Common Types of Music Licenses and Royalties

Music is a universal language that unites people, crosses borders, and enriches our lives, making it well worth protecting. Copyright law is the framework behind how music is protected and how songwriters, performers, producers, and other music creators are compensated for their musical creations. In this blog, we highlight some common music licenses and royalties under U.S. copyright laws and how they contribute to a thriving music ecosystem.  

Understanding Music Copyright: The Types of Copyright Protected Works in a Song  

At the heart of music copyright licensing is an understanding that there are two distinct kinds of copyright-protected works in any given song —a musical work and a sound recording. 

• A musical work is the underlying composition of a song, including the musical notes and lyrics in a musical composition. 
• A sound recording consists of the recorded performance of a song, capturing the specific sounds of vocals performed or instruments played by a musician.

These two copyrightable works generate different types of music royalties. Proper knowledge of the different types of works in a song ensures that musicians and copyright owners can collect the royalties they are entitled to, and for music licensees to know who to approach for licensing songs.

For Music Users: Common Types of Music Copyright Licenses

Music is encountered everywhere, from radio and streaming services to movies, TV shows, and advertisements and even in restaurants and shopping venues. For music to be legally used in these mediums and settings a music user must secure specific licenses—either those granted by the copyright owner or, in some cases, by the law.

For music licensees and users, here are a some of the most common types of music licenses, what they cover, the works they apply to, and where to obtain them.

• Public Performance License: This license grants the music user the right to play a song in public settings such as concerts, live music venues, bars and restaurants, on television, or digital streaming platforms.

• Musical works: Performing rights organizations (PROs) like ASCAP, BMI, SESAC, and GMR administer these licenses.

• Sound recordings: A limited public performance right exists only for digital radio transmissions. SoundExchange administers the public performance license for non-interactive digital transmissions (e.g., Pandora, satellite radio) of sound recordings. In the United States, there is no public performance right (and thus, no requirement to license) for sound recordings performed on terrestrial radio.

• Mechanical License:  A mechanical license grants someone permission to reproduce and distribute a musical work (not the sound recording) in physical or digital formats such as vinyl, CDs, digital downloads, and interactive streams. A mechanical license is a compulsory license, meaning that once a musical work has been made and distributed to the public under the authority of the copyright owner, the copyright owner cannot refuse to license anyone who wishes to make and distribute the musical work, provided they follow certain rules. The Mechanical Licensing Collective (MLC) administers compulsory mechanical licenses in the United States for digital audio transmissions (i.e., digital streaming platforms). Other organizations like the Harry Fox Agency also administer mechanical licenses in contexts like creating and distributing cover songs. But mechanical licenses can also be obtained directly from the music publisher.

• Master Recording License: This license is required to incorporate a specific sound recording in a project such as a movie, TV show, or advertisement. Film producers, advertisers, and TV networks obtain this license when incorporating an artist’s recording into their productions. The owner of the master recording (typically a record label or an independent artist) grants this license.

• Synchronization (Sync) License: Sync licenses are necessary when using songs musical works in audiovisual media, such as films, TV shows, commercials, video games, or YouTube videos.  A sync license can be secured from the songwriter or publisher.  

For Musicians and Music Copyright Owners: Common Types of Music Royalties

Music royalties that flow from music licenses, some of which are mentioned above, are how musicians are compensated. It is vital for musicians to understand the various kinds of music royalties so that they are not missing out on these opportunities for compensation. In the United States, there are some common types of music royalties, which are listed below along with who administers them.

Performance Royalties

For musical works, these royalties are collected and distributed by Performing Rights Organizations (PROs) such as like ASCAP, BMI, SESAC, and GMR. In order to collect these royalties from a PRO, songwriters have to sign up for PRO membership.

For sound recordings, SoundExchange administers sound recording digital performance royalties. In order to collect these royalties, performing artists should sign up to be a member of SoundExchange.

Mechanical Royalties

These royalties can flow from music publishers or other services that administer mechanical licenses. Mechanical royalties that flow from digital streaming are collected and distributed by the Mechanical Licensing Collective (MLC) and require the songwriter and/or music publishers to sign up for membership.

Master Recording Royalties

Master recording royalties can be collected from the copyright owner of the master recording, typically the performing artist’s record label or distributor.

Synchronization (Sync) Royalties

Unlike other types of royalties, sync royalties are paid directly through licensing agreements negotiated between the copyright owner(s) (usually the music publisher) or those authorized to act on behalf of the sound recording and of the musical work and media producers.

Conclusion

Copyright laws are the foundation for a variety of music licensing opportunities. In this blog post, we covered some common music licenses and royalties, because understanding the copyright music licensing landscape is critical for musicians who want to earn a living through their creative craft. It is important to ensure that our copyright laws and policies continue to prioritize protecting music creators and enable them to continue creating the songs that shape our world.

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