One of the ways that musicians make money is by the licensing of copyrighted songs that they wrote. Since the dawn of the internet, intellectual property laws and licensing agreements have gone through some pretty big changes. By the basic methods of writing music and getting paid for it remain essentially the same. If you want to think about music in legal terms, there are two parties involved.
How Artists Get Paid
The performing artists and the songwriters are generally the recipients of any music royalties. Songwriters retain the rights to the lyrics or the melody while the performing artists will retain the rights to the recording of music often referred to as the master recording. However a songwriter can only get copyrights for the full song, they aren’t able to separate melody and lyrics into distinctly separate rights. Both parties typically assign a third party to look after their rights rather than trying to keep track of how and where a song is played themselves. Let’s have a closer look at how that works.
Royalties for Performing Artists
This is the fee that must be paid when the music is performed publicly. Here are some examples, your radio, Spotify, Pandora and the music you hear when you are at a bar or a restaurant. There are PRO’s or Performance Rights Organizations that collect performance royalties and then in turn pay the sogwriters. Copyright regulations can be a little weird, for example radio stations have to pay royalties to songwriters but nor the artists who record the music. Spotify and Pandora pay both the performers and the songwriters.
This type of royalty are paid to musicians when their music is licensed like on a CD, and when the music is offered on a streaming service. An example of a streaming service that pays mechanical royalties would be Spotify. These rights are determined by the government under a compulsory license and at this point it is set at $0.091 per copy. This system is outdated since the regulations were created before streaming services were even thought of. Streaming music falls under both performance and sale categories so there are two types of royalties that are paid.
How musicians get paid in the music industry is complicated and some would say unnecessarily so. There are performers, musicians, distributors and the record labels all looking for a slice of that pie. The internet has complicated the issues even further. Hopefully you now have a better understanding.