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Have you ever wondered how much Mozart could earn if he had lived in our times? If he were alive now, he could collect a stack of money from music royalties alone.
Creating music doesn't end up with finishing a song, finding a way to spread it to the world, and then sitting peacefully while earning your pennies. Music creation is a serious business that has its own monetization and commercialization methods. One of them comes from royalty payments.
Royalty is the legal right to use the asset after paying the owner. For the creators, royalties usually come in the form of recurring payments.
Royalties are part of copyright law, which protects intellectual property and provides creators with exclusive rights to manage their own work. Royalty payments can be sometimes referred to as license fees.
Music royalties work in the same way as those in other industries and protect the music creators' original work. The copyright tradition in the music industry isn't that old – it only applies to works created after 1978. According to the current US copyright law, the work is protected for the lifetime of the last surviving author plus another 70 years.
Music copyrights can be classified into two categories: composition and sound recording. There’re different streams of royalty payments depending on their category.
Music royalties are collected after the piece of work is created.
Publishers and songwriters.
Music royalties are received when the song is downloaded or streamed on various platforms (Spotify, Youtube, etc.)
Performers and the record label.
In order to not get lost among various stakeholders, music royalties were classified into four main groups. There could be even more depending on the specific music creating use cases, but the core principles remain the same.
Metadata serves as an ID for a song to be identified and receive the deserved payments. It also makes the piece easier to find and categorize among the ocean of already existing masterpieces. Metadata of songs usually consist of the album title, writers' and publishers' names, the record label, ISRC (International Standard Recording Code), etc. Such technical data plays a huge role and allows many musicians and music writers to get adequate payments for their work.
However, music-related metadata usually isn't synchronized enough, making it harder to track and leaving a gap for people to play music illegally. Then it becomes almost impossible to calculate the amount of lost income due to infringements of copyrights.
Gathering metadata may sound like the most simple technical procedure, but the collection isn't as easy as pie in practice. There were no standards for collecting, authenticating, or storing metadata for years. Gladly, the situation is changing as metadata collection becomes a new cool, making it easier to spot copyright infringement.
One of the mighty solutions to solve the problem of illegal music usage and publishing is data collection. Metadata scraping aims to keep an eye on the usage of music in real-time and attempts to spot unlicensed players faster than before. The music creators can scan music royalties data on such sites:
So, if you wanna be sure that there're no boundaries related to copyright law being crossed, you have to check it yourself. Doing it with your original IP could be a real headache because:
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Music royalties help artists earn their bread-and-butter for their work. Still, old habits of violating music copyrights cause artists' potential income losses. Constantly scraping metadata can do the job of preventing such actions.
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It depends on several factors, which are identified in the royalty agreement. It can be calculated from gross/net revenue; it can be a fixed price per sold unit or the minimum sale. Simply put, it depends on the use case. For example, music royalties from the physical CD can follow this formula: Units sold x Price x Royalty rate = Music royalties earned.
The royalties are shared using the old, but gold 50/50 rule, leaving one part of royalties for the creator and another for the publisher.
You can copyright your created music, lyrics, and updated version of a song. Still, you cannot trademark the song title, chord patterns, or the general idea of the song.
The royalty collecting process differs by the source you want to earn from (composition or song recording). But the general process goes like this: