Music artistes and royalty payments

How does a musical artiste know that the music company is paying them the correct royalty years after the song was released. For eg how does Elton John know that his song from the eighties being played on a radio station in japan and accruing royalty payment is passed on to him.

There can be no way to verify this is there.

My limited understanding of the worldwide rights system is that it is indeed opaque and essentially impossible to really work out the money flows.

Roughly there are three sorts of rights. Those of the song’s author, those of the song’s recording, and those of the song’s performance. Depending upon the country involved these may be controlled by one organisation or split between organisations. Each organisation in each country has agreements with their peer organisations around the world and they agree to track one another’s artists rights, and send money as appropriate. Less an administrative overhead. So radio stations are required to keep track of every recording they play, and are billed by the local right’s organisations for royalties. In addition, in principle, local cover bands may be required to pay royalties, pubs and bars pay royalties, and even people who use music for telephone on-hold pay royalties. Radio playlists are easy to understand. But the other royalty payments are much less clear, and there is scant evidence they are much more than a tax on anyone who wants to play music in an environment where their use of the music exceeds the basic rights you get with a purchased recording (ie play for your own personal enjoyment.) So these rights organisations clearly fudge the numbers.

The complaint you will hear from many artists is that the Elton John’s of this world are kept happy, and receive steady hefty cheques from their representative rights organisation. However minor artists get remarkably little if anything. The rights organisations seem to simply lose them in the noise of their estimates of music’s playing.

The modern world is worse. The Internet has essentially made it impossible for new or minor artists to make any money. All the payments systems are skewed towards placating the major artists. This is despite the fact that companies like Spotify can have essentially perfectly accurate information on reproduction of music. But their formula for recompense is heavily skewed towards the big artists - and keeping them happy - at the expense of the minor ones.

IMHO there is a pretty amazing long lived scandal under the question of music rights. The various rights organisations are anything if transparent, and the amount of money siphoned off for “administration” remains a closely guarded secret. These organisations simply keep the big fish happy with coarse estimates of royalties due, estimates that are so coarse that they lose any view of rights due to the plethora of struggling artists in the world. Great work if you can get it.

In theory, the music company (or whomever holds the copyright) has a record of everybody who’s been given permission to use any of the rights restricted to the copyright holder (e.g. reproducing, performing, including in another media format (e.g. video), etc.), and the fees they’ve been paid for that permission.

If an artist has a reasonably well-founded suspicion that the music company has violated their contract, they can file a complaint in court (alleging violation of contract) and force the music company to produce what records it has.

In musical theatre, you have to pay “grand rights” every time the song is sung. If grand rights are not paid, the show will not go on. There have been court cases on this matter.

To repeat: The composer and lyricist get paid every time the song is sung. People who wrote the songs used in jukebox musicals (i.e. The Four Seasons “Jersey Boys” and ABBA “Mamma Mia!”) are making some good money these days.

I’ve long fond this a fascinating subject, and despite my wife and me both being lawyers and having discussed this at length, I have no idea how it is really done.

One example, we were recently at a music fest, where a bluegrass band covered an Eagles tune. My wife asked if I thought they paid royalties for the performance. I said I assumed so, since the cover was also on their recent album, and that is the kind of thing that would be easy to track. But I’d have to think there are a ton of instances where a band is getting paid to perform, and they decide to do a cover of someone else’s song, but haven’t paid royalties.

Then there is the issue of businesses playing radio in the background. Oughtn’t they pay royalties?

My understanding is that for the radio stations themselves, they keep close records of their playlists, but pay royalties to the major organizations, which distribute royalties based on some formula.

My understanding is that this is an incredibly complex practice, and enforcement is extremely lax/inconsistent. And it all adds up to it being harder and harder for the little guy to make money making music.

I am not an expert, but am a musician.

Generally, performance rights are handled by the venue. Your local bar band (or Springsteen at Madison Square Gardens) do not pay rights to play a song; the venue pays an annual fee based on [magic/statistics/bean-counters] that covers it.

Recording rights are different. You do need to secure rights to record a cover of a song.

There are three main companies in the US that handle this, ASCAP, BMI, and SESAC. Basically the artist signs on with one of them, and their music goes into the catalog for that company. The companies get revenue from various businesses that play music, and distribute it to artists by forumae based on popularity and usage. They send a lot of enforcement agents out to bars, restaurants, and other areas that play music, and if they find a place that isn’t paying their fee but is playing their music, they try to work out a deal (and sue if no deal can be made). It’s a kind of clunky and quirky system, but it works well enough that no one strongly wants to change it.

https://en.wikipedia.org/wiki/American_Society_of_Composers,_Authors_and_Publishers
https://en.wikipedia.org/wiki/Broadcast_Music,_Inc.
https://en.wikipedia.org/wiki/SESAC

Songwriter/member of ASCAP here. Everything that has been said so far is thorough and correct; royalties are paid by the establishment, not the bands. So if a band does an Eagles tune at a club, they don’t owe anything; the club pays a monthly fee to have the right to perform just about any song.

However, if that band records the song and releases it, they (usually) go through the Harry Fox Agency and pay $0.091 per song per record (last I heard). In other words, if they release an album with 11 originals and 1 cover, and they press 1,000 CDs, they owe $91 to whomever wrote the song.

But yes, to answer the OP, organizations like ASCAP, BMI, and SESAC can only do their best and estimate the usage of older songs. Nowadays there is technology that can identify unauthorized internet use, as well, as seen when YouTube deletes a video that uses a copyrighted song.

In the US, t is the responsibility of the venue to get licenses from the PROs (Performance Rights Organizations). The PROs use sampling and performer self-reporting to keep track of what is played in live settings. ASCAP, the best-known PRO, basically follows the 300 largest tours and a number of other venues to get their numbers.

As you can imagine, this causes a lot of grumbling from songwriters whose music isn’t being performed by major acts. In the last couple of years, ASCAP and BMI have instituted progams (ASCAP OnStage and BMI Live) that lets songwriters report when they perform their own songs live. However, many small musicians believe that the purpose of these programs is more to help the PROs locate unlicensed venues than to make sure the musicians are paid.

Under 17 U.S. Code § 110(5) a business under 2000 square feet does not need a license to play an FCC licensed radio station on its premises if no admission is charged. In the case of businesses over 2000 sq ft, no license is required if fewer than 6 speakers (no more than 4 per room) are used. In the case of eating and drinking establishments, the 2000 sq ft goes up to 3750 sq ft.

A long, long time ago they did. For terrestrial radio, the PROs now use sampling. For a while, they used trained listeners to record what songs they heard, but now they have migrated to using broadcast radio monitoring services such as Media Monitors to collect their samples. Again, many songwriters complain that their sampling over-emphasizes large radio stations and the big pop hits.

Correct.

By the way, here is a list of how ASCAP collects its data in the US. The other PROs use similar methods.

Do not assume that anything I have said applies outside the US.

Correct. The venue should get the license, but it should be noted that it is not uncommon for the venue to charge performers for the use of its license. For example, if the band is paid a percentage of the cover charge, it is not uncommon to deduct a fee for the cost of the license from the band’s cut.

Given the way the PROs sample live venues, many performers were complaining that they were essentially paying to perform their own songs and the money was going to big-name writers.

To placate the less-known writers. ASCAP established ASCAP OnStage and BMI established BMI Live, to allow performers who are also writers to report the use of their own music.
ASCAP’s Live Performance Royalties No Longer Reserved For Top Touring Acts

There are two different income revenue streams for an artist like Elton John.

There are record sales, which is paid by the record company and collected on his behalf from a place like The Harry Fox Agency. They can audit the books from the record companies and file lawsuits to collect what may be due.

There are broadcast and live performance royalties from performing rights organizations such as ASCAP and BMI. Each of them have an office in other countries. Places like the UK, have their own called PRO. All of these work together, so a performance in Japan could be picked up by the performing rights organization there and payment gets back to BMI, if he belongs to BMI.

For broadcast on radio and TV, they have logs and ASCAP and BMI have done statistical sampling. But with the improvements in technology, logging of everything might be possible now along with the use of digital watermarking. So that when a song of Elton John is used in a TV commercial, it gets logged and reported to the performing right organization.

The biggest problems have been with the record companies, where they claim they didn’t make money and the books need to be audited.

When an Elton John song is used in a TV show or movie, the producer of the show purchases a synchronization license from the publishers and/or copyright administrator of Elton John’s songs.

ASCAP and BMI can also file lawsuits on the behalf of its members if they don’t have a license to broadcast or perform music from their catalog for the view. This is how music composers and publishers get paid for their intellectual property.