The Rules All Digital Music Services Must Follow
To Whom They Must Pay Royalties In Order To Sell Music In Their Stores
In order for a digital music service like AmazonMP3 and others to allow a song to be downloaded, it must get two separate licenses and make two separate payments.
The licenses are:
-One from the person or entity that controls the recordings (like a record label)
-One from the person or entity that represents the rights of the songwriter
The two songwriter rights needed by digital music stores to be able to sell your music outside of the United States are:
1. The Right of Communication (aka Public Performance)
2. The Right of Reproduction
When a song sells in the United States, a digital music service like Amazon pays the songwriter money to the record label and then the record label pays the songwriter.
When a song sells outside of the United States, a digital music store must get the licenses and pay the person or entity directly that controls the songwriter rights. The digital music service does not pay the money to the record label to pay the songwriter.
Therefore, any royalties paid to you by TuneCore distribution for the sale of your music and songs outside of the United States do NOT include the additional money owed to the songwriter. The digital music services outside of the US must get the necessary licenses and make payments to the person or entity that controls these rights.
The digital music service must pay a separate royalty to the person or entity that wrote the song for each sale outside the United States.
If an artist is affiliated with a performing rights organization in the US like ASCAP or BMI, it is only for the right of Public Performance, not for Reproduction, which is just one of the two needed songwriter licenses.
The digital music service still needs to obtain the second license (the right of Reproduction), and make payments to the person or entity that controls that right for the songwriter.
Outside of the United States, the amount of the second royalty that typically gets paid to the songwriter for the download of a song via a digital music service is between 8 – 10% of the purchase price.
Some digital music services might try to get the licenses and make payments to a local, third party that does not represent all the rights (or any of the rights) of the songwriter.
These local collection agencies hold onto the songwriter’s money, take over 20% of it, and give the rest of it away to others companies like Warner Bros., Universal, EMI, Sony and others based on what % of the “market” they control.
In many cases, these local collection agencies never had the right to issue licenses and take the songwriter’s money in the first place.
It is not known if digital music services know this and turn a blind eye.
But what we do know is this: for songwriters, the digital music services must obtain the two licenses from songwriters, and make payments to them each time a song is downloaded from their stores.
If they do not have these licenses and are not making these royalty payments, they are violating copyright law and not paying artists the money they are owed.