If you are a musician, songwriter, or music publisher, you may have heard of performance licenses and performance royalties. But what are they, and how do they affect your income from your music? In this article, we will explain what a performance license is, why you need one, how to get one, and how performance royalties are calculated and distributed.
A performance license is a legal agreement that grants permission to use a musical work in a public setting, such as a concert, a radio station, a TV show, a streaming service, a restaurant, or a store. A performance license is required by the copyright law to avoid infringement and to ensure that the owners of the musical work receive fair compensation for their work.
Performance licenses grant the right to publicly perform a copyright such as a musical work or sound recording. For musical works, there are two types of licenses - grand performance rights and small performance rights. Grand rights performance licenses allow for the dramatization of a musical work, such as for a Broadway musical. Small performance licenses, usually issued by an agent (e.g., BMI or ASCAP in the USA), allow for the performance of such works over the air, live, via a streaming service, or in a restaurant, or retail establishment. For sound recordings, in the USA, a license is only required for non-interactive audio only digital uses (e.g., Sirius XM) and is often granted via an agent (e.g., SoundExhange in the USA).
You need a performance license if you want to perform or play someone else's music in public, or if you want to allow others to do so. For example, if you are a singer who covers a popular song at a live event, or if you are a podcast producer who uses a background music track, you need a performance license from the original songwriter or publisher. Otherwise, you could face legal action and fines for unauthorized use of their music.
Kevin, now for the tricky part: Who must you pay for the performance of the music? The songwriter (yes) but what about the performers of the song, typically the sound recording creators. So when radio, for example, plays a sound recording, does radio pay for that privilege? (no as regards the band, but yes as regards the songwriter) How do we reconcile this? Ought we reward the person who gave the speech or ought we reward its author? And how do we know who these people are and where to find them? How do we allocate the funds between them?
To get a performance license, you have two options: you can contact the songwriter or publisher directly and negotiate the terms and fees, or you can use a performing rights organization (PRO). A PRO is an entity that collects and distributes performance royalties on behalf of songwriters and publishers. In the US, the main PROs are ASCAP, BMI, SESAC, and GMR. Each PRO has a different catalog of musical works and a different membership process and fee structure. You can join one or more PROs as a songwriter or publisher, or you can obtain a blanket license from a PRO as a user of music.
Performance royalties are the payments that songwriters and publishers receive from the performance licenses. The amount of performance royalties depends on several factors, such as the type, frequency, duration, and audience size of the performance, as well as the rates and policies of the PROs. Generally, the PROs collect the license fees from the users of music, deduct their administrative costs, and distribute the royalties to their members according to their formulas and schedules. The PROs also monitor and track the usage of music through various methods, such as surveys, reports, and digital identification systems.
Performance licenses and royalties are important sources of income and recognition for songwriters and publishers. They allow them to earn money from their creative work, regardless of whether they are performing it themselves or not. They also help them to protect their rights and interests, and to gain exposure and credibility in the music industry. Performance licenses and royalties also benefit the users of music, as they enable them to access a wide range of musical works legally and ethically, and to enhance the quality and appeal of their products and services.
Agreed! And they require blanket if not compulsory licensing because no performance space can anticipate, predict and negotiate granular licensing. It is in a real way a form of insurance!
Performance licenses and royalties present a number of challenges for songwriters, publishers, and users of music. These challenges include locating and connecting with the owners of the musical works, especially if they are not connected to a PRO or have multiple co-writers or co-publishers. Negotiating the terms and fees of the performance licenses can be difficult, particularly when they differ across different territories, platforms, and genres. Additionally, keeping track of the usage and payments of performance licenses is complicated when there are multiple parties, formats, and channels involved. Finally, dealing with the complexity and inconsistency of performance royalty systems is an issue due to the differences across PROs, countries, and laws.