult for artists to understand, even though it is possibly the most important type of right they have in relation to their music. Composition rights usually belong to the person who wrote the music for the song, and the person who wrote the lyrics for it. The composition rights are often partly assigned  to a publisher by the composers. This is so that the publisher can help the composers publish their song via a record label, or administer the royalties the composer receives when the song is used commercially.
  • Sound recording rights. The right to the sound recording is created when a song is recorded. The person or company that has recorded the song usually owns this. Traditionally, the right to the sound recording belongs to the record label who helped the musician to record the song – that is, the company that paid for it. The distinction between composition rights and sound recording rights is becoming weaker, since musicians tend to write and record their music on their own computers, and usually don’t need someone else to record their music or pay for it to be recorded.

Do I own these rights?

If you wrote both the music and the lyrics, then you own 100% of the composition rights; and if you recorded your song yourself on your computer, or paid for studio time to record it, you own 100% of the sound recording rights. If these composition and sound recording rights belong to you, then you don’t need to license or sell those rights if you don’t want to.

Whatever people tell you, you must remember that you can choose whom you want to use those rights and the terms of the agreement. If a company you want to work with tells you that you have to assign 50% of your rights to a publisher, or that you have to assign certain rights to a collecting society or something similar, remember that you don’t have to do it! You own your rights in the same way as you own your instrument: they are yours and you can choose what you do with them. There are no rules that you have to follow when you sell or license your own rights – you only need to follow rules after you’ve signed a licensing agreement.

What type of rights do collecting societies manage?

As well as managing composition and sound recording rights, collecting societies manage other rights on behalf of artists, labels and publishers. These are:

  • Digital rights. These rights relate to music being used on the internet. For example, streaming via platforms such as Spotify, YouTube and internet radio.
  • TV rights. If a film is shown on TV and the film has a right holder’s song in it, the right holder should be able to collect their royalties through their local collecting society.
  • Radio rights. Right holders should be paid a royalty when their songs are broadcast on the radio.
  • The right to create CD copies.
  • Live events rights. Right holders should be paid a royalty each time their songs are played in a concert.
  • Background music rights. Right holders should be paid a royalty each time their song is played in a store.

These rights might be given different names in copyright law and in a collecting society’s agreement, so make sure you understand what each term means in any agreement you sign.

Traditionally, European collecting societies made an agreement with artists which meant that the society administered all these rights as one bundle, and would only agree to work with artists if they could do this. However, things are changing and artists are starting to unbundle these rights. In the same way that you don’t have to buy a mobile phone, landline, fax, cable TV and broadband from the same company, you don’t have to ask one collecting society to handle all the rights to your music. Some artists, labels and publishers still find it useful just to deal with one company, but it generally isn’t the best way, especially if they want to make money from their music and get it heard.

You should be able to license your music to the best company for you, depending on the level of service you receive for each specific music right. You can limit your agreement with your own national collecting society, asking them to collect for only some rights and not others. Soundreef can help you do that for background music rights (though we suggest you stay with your own national collecting society for all the other rights).

Royalties from Soundreef

Soundreef collects royalties for artists, labels and publishers when their music is used as background music in stores. We’re also planning to start collecting royalties when our artists’ music is used for live events. Our efficient and transparent system uses the latest technology, allowing us to show our artists exactly how much their music is being played and where, so that they know they’re getting paid fairly and on time, something that traditional collecting societies can’t do yet.