When I explain to people what I do for a living it’s usually some form of “we make sure that musos aren’t missing out on money”. That’s the short version, but the slightly longer version is “we leverage our specific knowledge of how the music industry works these days to make sure there are no gaps in our clients’ royalty accounts and work to recover any potentially missing income”. The first version is better for the cab ride.
Over the 20 years that I’ve worked in the music royalties game CDs magically turned into free downloads, which then turned into paid downloads, and are now more like audio-streams-for-rent. The ways in which we consume music is light years away from how it used to be, and in turn, so are the ways that it’s marketed, distributed, and monetised.
These changes have opened up broad gaps in understanding, new interpretations of old terminology, and general confusion about how it all works. Some things remain the same but MANY things have changed. It’s a wild world out there for artists and labels, big and small, so here are my...
5 Music Royalty Things for Artists (and Their Managers and Labels) to Understand
Even though it’s all a bit confusing, and kind of boring, having this music and entertainment industry knowledge can help you sustain a career as an artist.
Escalations
Under some contracts “going Gold” means increased royalties for you, (and a nice plaque). 35,000 sales is Gold in Australia which used to be easy to count when it was all vinyl and CDs. But in the world of streaming, X amount of streams = one download … but don’t include some of the biggest tracks, and not user generated content either, and it’s different for ad-supported streams, and depends on what year it was streamed...
All this means that it’s easy to end up in the too hard basket. People just don’t do the count. So, don’t miss out on the escalation, (or the plaque). Get the sales counted.
Unregistered Tracks
Neighbouring rights is a whole thing. It’s the royalty income for the performance of the master recording. Similar to the royalties that writers get from APRA, but for the performers on the sound recording. If you are a performing artist you need to be registered with the relevant society in Australia as well as the equivalent societies overseas. They don’t deal with each other so it’s up to you, and again, there are different rules in different countries to be aware of.
The kicker? If you don’t claim this income yourself, it’ll likely go to your label and could end up sitting behind that recording budget you totally blew. Make sure you know who you need to be registered with.
International Reporting
Many times, if you do a world-wide deal with a major label, it’s going to be with the specific regional entity. For example, White Sky Records Australia Pty Ltd. Even though White Sky Records might be a multi-national company, the Australian entity is separate to all other entities, and they will have their own “inter-company” arrangement overseas entities. This means that, for example, the US entity will sell music in the US and then report back to the Australian entity based on their own internal arrangement.
Why is this important? Because if the US entity sells $100 worth of music in the US, it might only be required to report $80 of that to the Australian entity. Then, depending on the wording of your agreement with WSRA Pty Ltd, Australia may only pay you a percentage of that $80, not part of the $100. The devil is in the detail and lucrative international markets have NEVER been more open to Australian music (you don’t need me to explain the internet to you), so take note of your international income clauses.
Keep Track of Your Deals
The ability to record world class music in one’s share-house bedroom is amazing. You can be recording tunes day and night, whenever and with whoever you like. This kind of environment has led to an explosion in features and collabs between artists, producers, remixers, and live performers. The days of “ written by Diane Warren (and NO ONE ELSE )” are gone.
Everyone has a part to play and everyone should reap the benefits of their hard work … but sometimes this stuff gets lost in the shuffle. If you do a collab deal with someone, they should be reporting to you. It’s annoying but keep track of your deals follow them up.
Watch Those Costs
A common concept in the music business is that of recoupable costs. These are costs charged to the artist. A lot of non-major label deals are structured as a “profit share”, where the artist share will be something like “50% of Net Receipts”, where net receipts is defined as “income less costs”.
50/50, sounds great. Everyone wins … BUUUUT … Some costs could be fully recoupable from the artist’s 50% share. These could be just recording costs. Or just mechanical deductions. Or both of those things and also all 3rd party marketing and promotion costs … then before you know it the artist is fully covering most of the costs and it doesn’t look much like 50/50 anymore.
A lot of the time costs and budgets are to be agreed by all parties, but even if they’re not and the label has carte blanche, as an artist you should be across the spend, and be aware of who is actually paying in the end.
Your Job is to Make Great Music...
Ours is to make sure you’re paid properly for it. The technology makes easy and devil in detail Venn diagram is a circle. It’s not to say that things can’t be easy, it’s just that there are more things to be aware of. Like I said at the top, this stuff is our jam, so if you want to run anything by us just reach out via the form below.
White Sky, now part of BlueRock, provide specialised accounting and financial services that help artists, managers, record labels, festivals and creative businesses thrive.
