Royalties Demystified

If the ins and outs of royalties regarding Library Music leave you a bit confused, here’s a simple guide to how it all works, from the very basic through to a few common questions.

 

What is a royalty?

 

What we’ll be talking about here are “performing royalties”. Simply put, these are recurring payments that you get whenever your music is on a show that is then broadcast to the public on TV, radio, etc.

 

How it works.

 

First of all you’ll need to join a P.R.O. (Performing Rights Organisation). These are the companies that collect and distribute music royalties. Different countries have different P.R.O.s. A few examples are:

 

USA: ASCAP, BMI, SESAC

UK: PRS For Music

Canada: SOCAN

France: SACEM

Germany: GEMA

Australia: APRA

 

So you’ll need to join your local P.R.O.. Some P.R.O.’s want evidence that you have tracks that are being used, (i.e., already receiving broadcast usage or likely to), as part of their registration process. Whilst this seems like it puts you in a bit of a chicken and egg situation, it stops them having lots of members who never have tracks that generate royalties. (Then again, given that it costs money to join a PRO, some wonder why that’s a problem for them!) A copy of the contract from the Music Library that has contracted your track(s) will suffice as evidence.

 

The most important number of your writing career.

 

Say your name is Fred Bloggs.

An IPI scuppers your ambitions to register yourself as “Paul McCartney” and buy a Ferrari with your ill-gotten gains.

How do you make certain that your money goes to the Fred Bloggs that is you, not to one of the other 457 composers out there called Fred Bloggs?

Your PRO will issue you with an IPI number (also known as a CAE number) and this is your unique tracking code. Note that it’s different to your membership number. (Libraries need your IPI number NOT your membership number. They are different. Don’t get this wrong!)

When a Library signs your tracks to it’s catalogue, clients who use your tracks (let’s say CNN News in this example) will need to fill in a Cue Sheet once they put your music from the Library onto their show. This cue sheet is a list of all of the music on that episode of CNN News, along with other details including the track names, publisher for each track (in this case, the music library), the composer for each track (you and any co-writers) and the IPI numbers of the publishers and composers. The Library will supply this info to the show’s production team.

 

Where do the cue sheets end up?

 

Cue sheets are then sent electronically to the local P.R.O. for that country. The P.R.O. log that information into their systems and calculate the money owed to you based on the royalty rate and how long your track was used for in that show. Each network (channel) has a royalty rate ($x per minute) which can vary with other factors such as if the music was used during prime time hours or not. That money will be allocated to your account along with all the other amounts from uses of your other tracks. Once it’s distribution day, they send that quarter’s total to you, along with a statement breaking down the amounts by the source of each usage.

 

What if my music is shown abroad?

 

The IPI number system means that this identifying number is attached to you and the system will realise that you are a member of your local P.R.O., (i.e. if the show airs in the USA, but you’re from the UK, the USA P.R.O. will realise that your number is not that of an American member.) The USA P.R.O. will send the money to the UK P.R.O., who will pay you. This process takes time depending on the countries. I’ve heard stories of overseas royalties taking over 4 years from the date of broadcast to arrive with the composer, but usually it’s quicker than that. So you’ll only ever receive payment from your local P.R.O.. They’ll collect any overseas royalties due to you.

 

Why are my Library tracks not showing on my P.R.O.’s database?

 

Ok, so first of all, do not register signed Library tracks yourself. Let your Library do it. By all means chase them if you can’t find them logged on your P.R.O.’s website. However, registering tracks yourself can be shooting yourself in the foot. Not just because you may do it wrong, but also because you will most probably be creating a duplicate entry. This can confuse the P.R.O. system and cause monies to be withheld.

Lastly, if you’ve signed tracks to an overseas Library, (my UK Library signs tracks from writers all over the world), you may not see your tracks on your local P.R.O.’s website. That’s ok! So in this example, as a British Library, we register your tracks with our P.R.O. (PRS For Music). Your IPI number means that when the royalty hits PRS For Music they will know that they need to get your share to you via your P.R.O.. But as the track was registered in the UK, it may not also be registered in your territory. That’s ok. The IPI tracking system will always lead to your money finding you. (Basically, you will be registered in your country, but your tracks may not be.) Of course, if you have any questions, ask your Library.

So, can you see why the IPI number (CAE number) is so important?!

If you’re serious about making royalties from your music, Music For Income’s “Library Music That Sells” course will give you all the guidance you’ll need to get your music most likely to get accepted by the worlds best Music Libraries, where those tracks can then starting making you a royalty stream.

You’ll get expert advice from formidable industry experts on topics such as track formulas that Libraries love (regardless of genre), how to approach and form relationships with Libraries, organising your time, avoiding the mistakes that most composers make writing production music, plus a huge amount of other information to avoid you wasting years trying to figure out what works.

If you want to learn more about the Library Music That Sells course, sign up for 3 free lessons via the “Courses” tab above. Already seen these lessons but got some questions on whether the course is right for you? Drop us an email, (following address separated to avoid spam – join it all up to email!!) info @ musicforincome .com  .

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