TOKENIZING MUSIC RIGHTS: PART 2 - WHAT ABOUT ROYALTIES?

We previously talked about the types of publishing rights that exist. There are payments involved in each of those rights in the form of royalties. Royalties are designed to compensate the songwriter, publisher and composer for a song or musical work each time it is used, sold or, in these days, streamed. 

• Streaming Royalties - Each time a musical work is streamed and downloaded to a streaming service such as Spotify or Apple Music, compensation is handed out. Some also call these Mechanical Royalties as they existed in the form of each time a physical CD or vinyl record was produced for a song or an album, but in today’s digital age, (and for the purpose of this article) it is more relevant to consider them in the form of streams.
• Performing/Concert Royalties - Whenever a song is performed in a live performance, on the radio, in a public broadcast or through digital streams, there is compensation for each of these instances for those responsible for the work. In the US, they are paid out by Performing Rights Organizations, or PRO’s, but these types of organizations exist all around the world in different forms.
• Sync Royalties - Each time a musical work is used in TV, film, video games or otherwise visual media, compensation is paid to the responsible artists and publishers. 

These are the most wide-known types of music rights the general public knows about, and for good reason. This is why artists with a small catalog or even one-hit wonders can stay quite wealthy if their work was popular enough. In the U.S., royalties last for the duration of the copyright, which is stated to be as long as the artist is alive, plus 70 years after their death. Anyone legally bound to these rights have passive income that could be very valuable.

Streams in particular have been a primary source of revenue for artists since the boom of online music services over the past decade. To give you an idea of just how much this revenue stream is worth, Spotify handed out over $7 billion in royalty streams in 2021 alone, $2 billion more than in 2020 - you can read the report by Spotify here. 

Source

In fact, the head of the National Music Publishers’ Association, David Israelite, reported:

• “There are 47 different music services that operate 151 different models that pay mechanical royalties to songwriters. We now know that in 2021, those services combined generated nearly $9.8 billion in revenue, which is just one of the important factors by which songwriters get paid.”

That is a significant number - and that’s not the whole story. Music labels were reported to be compensated 58.6% of that revenue number, worth around $5.7 billion. Songwriters and music publishers, however, were only paid a total of $1.3 billion, compared to the $4.1 billion the services take in pure profit. You can see there is quite a discrepancy between the parties responsible for the work and the parties who only manage it. (Source: digitalmusicnews.com)

For now, we’ll leave you with companies with the lowest and highest royalty payouts out of all the streaming services; and the answers might surprise you. Thanks for reading!

Source: https://www.statista.com/chart/13407/music-streaming_-who-pays-best/)

DIAMAAN GUEYE