Royalty Accounting (Music Industry)

A royalty is a payment to a company or individual with creative assets that are being used by a third-party. Music royalties come from copyright or intellectual property and the owner is paid before stockholders, company executives, etc. Greenlight Financial can help artists calculate how much royalties are due to them. We can also help small record labels when calculating the royalties due to their songwriters.

Music Copyrights

Music is protected by copyright laws and are considered “a tangible medium of expression.” A song is composed of two copyrights: 1) Composition, which is lyrics & melody; 2) the actual sound recording you hear.

Types of Music Royalties

Since there are different types of music royalties, it’s important to understand the differences. If you are in the music industry and need help with your royalties, Greenlight Financial can help with the calculation of:

  1. Mechanical Royalties – If you own a master recording of a song, each time your song streams on a streaming service such as Spotify, a mechanical royalty is generated. Mechanical streaming royalties are collected by a Mechanical Licensing Agent, like Harry Fox Agency and SongTrust.
  2. Performance Royalties – If you are a songwriter and your song streams on a streaming service, a performance royalty is generated. This type of royalty is also triggered if performed a show in public, or your music being played on the radio, restaurants, malls, etc. Performance Royalties are collected by Performing Rights Organizations (PRO) such as BMI (Broadcast Music Inc) , ASCAP (American Society of Composers, Authors, and Publishers), and SESAC. Performance royalties come in two forms: songwriter royalties and publishing royalties.
  3. Synchronization (Sync) Royalties – Each time your song appears in a tv show, film, commercial, video game, or any other type of visual media, a sync royalty is generated.
  4. Print Music Royalties – If you are a classical or film composer, once your composition is transcribed to sheet music, you are due print music royalties from the print music publisher for each copy of the composition.
  5. Producer Royalties – Some producers are paid based on percentage of revenue the label earns from a song. This is called producer points or producer royalties. One point is equal to 1% of the revenue earned by a song.

Greenlight and Royalty Accounting

Greenlight Financial has over 16 years of experience in royalty accounting with both individuals and record label companies. Contact us today to learn how we can help you.

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