In the music industry, royalties are the primary form of payment for musicians, generated by licensing copyrighted songs and recordings. If you want to use an artist’s music in your campaigns, you need to understand the two main types of royalties to ensure that the correct procedures are followed and to avoid potential lawsuits.
Those two types of royalties are mechanical royalties and performance royalties. Let’s explore them further.
Mechanical royalties
Mechanical royalties are paid when music is reproduced, whether through physical sales (like CDs and vinyl) or digital reproduction (such as downloads and on-demand streaming).
Performance royalties
Performance royalties come into play when music is performed publicly, which includes radio, use in venues and streaming services.
Implications for users
So, what does it all mean for you when licensing music?
Two-part licensing
When using music in commercials, you often need to secure both mechanical and performance rights. These cover different aspects: reproducing music in your ads and broadcasting or streaming it publicly. If you’re using a cover version, mechanical royalties might be owed to the new musicians rather than the original artists, while performance royalties still go to the original songwriters. Failing to secure both types of rights or misunderstanding who should receive the royalties can lead to legal issues and impact your campaign’s success.
Multiple parties
You may need to deal with music publishers for mechanical rights and PROs for performance rights so that all necessary parties are properly compensated. That means you may need to often negotiate with different entities to cover all aspects of music usage.
Digital complexity
For digital ad placements, both types of royalties may apply due to the nature of digital media, where music is both reproduced and publicly performed.
Understanding the distinctions will help you budget correctly and adhere to legal compliance in your advertising campaigns. Always make sure you’ve secured all necessary rights before using music in your ads.
Simplifying music licensing
Keep Legals eliminates contractual insecurity while automating processes and providing a solution for managing the complexities of advertising contracts and payments securely and efficiently.
Navigate music licensing in advertising with Keep Legals so you’re fully compliant and avoid legal pitfalls.