For The Record: Royalty Edition

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For The Record: Royalty Edition

This week on For The Record, I am going to talk about music royalty. No not the queen of music (Beyonce, duh), but royalties. Royalties are typically agreed upon as a percentage gross revenues from the use or fixed price per unit sold of an item. Basically, artists earn royalties from the sale of their recordings. Nowadays, there are a few different ways for an artist to collect their royalties due to streaming and performances. There is a mechanical royalty. Which is paid on a copy of a recorded song. But these royalties are paid by the record label to the songWRITER. Not the performer of the song. Then there are performance rights royalties. These are paid to the songwriters for a live performance of their song. “Performances” include things like concerts and radio. Basically a song being played in public. Now these royalties are collected by PRO’s, Performing Rights Organizations. The main three companies are BMI, ASCAP, and SESAC. They issue licenses for the performance of these songs and then monitor their playing and distribute the royalties to the songwriter/publisher.

Now that you understand some of the basics of a few royalties, I would like to talk about streaming royalties. Ever since services like Spotify came around, royalties to artists and songwriters have changed. There was a huge uproar when Taylor Swift removed her music from Spotify. She got a lot of heat for that move, but she was making a good point. Without the physical sale of a song/album, artists, songwriters, side musicians, producers, etc.. are making less money. To put in perspective, an album has to be streamed 15,000 times to equal one album sale. She stated in her letter after removing her music that she was doing it because it was hurting the people working in the music industry. She has recently put her music back on Spotify. This could be due to the fact that Spotify is too large of an entity to not put your music on, or because streaming was one of the biggest revenue streams in the industry 2017. Either way, it made a statement about today’s music industry. Streaming is now the norm.

I could go in even more depth about how specifically Spotify deals out every cent of royalties, but it would take some time and I would need some charts. The question today is will companies like Spotify eventually fizzle out due to not making enough revenue or will the industry adapt to this streaming trend?

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SPARKsouthSeptember 28, 2018
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