This is just one of the stories in our âI’ve Always Asked Myselfâ series, where we answer all your questions about the business world, regardless of its size. Have you ever wondered if recycling is worth it? Or how to store brands stack against famous brands? Discover more of the series here.
Auditor Paul Lusnia of Santa Rosa, Calif., Asked:
How do the âroyaltiesâ for music (songs) work? I used to go to a lot of concerts and often saw bands playing other bands songs live eg saw U2 playing part of Lou Reed’s “Sweet Jane”. If they do, do they owe the other artist / group money to do it? Also, do they need permission to do so before performing the song? If an artist sells the rights to his own music and then goes on tour, does he have to pay for the right to perform his own songs? Do songs end up in the public domain like books?
Even when artists pay homage to other artists, there is a price to pay.
Songs and the rules governing the right to use them can get complicated very quickly – there are several types of royalties that cover music on streaming services, social media, and stages.
In the world of live performances, as Lusnia pointed out, artists often do covers. (BBC Radio has a âLive Loungeâ segment dedicated to this same premise.)
This is how it works. Almost all of the artists are signed with a music publisher – industry-leading publishers include Warner Chappell, BMG, Sony, Kobalt and Universal, according to Don Franzen, an entertainment and business lawyer. and Assistant Professor with School Music at the University of California, Los Angeles.
Franzen said that sometimes an artist will make an agreement in which the publisher controls the copyright and in turn enter into an agreement with a performing rights organization like the American Society of Composers, Authors and Publishers or BMI.
These music companies, which represent copyright owners, then license venues, such as the Walt Disney Concert Hall or the Staples Center in Los Angeles.
Franzen added that organizations have formulas to pay royalties to the songwriter and publisher. (The performer does not receive a royalty unless he wrote the song.)
Sites pay an annual fee for a general public performance license, giving them access to all of the company’s works, which can run into the millions.
Tobi Parks, owner of a concert hall called xBk in Des Moines, Iowa, and copyright and entertainment lawyer, said license costs are based on your capacity or a percentage of your income. .
An ASCAP spokesperson said that for its licenses, prices may depend on how the music was played, the size of the facility and whether or not the entry was charged. Licenses for small establishments, such as bars and restaurants, typically cost around $ 2 or $ 3 per day.
The fees they charge, known as the public performance royalty, apply to theaters, bars, restaurants, television networks and radio stations, said Benom Plumb, program director. studies on the music industry and music management at the University of the Pacific.
Plumb, who was vice president of licensing at Bluewater Music, said the venue is paying the fees, not the artists themselves. He noted that music publishers and their songwriters will affiliate with a company, register their song in the organization’s system, and let them know what percentage of the song they own.
This would also apply when an artist performs his âownâ song, the rights to which belong to someone else. The venue they are playing in should already have a license in place, giving them the right to perform the song.
Pay for performance
The amount that a songwriter and publisher is paid for an artist’s live performance can vary wildly, with some songs fetching a few dollars or hundreds of dollars. Plumb said the two generally split that income 50-50.
He recalled that he represented a songwriter who wrote a hit for a well-known artist who performed this song every night of a big summer arena tour. He registered the song for each of these performances with ASCAP and entered information such as the date it was performed, the size of the venue and the admission fee.
âWhen you record these songs for the live performances, they know the song is already in their system, they know it was played there, and then they run it through the crazy royalty formulas that they have. And then they pay that in their next distribution, âPlumb said.
Plumb said that at the lower end of the spectrum, a royalty of $ 2- $ 10 per song is common for performances in small venues. But in the summer arena tour example, Plumb said he envisions hundreds of dollars per performance, which works out to around $ 5,000 for the entire tour.
Questions and reform
One of the tricky things about royalties is that different music companies can represent a single song.
“If this song that was performed in your hall is partially represented by the [Society of European Stage Authors and Composers], then you have technically violated the public performance right of the SESAC part, but not the ASCAP and BMI part, âPlumb said.
Plumb believes the licensing process should be streamlined, and business owners should be made aware of how it works.
âThe problem with this publishing stuff, with these royalties, is that the amount you get depends on what percentage of the song you claim,â Plumb said. “It’s not very transparent, and they don’t really give you answers as to why you get paid what you get paid.”
Parks, of xBk, echoed those sentiments and said there might be some entrepreneurs who don’t quite understand what they’re paying for.
In an emailed statement, ASCAP said it was “fully committed to transparency”.
âWe recently launched Songview with BMI, a comprehensive data platform that gives music users an authoritative view of copyright ownership and stewardship shares in the vast majority of licensed music. United States, âthe spokesperson said.
Parks said theaters pay a block license for millions of compositions, but they might only use a handful of those songs. She would like to see a process where venues can report what is actually being played in their venues.
“Most [performing-rights organizations] have a mechanism where artists can enter and enter their playlists, wherever they are on tour, and the [PROs] come up with some sort of calculation and pay them a royalty, âParks said. âBut it’s up to the artist to manually enter this data. ”
An economic slowdown
The COVID-19 crisis has been particularly difficult for the music industry, closing many venues.
âCOVID has really shown how risky and fragile the live music industry is, not only for venues, but for the artists who make a living in our venues,â Parks said.
Parks said she understands venues need to have licenses, but questions whether the methodologies used by performing rights organizations to calculate royalties are optimal, given that shows have been on hold for so long.
In a statement, the ASCAP spokesperson said: âWe see the sites as our partners and understand how the pandemic has affected many of their businesses. The venues were not charged a license fee for the closed periods and we made adjustments if they were operating at reduced capacity or without live music.
Like books, songs enter the public domain. Their copyrights eventually expire, decades after their publication. On January 1, 2019, works protected by the copyright of 1923 began to enter the field – the first time that works had done so in two decades.
Since then, a new batch has entered the public domain each year. All music, films and literature published in 1924 entered the domain in 2020, and all 1925 works entered in 2021. This will continue over the years.
Why the gap? Previously, material published from 1923 was supposed to enter the public domain in 1999, instead of 2019. But in 1998, Congress passed a bill extending copyright protection for 20 years.
Now we finally have the chance to use this material. In 2021, the music of George and Ira Gershwin became available, along with many jazz music, “The Great Gatsby” and a treasure trove of early 20th century American creativity.