Know your neighbouring rights: Understanding a vital revenue stream for DJs and Artists
If your music is played on TV, radio or publicly in many countries around the world, you’re due neighbouring rights payments. Find out what they are… And how to make sure you…
Collect what you’re due
Somewhere, out there, are numerous pots of unclaimed monies sitting idle for musicians and label owners. Millions in cobwebbed accounts of collection societies around the world waiting for the right person to claim them. Some pots are pretty considerable, too…
“We’ve found tens of thousands of pounds for people who didn’t know they were missing royalties. They didn’t realise they could get paid for all their non-featured credits or remixes that did really well in certain territories,” explains Christopher Davies-Smith at Lime Blue Music, a leading UK neighbouring rights management company. “There are some people who are due hundreds of thousands. There are holding accounts in collection societies around the world with the names of people who they know are on the track but these societies can’t track them down. There are countless musicians with tens and hundreds of thousands just sitting there.”
Could that be you? If a record is played on radio, TV or in a public place in a large proportion of countries around the word, and you are either the artist on a record, any of the registered performers on the record, the remixing artist, or you own the label responsible for its release, then you are due at least a little slice of those pots.
Say kids, what time is it?
It’s called neighbouring rights revenue… And while it’s officially existed since 1961, it’s recently become an increasingly rising source of income for musicians and labels as the industry continues to gain more efficiency in collecting multiple sources of revenue on each record such as streaming, mechanical rights and syncing.
“There’s a lot of talk about getting as many revenue streams on a track or content at once,” agrees Davies-Smith. “As a lot of our clients are independent labels this type of revenue has been a huge boost to their business. And more and more people are becoming aware of neighbouring rights revenue because there’s an increased movement towards everyone going independent.”
In 2017 performance and neighbouring rights increased to account for 14 percent of industry revenue in the US alone, tallying a cool $2.4 billion. The IFPI expect it to continue to rise. Not just because more artists have become fully independent but also because 14 percent does not reflect the amount of copyright holders that are out there.
Bang to rights
The Association For Electronic Music (AFEM) put it best: ‘get played, get paid’. But how do you know where your music is being played? And how do you access those royalties? There are over 50 countries with collection societies you could potentially source revenue from, providing your music is played in that territory. But each country’s collection society has a different structure, a different royalty amount collected per play (and these payments range depending on time of broadcast and size of audience) and a different registration process. They also hold on to unclaimed revenue for different periods of time.
“Some countries it’s a year, some are six, some are ten years plus,” lists Davies-Smith. “In the UK it’s six years for performers and one year for labels. Every country is different and that’s where things get confusing.”
No place like Rome
To get an idea of why the rights collection process is confusing, and how regulations differ from country to country, we need to go back to 1961 and a legislation known as the Rome Convention. It was here where neighbouring rights were established and a selection of countries signed a deal to ensure that all performers and artists on a record were remunerated when the sound recording was broadcasted or played publicly. While each country agreed to collect on behalf of registered international artists, the laws and processes each country decided to implement was up to them.
To make it more complicated, some countries signed the Rome Convention but don’t have collection societies set in place to actually collect royalties (such as the UAE) while other countries didn’t sign the Rome Convention at all. This includes one of the biggest territories in the music industry, America, where broadcasts of a sound recording on standard TV, radio or in public did not require any royalty payment to the owners of the sound recording copyright.
“It is very very complicated,” agrees Mark Lawrence, AFEM CEO. “Originally, by not signing to the convention, US musicians and performers were excluded from reciprocal deals between neighbouring rights societies and therefore excluded from earnings. US law does recognise the neighbouring rights in digital broadcasts so there is income from digital performances of sound recordings on satellite radio and internet platforms, so Pandora and Sirius XM are licensing via SoundExchange.”
This digital development happened in 1996 during the WIPO Performance And Phonograms Treaty and with the rise of platforms such as Sirius XM and Pandora, the American collection society, SoundExchange has become a major source of neighbouring rights payments. Notably, Sirius ranked close to the UK’s BBC as one of the highest payers to collection societies.
Right here, right now
So how do you make sure people are collecting for you? For the UK industry the default, and perhaps easiest, position was to collect through PPL. As the UK’s only collection society who collect national revenue through recorded music, UK musicians and labels are already signed with PPL so it makes sense to mandate them and allow them to collect globally on your behalf. Now however there are a variety of smaller independent neighbouring rights management companies who tailor their collections to particular markets and offer a more personalised service.
“The more data you have, the more you understand your product and where it’s working,” explains Davies-Smith. “You could have a remix that didn’t do too well in the UK but did incredibly well in Greece, for example. It gives you a clearer way of knowing what’s working and how to develop.”
Whether it’s with PPL or an independent rights management company, signing up is relatively straight forward; making sure you have your catalogue and IRSC codes registered and signing various documents to give the company power of attorney in various territory to make the collection for you. If you’re an independent artist, rather than a label, get your autograph flex on; Davies-Smith explains that there are many different documents to sign as many collection societies still require paper registrations.
Have a cigar
But before you sign anything, do your research. Lawrence recommends a second pair of eyes, “preferably a lawyer, to ensure that the contract is fair and will deliver on its promises”, while Heerey recommends looking at each company’s service and global reach as well as existing clients and identifying one which perhaps works in your genre and knows your product.
“It’s definitely worth researching the options that are out there and understanding what each service offers and what is best for you. Some services may work with labels and artists who sit in a certain field or style so you may find that your repertoire will be best represented by a company who shares a similar ethos or passion for your music,” he concludes. “It’s a competitive, massively growing market and collection societies are still launching and developing around the world. Whether you own your own label or are an established indie you should be thinking about this revenue stream and who you partner with just as importantly as who you partner with for your digital distribution and other revenue streams.”
Editor’s Note: Our friends over at Labelworx offer an excellent Neighbouring Rights service – click through HERE to another great article on this issue and get in touch with Aex and the Labelworx crew via the link on this page.