:: ROYALTIES::     

ARTIST ROYALTIES

What is usually referred to simply as "Royalties" is more properly known as Artist Royalties. This is the percentage of the record sales that the label agrees to pay the artist. This money is not in any way protected or governed by Copyright law, it is all determined in the CONTRACT

PERFORMANCE ROYALTIES

refer to the money that must be given to the copyright holder(s) every time the composition is "performed". Every radio station, club, restaraunt, and retail store (that plays music) is liable to pay the copyright holder every time they play the composition. Since you can't be there all the time checking up on these people, companies like BMI ASCAP GEMA etc were created by artists (back in the day) to administer these copyrights. There is a lot more money than you think generated from radio play of "underground" music. Much of it is never collected so they give it all to Led Zeppelin.

MECHANICAL ROYALTIES

refers to the money that must be paid to the owner of the (composition) copyright every time a physical copy is made of any record containing that composition.

That means for every actual peice of vinyl, 8-track or cassette, a certain amount must be paid the copyright owner (usually the composer) . Excluding use for broadcast, hence all the specifically marked "promo only" stuff. The artist never gets paid for those copies. Nor do they get money when their (major) label gives bunches of those records to Record and Tape Clubs. They are considered promotional copies, given to those companies as a "reward" for buying a certain amount of another artist.

By law, this right cannot be assigned to the label ! So usually in a recording contract, the label bargains a lower rate (usually 2/3 or 3/4) that it must pay the composer. Again, this is a lot of paper work, small labels usually just roll this archaic stuff into a decent royalty rate.

The reason I call this archaic, is that it is grown out of an old system where the composer, arranger, performer, and label are very distinct entities.

In the US, the HARRY FOX AGENCY is known for collecting and administrating Mechanical Licenses.

Copyright © 1999 Innerface Sounds. All rights reserved. Revised: February 27, 2008.