In the music industry, whether you are a publisher, songwriter, recording artist, or a recording company, you have many ways to capitalize on profit. One of the biggest and the main stream of income in the music industry are royalties. Royalties are the payment for the use of the asset. The percent of royalties each person gets is based on who is on the copyright of the asset and what is stated in the contract. There are four types of royalties, which are mechanical licensees, performance rights, synchronization rights, and print rights. All of these different types of royalties have their own subcategories to break royalties down in their specific group. Today I will be talking about the different types of mechanical royalties. The first type is the recording artist mechanical royalties. This may be one of the most difficult royalties to understand since recording companies operate differently. The artist is paid a percentage of the sales of the recording depending on the contract. The artist does not get the immediate percentage of the record sales. The recording company must first collect the money they invested in the artist. They also deduct the promotion and packaging. The artist collects in royalties what has been left of the profit. The second type is the writer/publisher mechanical royalties. The record company calculates the total royalties and gives the publisher its percentage share. From there, the publisher pays the writer a percentage of the royalties received. The government has set up a statutory rate of $0.08 for a song that is five minutes or less in time. The third type is the Internet royalties. Each time a song is downloaded, the artist gets a percent of the royalties. This type of royalties is usually less compared to the other types. The recording companies also deduct a twenty-five percent packaging fee even though there is no packing involved in online songs.
Sources
