License management today requiresa new approach, particularly after the shift to the streaming-generated content access paradigm.

COPYRIGHT

It is the legislation that gives authors of works of a creative nature (e.g., musical, artistic, literary creations, etc.) a property right in the creations themselves for a specified period of time.

There are essentially two main types of copyrights that are contained in each individual piece of music:

  • Song rights, which includes song lyrics and musical compositions, and is identified in the music market by the term “publishing rights.”
  • Rights to song recordings and is simply identified by the term “recording rights.”

Each of these two categories in turn incorporates different rights over which the copyright holder has control.

In the music industry, there is a tendency to group rights over copying/reproduction and distribution under the term “reproduction rights” and control over performance and public communication under the term “performance rights.”

Copyright law has not kept pace with the evolution that the music industry has undergone. Much of the legal framework governing music licensing, in fact, dates back to the early 20th century, long before the digital revolution reorganized the record market.

Copyright allows profits to be generated when third parties, called licensees, obtain permission to exploit the copyrighted content in one or more of the ways listed above in return for payment of a royalty.

LICENSORS

They can simultaneously exploit distinct types of copyright and different rights arising from the way the protected content is used, and in this case, they must obtain permission for each.

Example

If a radio station plays a song, it is exploiting the right on public communication at both the level of publication rights and recording rights, whereas if a band plays a song in a concert open to the public it is exploiting that right only with reference to publication rights.

Licensing, then, is the process by which the owners of rights, in this case music, grant third parties a license to use and exploit them in return for payment of a royalty.

With reference to the ownership of rights, it must be said that as far as publication rights are concerned this belongs by default to authors and composers, but usually it is ceded or control is transferred to publishers or CMOs.

Instead, ownership over the recording rights varies according to copyright regulations, which differ from country to country, but usually belongs to the record companies, musicians/performers, or entities that finance the recording, and even then the artist often transfers ownership or control to a third party.

royalties

The contracts and agreements by which control or ownership of rights are transferred provide that rights may be licensed against payment of certain royalties.

Four types of royalties can be distinguished that result from as many types of licenses:

  • “Mechanical” royalties: these are the revenues generated from the reproduction (physical or digital) and distribution of copyrighted works and apply to all music formats, such as CDs, vinyls, cassettes, downloads and streaming services.
  • Public performance royalties: these are the revenues generated from copyrighted works that are performed, recorded, played, or streamed to the public, such as through radio, television, live concerts, bars, and other public venues, or through streaming services; usually licenses for this category of rights use are handled by performance rights societies (PROs), which then collect and distribute royalties to rights holders.
  • Synchronization royalties: these are the revenues generated from the exploitation of music rights in film, television, video games, advertising, etc.
  • Printed music royalties: these are the revenues that arise from the fact that a copyrighted piece of music is transcribed onto a printed sheet, such as a sheet of music, and then distributed.

The total revenues generated from music streaming generally are split 30% to digital platforms, 60% to record companies and the remaining 10% to authors, artists and musicians.

The artists’ world also complains about the lack of transparency in revenue calculation systems and inefficient and slow payment flows.