How are music royalties collected and paid out? Wondering particularly about classic musicians like Bach, but also for modern music of performers both alive and dead
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There are multiple different ways by which a musician can be payed something called a “royalty”, and it can get real complex real fast, but I’ll keep it as ELI5 as I can.
When a musician or group of musicians record an original composition, they are creating two copyrightable items: The recording (which is the actual tape / disc / parts of a hard drive that contain that exact recording of that exact song) and the song (which consists of the notes, chords, rhythmic structure, and lyrics of the song)
The recording is typically controlled by a recording label. The label typically puts up the money to record the song and has exclusive rights to press copies of that recording onto physical media and to distribute that recording to digital retailers and streaming sites. They are the ones that get paid to both ship CDs to Wal-Mart and are the ones that get collect their $0.0033 / stream from Spotify. They will have some arrangement in the form of a recording contract stipulating how much of any money made off a given recording needs to be paid to the musician(s) who recorded the song. On some regular timetable the recording label will do some math, figure out how much revenue the song has brought in, figure out how much they owe the musician(s) and cut a check accordingly.
The song is typically controlled by a publishing company. The publishing company’s job is to maximize the amount of money that can be made off a given composition and pay the composer some amount of that money based on their publishing contract. Publishers make their money off of record sales by charging recording labels for the songs put on records, by “sync” rights, where they sell the song to be used in film or television or advertising, and from giant companies called “Performing Rights Organizations” or PROs which is a weird enough thing to merit its own paragraph.
PROs handle how songs in public can get composers paid. In the US there are three PROs: ASCAP, BMI, and SESAC. Every publishing company (and thus every published song) is associated with one of these three in the US. If a public venue wishes to play any music, they’re legally obligated to pay a royalty rate (typically dependent on capacity of venue) to whichever PRO controls whatever music they want to play. Sometimes this is handled through a third party service that will offer discounted rates in exchange for limited amounts of songs to be played in the venue (Muzak, and Pandora for Business are two great examples of this). This can be everywhere from the neighborhood coffee shop to an NFL stadium. The PRO then does some magical math to figure out what songs in their catalogue are the most popular, take the amount they took in from venues, and pay them out to publishing companies. Publishers then do the same kind of math as the record labels do and pay out according to the terms of the contract and what money came in.
Bach, as many folks have pointed out, is too long dead to have any works currently in copyright. Current term for US copyright is life of the author plus 70 years for sole compositions and 95 years from publication or 120 years from creation (whichever is sooner) for corporate works. Aaron Copeland’s compositions are still in copyright. He of course is too dead to personally collect royalties, but Concord Music continues to act as Copeland’s publisher, so everytime you hear “Fanfare For The Common Man” at the grocery store, know that that grocery store needed to pay a PRO for the right to have pleasing light music in the store, and that PRO payed Concord Music for the fact that that grocery store played “Fanfare”, and Concord Music periodically needs to cut a check to Copeland’s heirs.
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