Understanding How to Profit from the Digital Performance Royalty
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
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
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
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) don’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
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 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 [link] 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
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!