Benjamin E
Member
The buzziest word in music this year is the one that used to be the most utterly boring.
Copyright — ownership of songs and albums as creative works — is a riotous knot of rules and processes in the music industry, with the players much more numerous and entangled than the ordinary fan might think. But between Congress mulling over the much-anticipated Music Modernization Act, plagiarism battles between major songwriters raging and Wall Street scrutinizing Spotify’s lack of profitability as a public company, it’s helpful to have at least a basic understanding of music’s U.S. financial system in order to ponder its future.
To begin with: “Royalties” are the sums paid to rights-holders when their creations are sold, distributed, embedded in other media or monetized in any other way. Here’s Rolling Stone‘s guide to how musicians, songwriters and producers in the digital era actually get their hands on that money.
Recording and Writing Music …
For music listeners, a song is a song is a song. But for the music business, every individual song is split into two separate copyrights: composition (lyrics, melody) and sound recording (literally, the audio recording of the song).
Let’s start with the latter. Sound recording copyrights are owned by recording artists and their record labels. There are further distinctions between different types of sound recording licenses that generate royalties, such as performance rights (for a song’s play on formats such as streaming services, AM/FM radio, satellite radio and Internet radio) and reproduction rights (for sales of physical CDs or digital music files) and sync rights (for song use in film, television and other media) — but for the most part, what matters is that this copyright only belongs to artists and whatever label is behind them.
Those parties may have nothing to do with the people who write the lyrics and melody of the song and thus own the composition copyright. Sometimes they’re one and the same, in which case that lucky party gets double the cash flow. If they’re separate — as is the case with most pop songs and chart-topping hits — the sound recording copyright is split between artists and record labels, while the composition copyright is split between whatever songwriters and publishers are involved. In the case of Counting Crows’ “Big Yellow Taxi,” for example, the band takes sound recording royalties but Joni Mitchell, the song’s original writer, gets composition royalties.
For the majority of times when somebody listens to a song, both types of copyright kick in, generating two sets of royalties that are paid to the respective parties. Here’s a handy chart, put together by Citigroup’s research team in a recent report on music finances, that shows how both types of copyright generate and receive money:
Copyright — ownership of songs and albums as creative works — is a riotous knot of rules and processes in the music industry, with the players much more numerous and entangled than the ordinary fan might think. But between Congress mulling over the much-anticipated Music Modernization Act, plagiarism battles between major songwriters raging and Wall Street scrutinizing Spotify’s lack of profitability as a public company, it’s helpful to have at least a basic understanding of music’s U.S. financial system in order to ponder its future.
To begin with: “Royalties” are the sums paid to rights-holders when their creations are sold, distributed, embedded in other media or monetized in any other way. Here’s Rolling Stone‘s guide to how musicians, songwriters and producers in the digital era actually get their hands on that money.
Recording and Writing Music …
For music listeners, a song is a song is a song. But for the music business, every individual song is split into two separate copyrights: composition (lyrics, melody) and sound recording (literally, the audio recording of the song).
Let’s start with the latter. Sound recording copyrights are owned by recording artists and their record labels. There are further distinctions between different types of sound recording licenses that generate royalties, such as performance rights (for a song’s play on formats such as streaming services, AM/FM radio, satellite radio and Internet radio) and reproduction rights (for sales of physical CDs or digital music files) and sync rights (for song use in film, television and other media) — but for the most part, what matters is that this copyright only belongs to artists and whatever label is behind them.
Those parties may have nothing to do with the people who write the lyrics and melody of the song and thus own the composition copyright. Sometimes they’re one and the same, in which case that lucky party gets double the cash flow. If they’re separate — as is the case with most pop songs and chart-topping hits — the sound recording copyright is split between artists and record labels, while the composition copyright is split between whatever songwriters and publishers are involved. In the case of Counting Crows’ “Big Yellow Taxi,” for example, the band takes sound recording royalties but Joni Mitchell, the song’s original writer, gets composition royalties.
For the majority of times when somebody listens to a song, both types of copyright kick in, generating two sets of royalties that are paid to the respective parties. Here’s a handy chart, put together by Citigroup’s research team in a recent report on music finances, that shows how both types of copyright generate and receive money:
