Royalty

What Is a Royalty in Music?

A royalty is a recurring payment made to the rights holders of a piece of music each time it is performed, broadcast, streamed, reproduced or sold. Royalties flow to songwriters and publishers, and separately to recording artists and labels, through collection societies, distributors and direct licence agreements.

Royalty in Practice

Royalties are the plumbing of the music economy. Performance royalties flow when music is played publicly, collected by societies such as PRS for Music, ASCAP and BMI from broadcasters, streaming services, venues and businesses, then distributed to writers and publishers. Mechanical royalties cover reproduction, and recording royalties flow separately to artists and labels. Advertisers fund this system indirectly: every televised advert containing music generates performance royalties when it airs. The most famous illustration is Happy Birthday to You, which earned Warner/Chappell an estimated two million US dollars a year until a 2015 US federal court ruled its copyright claim invalid, with the song formally declared public domain in the 2016 settlement that followed. Understanding which royalties survive a buyout is essential in any brand music negotiation.

Famous Example

Happy Birthday to You, which earned Warner/Chappell an estimated $2 million a year until a 2015 court ruling