Radio - Understanding How to Profit from the Digital Performance Royalty

By George Howard

As discussed in previous articles when an author creates an original work, and then “fixes” that work in a tangible medium (writes it down or records it), the author has created a copyright, and is granted six exclusive rights.  Each right is important for different reasons, and each ties directly to potential revenue streams that are crucial for artists to understand in order to build sustainable business models around their creative output.

This article highlights an anomaly with respect to United States copyright law as it relates to the exclusive right to publicly perform copyrighted material (in particular, when your music is “publicly performed” – i.e.played - by AM and/or FM radio).  The goals of this article are: 1. To increase awareness of the rules around this public performance royalty; 2. To provide suggestions on how artists can best focus their energies in the ever-evolving landscape.

The Exclusive Right to Publicly Perform a Copyrighted Work

When you write a song and record it or write it down, it automatically gets protection under U.S. copyright laws.  One of these laws states that no one else can “publicly perform” your song without paying you.  As one example, the exclusive right to publicly perform a copyrighted work means that only the copyright holder of the song (the songwriter) may, for instance, play the song in a club. Additionally, it means that in order for a radio station to broadcast that artist’s copyrighted song, the radio station must have an agreement in place with the artist. Same deal if, for instance, a TV station airs a show in which a copyrighted song by the artist plays during, for example, the opening credits or in the background of a show.

AM/FM radio stations get the right to pay and publicly perform a song by paying a Public Performance Organization.

The Public Performance Organizations (PROs): ASCAP, BMI, SESAC

In order for the above to take place, clearinghouse agencies were created – that is, a place an entity can go that represents a whole lot of songwriters.  In the United States, these agencies are known as Performance Rights Organizations (PROs).  There are three dominant ones in the United States: ASCAP, BMI, and SESAC.  Each does the same thing: they act on behalf of the songwriters who have affiliated with them, and issue licenses to those who wish to broadcast (i.e. publicly perform) these artists’ copyrighted songs.  Further, these PROs distribute the money they collect in license fees from these broadcasters to their affiliated writers whose copyrighted songs are publicly performed.

For instance, club owners pay the PROs a flat annual license fee that allows artists to perform copyrighted music in their club.  This is how any artist is able to stand up on any stage (assuming the owner of that stage has paid the PROs their license fee) and sing a Bob Dylan song.  The PROs use a variety of methods (including visiting clubs) to determine which songs are being publicly performed. 

In a similar fashion, the PROs monitor radio play (via playlists submitted by the radio stations) and music played on TV (via “cue sheets” submitted by the networks) in order to determine which of the writers who have affiliated with them (i.e. the PRO) is having their copyrighted works publicly performed.

The United States’ Inconsistent Stance on Performance Royalties

Hopefully, to this point, this all seems (relatively) clear and logical.  If it’s not clear, please review this prior article [http://blog.tunecore.com/2010/09/your-public-performance-rights.html]. There is a wrinkle.  Recall that for each song, there are two copyright holders – the songwriter is one,  The second is the entity that controls the right to the actual recording of the song (traditionally a record label). 

For all of the above, only one copyright holder gets paid: The Songwriter.  This means, for instance, that every time Frank Sinatra’s version of Paul Anka’s song “My Way”* is played on radio, broadcast on TV (for instance, if it’s playing in a scene on a TV show), or (when he was still alive) performed by Sinatra in concert it is Paul Anka (and, assuming he has one, his publisher) who receives the public performance royalties from the PRO, and not Frank Sinatra. 

It’s important to be clear here:  Frank Sinatra, obviously, got paid a fortune when he performed in concert.  However, in order for the venue where these copyrighted songs were publicly performed to not infringe upon the songwriters’ exclusive right to publicly perform their copyrighted works, they (the venues) have to pay a license fee to the PROs who represent the songwriters.  Similarly, when Frank Sinatra’s records are played on the radio, it may increase sales, which results in Frank Sinatra’s estate earning royalties from the record label.  However, Frank Sinatra (or his estate) doesn't see a dime from the public performance of “My Way”; Paul Anka — via the PRO with whom he is affiliated, and who collects fees from the radio stations and pays out to its affiliated writers — makes money every time the song is played on terrestrial radio.

The disquieting detail is that every industrialized country except the United States has a public performance right that is paid to the Sound Recording Copyright Owner (typically, the label).  This means that not only the writer, but also the label/performer gets paid when a song is broadcast on terrestrial radio or analog TV.

Further unsettling is the fact that when American-made music is played overseas, other countries collect royalties for it, but don’t pay American artists, because we don’t collect for artists here (only writers).

In the example above, if Paul Anka’s song “My Way” is recorded by Frank Sinatra, and the song is played on the radio in France, money is paid to a French PRO for BOTH the songwriter and the label/performer.  The French collection agency then gives the U.S. PRO the money for the songwriter NOT for the label/performer.  The U.S. PRO then gives a % of the money it collected to the songwriter.

Reforming the Performance Royalty

As you would expect, there are initiatives afoot to normalize the United States’ stance on public performance; most specifically, bill S. 379, the “Performance Rights Act.”  Here is a letter from Senator Leahy supporting granting copyright owners and performers a public performance right when their sound recordings are transmitted by over-the-air-broadcast stations. 

The debate — as all are — is complicated, and opponents to the bill argue that such legislation would essentially put those terrestrial radio stations who are still playing music out of business or push them towards talk radio.

The important distinction is that it is only AM/FM terrestrial (i.e. non-digital) broadcasters who are exempt from paying a public performance royalty to copyright owners and featured performers of sound recordings.   If music is played on Pandora, satellite radio, via a net simulcast etc, both the songwriter and the label/performer get paid. 

The Digital Performance Right in Sound Recording

The Digital Performance Right in Sound Recordings Act of 1995 and the Digital Millennium Copyright Act of 1998 (DMCA) granted a performance right in sound recordings for certain digital and satellite transmissions.  This means, generally, that whenever a song is streamed (in a non-interactive manner — i.e. without the listener’s ability to rewind, etc.) online, not only must the writer of the song be paid, but also the Sound Recording Copyright Owners (SRCO) and the performer.

The PROs we’ve already discussed (ASCAP, BMI, SESAC) continue to collect fees from these web broadcasters on behalf of their affiliated writers when a song is streamed online, but now another organization, SoundExchange collects on behalf of Sound Recording Copyright Owners (SCROs) and featured and non-featured artists.

When viewed in the appropriate light of inexorable technological trends and innovation, what all of this means is that, irrespective of what happens with the Performance Rights Act, an increasing amount of music is being streamed online and over digital TV (i.e. cable, Satelite), while a decreasing amount of music is broadcast over terrestrial radio/analog TV.

Strategy for Artists

As artists, it is therefore imperative that you both understand the rules governing the public performance of your music, but also take the necessary steps to ensure you are paid when your exclusive copyrights are used in this fashion. 

These specific steps are to affiliate with the PRO of your choice (ASCAP, BMI, or SESAC), and to register with SoundExchange (free).

My hope is that, in so doing, you will receive the maximum amount possible each time your music is used. In order for this to occur you must be the writer, the performer, and your own label. So, get out there, start your own label, and get your music — the music you made, and control — used, and make some money so you can make more music! 

* In actuality, “My Way” is based on the French composition “Comme d'habitude,” written by Claude Francois, Jacques Revaux and Gilles Thibault. Anka negotiated the rights to this song, and re-worked it into “My Way.” 

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George Howard is the former president of Rykodisc. He currently advises numerous entertainment and non-entertainment firms and individuals. Additionally, he is the Executive Editor of Artists House Music and is a Professor and Executive in Residence in the college of Business Administration at Loyola, New Orleans. He is most easily found on Twitter at: twitter.com/gah650

Comments

[Tiziano DEMARIA]

I'm in Belgium and I'm affiliate to SABAM that's the society for the Author's Rights here in Belgium.
Well, if my music is broadcasted in US via AM/FM radio, being myself the Copyright Owner of the whole my production, do I get the Rights ? yes or not ?

I thank you very much if you would like to answer.

Regards

[lisa trindade]

I would like to make sure Artist Kenny Locken is copyrighted for his songs yesterday and memory.

[Octavius]

Great info as always. @undaworldmusic

[MikeAlike(independent recording artist)]

Not a big fan of people who perform other peoples material, in fact I find that disingenuous-depending on the intent for interpretation. Performers are people putting on an act. Recently I watched Bob Fosse and the Michael Jackson comparisons. Not only was Michael Jackson not the genius Madonna babbled he was as his moves were someone else's, but the "queen" as well upon further inspection lacks creative skill and a majority of her sold product was created by another.
I assume that's why Michael Jackson after his "phenomenon" ended in the 80's he became a parody and repeat of himself...as he was imitating someone else-no doubt his brain modeled itself according to a false perception. George Howard has something interesting to explain, nice to read his informative article. I think the music business is a disappointment-our culture has been saturated with commercialism and an insistent pursuit of capital gain. In a sense it has made the American dream into an imperial nightmare....

[T]

Jango doesn't pay royalties.They told me so and ASCAP also confirmed it for me.So why does Tunecore tell
people that Jango pays?

[Dice Ceno]

send me a link im already on jango if this ones diffrent seb=nd me a link

[TuneCore]

Jango pays--through SoundExchange. It doesn't go through TuneCore.

Please check out this detailed article we wrote about it:

http://blog.tunecore.com/2010/04/get-paid-for-your-plays-by-jacqueline-rosokoff.html

Thanks!

--Peter

[MOOR]

This is probably the most confusing aspect of music. The other one is digital download and making the internet a viable source for sales.

If I had a music genie that granted me three wishes i would ask:

1. How do I copyright my music correctly?
The paperwork is like reading the KORAN in chinese.

2. Get my music played on Pandora.

3. For a business/music entity that is sincerely interested in artist's getting heard and paid.

[p-dek]

As it implies that am new in this game i don,t know much concerning the airplay and payment,but if there is a payment then i also have to receive payment to buy more airplay credit

[BobbiLynn]

My original music is being broadcast via airwaves, land stations, web stations as well as streamed. I have countless 'play lists' from all over the world as well. I am the songwriter, publisher and artist. I have NEVER received a penny for anything. I belong to BMI. I have written to them regarding this several times and have yet to receive a reply to my requests of them. What are we to do?

[Nigel]

My name is Nigel Benjamin and I was once the singer with a small band known as "MOTT"(the hoople).Until recently I had NEVER received a penny in royalties for almost 35 years!!!An English label released some crap live stuff that I gave no permission for,and sent me a few hundred dollars(because I went looking).I have tried for YEARS to find where my royalties went and to no avail.Obviously SOMEONE has them.The music business is foul with thieves.I suggest you all make yourself aware of this up front.It is how most of hollywood "suits" survive...theft.

[T]

Peter, Jango does not pay.Jango told me that they are a promotional tool like Youtube, Facebook etc.The difference is that you don't have to pay to get on Youtube, Facebook etc. but you have to pay to get on Jango.

[TuneCore]

Jango is DMCA compliant - when they program your music into rotation and it is played, they pay SoundExchange.

[TuneCore]

Jango will pay--not directly, but by DMCA, they must pay SoundExchange, and you can get the money from SoundExchange.

--Peter

[T]

Jango does not pay.Check your inbox for the email they have sent to me.I have forwarded it to you.

[TuneCore]

Jango doesn't pay directly, no. They pay SoundExchange, and Sound Exchange pays you.

--Peter

[raymond]

hi,

George Howard's article is good however not accurate.
In regards of the artist's/lables "or so called neighbouring" rights
A number ( most) Euopean labels are collecting money from US artists/ recordings they release or represent locally. however as most US artist's ( and smaller lables) are not aware of this income, the labels are keeping the money.
Raymond

[TuneCore]

Jango absolutely without doubt 100% pays for play on Jango radio.  If they did not, it would be illegal.  This is required by Federal US law - we confirmed that they pay prior to working with them

perhaps you are referring to the play you get when you buy spins with Jango?  THese are not "programmed" spins, these are more like paid advertisements for your music that you get to customize as to whom gets to hear them.

[Jon]

Hi, I started on Jango a week ago! I paid for airplay, and did the 250 plays for $10.00 a month, I picked up some fans, and so on. So if Jango pays through Sound Exchange, how will I ever know if Jango played my music, other than what I paid for, and how would I get paid. Would Sound Exchange notify me? It seems confusing, thanks, Jon

[TuneCore]

You'll need to register your music with SoundExchange, and yes, they'll pay you. Registering is free and easy.

Check this article:

http://blog.tunecore.com/2010/04/get-paid-for-your-plays-by-jacqueline-rosokoff.html

--Peter

[new songwriter]

What happens when you submit music to Tunecore as an original songwriter/executive producer and then you music gets played by other people i.e. the producer or DJ before it goes live?

Since they have contributed, do they just go ahead and make money without your receiving any money paid in royalties?

My CD single is supposed to go live and I am hearing that it will be over 6 weeks before it does.

[TuneCore]

@ wardheadley

I am sorry, I do not understand your question.

Once you checkout, your music should be live on iTunes within 24 hours...

Jeff

>

[[email protected]]

How much is the actual pay you will get from Jango? Is it really 0.0025 a spin?

[Ted]

This article says that internet radio stations pay royalties. But I don't think organizations like Radio365 do. Their DJs are volunteers and they don't pay anything when they create playlists. There seems to be a disconnect here.

[jay]

hey whats up im a internet radios station owner and oh yeah we have to pay all
3 organizations monthly depending how large your audience is you pay more but yes we do pay ......

[Barbara Hills]

I am from the UK and my experience of US based Internet Radio is similar to Ted's (above). There are now so many genres of music and niche stations who only play non-mainstream genres (ambient, for example). They say they could not afford to function if they paid the PRO fees. They usually (but not always) have contracts, which copyright holders have to sign. In these, copyright holders have to give up the right to the royalties associated with their music. The rationale is - we freely give you exposure you wouldn't otherwise get and you allow us to exist by giving us royalty-free plays. I would like to know if this is, in fact, against US law or if there are other laws that allow smaller ventures to operate without payment to the PROs.

Barbara