Performance Royalties – Definition & Detailed Explanation – Music Business Glossary

I. What are Performance Royalties?

Performance royalties are payments made to songwriters, composers, and publishers for the public performance of their music. These royalties are earned when a song is played on the radio, performed live, streamed online, or used in a film or television show. Performance royalties are a vital source of income for music creators and are collected and distributed by performance rights organizations (PROs) such as ASCAP, BMI, and SESAC.

II. How are Performance Royalties Collected?

Performance royalties are collected by PROs through licensing agreements with businesses that use music in their operations. These businesses include radio stations, concert venues, bars, restaurants, streaming services, and television networks. PROs monitor the public performance of music through surveys, digital fingerprinting technology, and partnerships with monitoring companies. They then distribute the collected royalties to their members based on the frequency and reach of their music’s performances.

III. Who Receives Performance Royalties?

Performance royalties are typically paid to three main parties: songwriters, composers, and publishers. Songwriters and composers are the individuals who create the music and lyrics, while publishers are responsible for promoting and licensing the music. In some cases, artists who perform their own songs may also be entitled to performance royalties. PROs ensure that all parties involved in the creation and promotion of music are fairly compensated for their work.

IV. How are Performance Royalties Calculated?

Performance royalties are calculated based on a variety of factors, including the type of performance, the size of the audience, and the duration of the performance. PROs use complex formulas to determine the amount of royalties owed to each rights holder. For example, royalties for a song played on the radio may be calculated based on the station’s ratings and advertising revenue, while royalties for a live performance may be based on ticket sales and attendance figures.

V. What is the Difference Between Performance Royalties and Mechanical Royalties?

Performance royalties and mechanical royalties are two distinct types of royalties earned by music creators. Performance royalties are earned when a song is publicly performed, while mechanical royalties are earned when a song is reproduced or distributed in physical or digital formats. Mechanical royalties are typically paid to songwriters and publishers by record labels, streaming services, and other music distributors. Both types of royalties are important sources of income for music creators and are governed by separate licensing agreements and collection processes.

VI. How Can Artists Maximize Their Performance Royalties?

There are several ways that artists can maximize their performance royalties. One key strategy is to register their music with a PRO and ensure that all performances are properly reported and tracked. Artists can also collaborate with other musicians and industry professionals to increase the reach and frequency of their music’s performances. Additionally, artists can leverage social media and online platforms to promote their music and attract new audiences. By actively engaging with fans and participating in live performances, artists can increase their visibility and earn higher performance royalties.