US and European Music Copyright and Collections

With the world growing smaller and technology making music more accessible, understanding publishing on a global level is becoming increasingly crucial for songwriters and musicians. Artists such as Lady Gaga, Katy Perry, and Sarah Bareilles have multi-million dollar markets outside of the United States, and there are separate sets of rules and regulations in all of the various other territories.  Each country has its own interpretations of intellectual property and the rights that they consider fair and equal.  The United States and Europe in particular, have varied sources of royalties and different collection societies as well.

Copyright Explained:
When someone records song in any tangible form (sheet music included), they are automatically a “copyright” holder for the material that they created.  Registration with the copyright office is not necessary to attain true ownership, but when dealing with infringement cases or working with a record company, legal proof of ownership over the intellectual property is required.  In the United States, owners of copyright have six basic rights:

• Reproducing the work
• Creating derivative works
• Distributing copies to the public
• Performing the work in public places
• Displaying the work publically
• Performing the work in non-exempt digital mediums

In Europe, a similar set of rights is offered, with a few additions:  For example, in the 1961 signing of the Rome Convention, neighboring rights were introduced. These rights address performing artists and record producers who make creative reinterpretations of other artist’s work. For instance, when Alien Ant Farm reinvented Michael Jackson’s “Smooth Criminal,” some argued that the band should have received performing royalties each time their rendition was played on American radio. While the band only received royalties from records sales in the U.S., royalties collected by the Performing Rights Societies in Europe were split between Michael Jackson’s estate and Alien Ant Farm.

European artists are also entitled to moral rights. The United States has a similar structure, but the laws are much more concerned with creating a commercial market than protecting an artist’s creative rights.  As a result, the United States copyright law is not as strict.  Under moral rights, the author may exercise a right of integrity to approve or oppose any alterations made to their work by a third party.  Once the work is created, a right of paternity is held- granting the original author writing credit in the third party work. These rights are non-alienable, and like U.S. law, the copyright is active 70 years beyond the death of the author.

Royalties
There are two main ways for an artist to profit from their songs: performance royalties are distributed when a song is publically performed, and mechanical royalties paid when physical copies of sheet music or recorded music are produced.
In the United States, publishing companies only deal with mechanical royalties and the administrative aspects of a writer’s career.  Publishing companies not only help a songwriter get his or her material recorded, but also deal with the nitty-gritty administrative tasks related to licensing and mechanical collections. Artists typically sign away the copyright to the publishing company and collect 50% percent as a writer’s share, but with enough clout, an artist can bargain for a different structure.  Once an artist has begun receiving money from album pressings, their songs can go on to be played on the radio, in stores, in restaurants, and performed live by cover bands and artists in venues across the United States.

Performing Rights Organizations
Performing Rights Organizations (PRO’s) collect royalties that are paid in proportion to the number of times an artist’s song is played on the radio, in a bar or club, or in any other public space.  In the United States, there are three organizations that an artist can choose from – ASCAP, BMI, and SESAC.  Each one offers the same basic services with slight variations to business procedures. After collecting royalties, they pay the copyright holder (generally the publisher) and the publisher pays the writer 50% percent of the money earned.

In Europe, there are 25 collection societies for the 27 countries in the European Union, and each one acts as the sole society for that country.  Essentially, they are government-affiliated monopolies that collect all of the money in a designated country for both performing royalties and mechanical royalties.  Differing from the United States, the European performing rights societies almost always expect exclusive administrative rights.  Since artists in the European Union cannot choose their service, regulations can be forced upon the artist that might not be in their best interest.  Overall, the United States offers more choices to an artist, while each country of the European Union offers a more streamlined set of regulations for the complicated royalty system.

Also differing from the United States, the European collection societies pay the publishers for mechanical royalties directly, rather than sending them to a third party organization first.  In the U.S., mechanicals are usually collected by organizations like Harry Fox.  Companies like these are responsible for handling all of the licensing, tracking, and payment collections, and they do so completely independently of the PRO’s.  In comparing the two systems, consider that in 2009, European societies reported 63% of global royalty collections, while the United States and Canada only accounted for a combined 19.2%. This drastic difference is due to the fact that, in Europe, both the mechanical and performing royalty collections are handled directly by PRO’s, while in the United States, ASCAP, BMI and SESAC handle performing royalties separately from the publisher.
Transparency and Equality

In the United States, each of the three major PRO’s use separate processes to determine how much each artist has earned.  For instance, ASCAP and BMI use an undisclosed equation which tracks play counts based off of arbitrary airtime samples to determine how much each artist receives from the total amount collected from the total royalties collected.  SESAC uses a scanning device that tracks the technological fingerprint of a song, which provides a more accurate representation of how many times that song was played.

European PRO’s utilize a similar system to SESAC called DJMonitor which also tracks fingerprinted songs on an online database.  Since each society only handles their respective country’s artists, the system is more equal and accurate.  Furthermore, the European societies strive for more transparency.  DJMonitor has developed a Playlist Management System (PMS) in which rights holders can review the music performed to verify the results and to make corrections to songs that were fingerprinted incorrectly.

All in all, there are many differences between the European and the American process for publishing and royalty collections. The three societies of the United States allow for more competition within a single market, and are independently regulated.  In Europe on the other hand, the government regulates each society with DJMonitor- a system that seems to provide more accurate tracking. European artists may sign away more rights, but they have more provisions written into copyright law that protect their work from being altered in an unfit or unacceptable manner.  Perhaps the United States will adopt Europe’s transparent system to ensure efficiency among collecting societies while maintaining the choice and freedom of the artist.

By Thomas ‘Witt’ Godden

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