In the complicated world of music royalties, every note, lyric, and beat you create has the potential to generate income. For songwriters, understanding performance royalties is not just about knowing where your money comes from; it's about proactively claiming what's rightfully yours. At KOSIGN, we empower independent artists and songwriters to navigate this complicated system, ensuring you keep 100% ownership while leveraging world-class technology to collect global publishing royalties faster.

What Are Performance Royalties?

Performance royalties are fees paid to songwriters and their publishers whenever a musical composition is performed or broadcast publicly. This includes a wide array of scenarios, from a song playing on the radio or television, to being streamed online, or even performed live in a venue. Essentially, if your music is heard in a public setting, it's generating performance royalties. And unlike master recording royalties, you don’t get paid by default so it is incredibly important to understand what they are and how these are distinct from other types of music income, such as mechanical royalties or sync fees, which are crucial for a songwriter's financial success.

The Two Halves of Music Copyright: Composition vs. Master

To truly grasp performance royalties, it's important to understand the fundamental distinction in music copyright: the composition and the master recording. These are often referred to as the two copyrights that exist for every song [2].

• Musical Composition Copyright: This protects the underlying music and lyrics of a song. It includes the melody, harmony, and lyrical content. The owners of this copyright are typically the songwriter(s) and their publisher(s). Performance royalties are paid to the owners of the musical composition [1].

• Sound Recording Copyright (Master Recording): This protects the specific recorded version of a song. It covers the actual audio recording, including the performance of the musicians and vocalists. The owners of this copyright are usually the recording artist(s) and/or their record label. While master recording owners earn royalties from the use of their recordings (e.g., digital performance royalties via SoundExchange for non-interactive streams), they do not earn performance royalties for the public performance of the composition [1].

This distinction is important because performance royalties are exclusively tied to the public performance of the musical composition, not the sound recording. When your song is played publicly, it is the underlying composition copyright that generates these earnings for you as a songwriter so even if you aren’t the recording artist, you still should get paid.

How Performance Royalties Are Generated and Collected

Performance royalties are generated through various public uses of your musical composition. These uses include:

• Radio Airplay: Both terrestrial (AM/FM) and satellite radio stations pay royalties for playing your songs [3].

• Television Broadcasts: When your music is featured in TV shows, commercials, or films broadcast on television [3].

• Live Performances: This covers your music being played in venues such as concerts, clubs, restaurants, and even background music in retail stores [3].

• Digital Streaming: Interactive streaming services like Spotify, Apple Music, and Amazon Music generate performance royalties each time your song is played [3]. Non-interactive streaming services (like Pandora radio) also generate performance royalties.

To ensure songwriters and publishers receive their due, Performing Rights Organizations (PROs) play a crucial role. In the United States, the primary PROs are ASCAP, BMI, and SESAC. These organizations act as intermediaries, licensing the public performance of musical works on behalf of their members [1].

Here's how the process generally works:

• Licensing: PROs issue blanket licenses to businesses and platforms (radio stations, TV networks, venues, streaming services) that wish to play music publicly. These licenses grant them the legal right to use a vast catalog of songs [3].

• Tracking: PROs employ sophisticated tracking methods, including digital sampling, broadcast cue sheets, and direct reporting from licensees, to monitor when and where songs are performed [3].

• Collection: They collect licensing fees from these music users [3].

• Distribution: After deducting administrative fees, PROs distribute the collected royalties to the affiliated songwriters and publishers based on their proprietary formulas, which consider factors like audience reach, frequency of play, and the value of the performance [3].

It's important for songwriters to affiliate with a PRO to ensure their performance royalties are collected. Without this affiliation, these earnings can go unclaimed.

The Unseen Billions: Why Royalties Go Unclaimed

Despite the robust system designed to collect and distribute royalties, a significant amount of money remains unclaimed in the music industry. This phenomenon, often referred to as the "black box," represents billions of dollars globally that fail to reach the rightful creators. The Mechanical Licensing Collective (MLC) alone reported holding $424 million in unmatched royalties, while the industry as a whole has an estimated $2.5 billion in unclaimed funds [4].

Several factors contribute to this massive pool of uncollected royalties:

• Missing or Incorrect Metadata: This is the most common culprit. When a song is registered with incomplete or inaccurate information—such as misspelled names, incorrect song titles, or missing PRO affiliations—the system cannot match the performance data to the rightful owner [5].

• Lack of Registration: Many independent artists fail to register their works with a PRO or other collection societies, meaning their performances are tracked but the royalties have nowhere to go [5].

• Global Complexity: The music industry operates globally, but royalty collection is often fragmented by territory. If an artist's music is played internationally but they lack representation or reciprocal agreements in those territories, the royalties may remain with foreign collection societies [5].

• Split Disputes: Disagreements among co-writers regarding ownership percentages can delay or prevent the distribution of royalties until the dispute is resolved [4].

This "black box" of unclaimed royalties highlights the critical importance of accurate metadata and comprehensive registration. For independent artists, it underscores the need for a reliable partner to navigate the complexities of global royalty collection.

KOSIGN vs. Traditional Publishing: A New Era for Independent Artists

For decades, the traditional music publishing model often required songwriters to surrender a significant portion of their copyright ownership in exchange for administration and collection services. However, the landscape is shifting, and KOSIGN is at the forefront of this change, offering a modern alternative that prioritizes the artist's independence and financial well-being.