A Guide to Rights Management and Royalties in the Digital Age

NEIGHBOURING RIGHTS

If you’re the owner of a record label or an artist that owns the rights to their master recordings, you are entitled to neighbouring rights music royalties when your recordings are publicly performed or broadcasted. The phrase “neighbouring rights” refers to a form of copyright encompassing commercially released sound recordings: when recorded music is played on television and radio or played in public places, copyright law states that music royalties should be distributed to the performing artist and the owner of the master recording.

In the commercial music industry, record labels often own the neighbouring rights to master recordings, and they are legally owed music royalties whenever their music is broadcasted or played in public spaces. One crucial distinction to understand is the difference between neighbouring rights and performance rights: the latter refers to the right to broadcast publicly the musical composition associated with a given recording, as opposed to any recording of that composition. While publishers collect royalties owed to performance rights holders, it’s music rights management companies such as MN2S that collect music royalties owed to neighbouring rights holders.

PPL

Phonographic Performance Limited, known to the music industry as PPL, is a British performance rights organisation and music licensing company. Rights management companies, record labels and artists register their rights with PPL in order for the organisation to collect and distribute any music royalties that they are owed: as of 2019, PPL work with over 100,000 rightsholders and performers across the UK, ensuring that their rights are properly registered and that labels and artists are compensated for any public broadcast or performance of their works.

PPL represents the majority of mainstream labels and musicians, along with many independent and lesser-known imprints and artists. Enabling broadcasters and public venues to play commercially licensed music without having to contact multiple licenseholders directly, they provide an essential service that facilitates the process of rights management and music royalty distribution on a national scale. As part of our music rights management process, we register the rights of record labels, artists and producers with PPL, providing them with the necessary metadata and acting on behalf of the label to collect and distribute music royalties.

MUSIC ROYALTIES

Music royalties generated by the licensing of copyrighted recordings form a large part of the income that record labels, artists, musicians, songwriters and composers receive. The music industry relies on these royalties, and it’s absolutely essential that they are collected and distributed in accordance with intellectual property and copyright law. Without such laws, music could freely be played or broadcasted to the public without a single penny ever being paid to those responsible for its creation: this would not only create an unfair environment in which labels and artists receive no compensation for their work, but also economically devalue the artistic medium of music itself.

PPL calculates the exact figures behind their royalty payments by working out how much each member has earned once the money they’re owed has been collected from licensees across the UK. The music royalties are then distributed to the rightsholders associated with the relevant recordings, after some deductions and adjustments are made. The details of this process are complex and vary according to whether music is broadcasted on radio, used in television, or played in a public arena, but the essential objective remains the same: record labels and musicians receive the music royalties they are owed, and the creators behind the music receive financial compensation for their work. At MN2S, our label services platform includes music rights management: we act on behalf of record labels to ensure that the music royalties collected by PPL are distributed in a timely and conscientious fashion.