All about neighbouring rights: getting paid for sound recordings performed on radio
Neighbouring rights, also called related rights, are similar to public performance royalties. However, they are paid based on the public performance and reproduction specifically of sound recordings. This means that artists performing other’s compositions are also entitled to royalties. Let MusicTeam® explain.
Key takeaways
- Neighbouring rights apply to sound recordings, specifically, the perfrmance of a sound recording on radio.
- Neighbouring rights apply to the sound recording makers and the performers.
- Neighbouring rights enable artists to earn ‘equitable remuneration’ (as it is called in Canada), payable on a 50/50 basis to creators and performers.
- Neighbouring rights payments are available retroactively to 1998. You must be registered with a CMO to collect these payments.
- The United States does not currently recognize neighbouring rights, though efforts are being made to change this.
- Currently, SoundExchange is the only organization paying creators and performers for radio plays in the U.S. and all other CMOs worldwide must go through SoundExchange in order to award royalties related to these plays. Royalties only apply to digital and satellite radio plays (not terrestrial).
- MusicTeam® helps artists worldwide get paid what they are owed via efficient metadata management.
Table of contents
How much do you earn when your sound recording is performed on radio?
Equitable remuneration is payable to creators and performers on a 50/50 basis when their work is played on Canadian radio. This means that performers are paid their 50% share without a record label as an intermediary. With respect to the 50% for performers, 40% is allocated to the featured performers and 10% is allocated to the non-featured performers. (Learn more about the difference between an artist and a performer for royalty collection.) For large ensembles creating classical or jazz recordings, slightly different splits are applied.
Important note: Because the U.S. doesn’t pay foreign artists for radio play, many other countries (including Canada, historically) have limited what they pay back to American artists for radio play. This means that the rules outlined here may not apply to American artists.
Neighbouring rights in Canada
In Canada, up until 1997, royalties for music broadcast or publicly performed were exclusively allocated to songwriters and music publishers, as dictated by the Copyright Act of Canada, which solely addressed royalties pertaining to musical compositions. Amendments to the Copyright Act in 1997 expanded the scope to include royalties for performances of sound recordings. This alteration meant that record labels, responsible for producing the sound recordings, became eligible for royalties concerning the broadcast and public performance of these recordings. Additionally, musicians who contributed performances to these recordings were entitled to royalties for their artistic contributions.
Who distributes royalties related to neighbouring rights in Canada?
Neighboring rights in Canada are administered by collective management organizations (CMOs), including Re:Sound, Artisti, ACTRA RACS, Connect and Panorama (formerly SOPROQ). These organizations collect and distribute royalties on behalf of performers, recording artists, and record labels for various uses of their performances and sound recordings, including radio airplay, streaming, public performances, and more.
The United States: where neighbouring rights don’t always apply
In the U.S. — along with China, Iran, North Korea, Cuba — recording artists (performers/owners of the sound recording) are not paid performance royalties for terrestrial radio broadcasts.
This is a result of the strong lobbying by broadcasters, who they argue that terrestrial radio performances constitute “free” advertising for artists.
Songwriters, on the other hand, do have digital performance rights (the preferred term in the U.S.) allowing them to be get paid when their work is performed on terrestrial radio in the United States.
American Music Fairness Act (AMFA)
On December 7, 2022, the House Judiciary Committee approved the American Music Fairness Act (AMFA), a proposed bill that would require U.S. AM/FM radio stations to pay royalties to performing artists and sound recording owners for music played on the air. This would represent a significant change to current U.S. law, under which terrestrial radio stations pay performance royalties only to songwriters and publishers, not to the musicians or recording owners. The bill has not been passed by the full House or Senate and has not become law, and efforts to change U.S. performance royalty rules for terrestrial radio broadcasts are still ongoing. As of today, U.S. terrestrial radio stations are still not required to pay neighbouring-rights royalties for sound recordings.
SoundExchange: paying royalties for radio
Currently, SoundExchange is the sole organization in the United States that collects digital performance royalties for sound recordings played over digital and satellite radio in the U.S., including Pandora, Sirius, and iHeartRadio. They do not collect royalties for recordings broadcast on AM/FM radio stations, however they are actively lobbying to be able to do so.
Payments are split as follows:
- 45% Featured Artist
- 5% Non-Featured Artist
- 50% Master Rights Owner
How Canadian artists can collect equitable remuneration in the U.S.
Re:Sound (and its member collectives) have a reciprocal agreement with SoundExchange. If you are registered with Artisti in Canada, they can collect your U.S. digital royalties for you and pay them out in Canadian dollars.
Do neighbouring rights apply to you?
If you are a musician or recording artist who has performed on a sound recording, you may have unclaimed revenue waiting for you. To collect your neighbouring rights, you have to register with a CMO in your country of origin.
To receive equitable remuneration for sound recordings performed on the radio in the United States, you must also go through SoundExchange. If your CMO does not already have an agreement with SoundExchange, you will need to register with SoundExchange yourself.
Retroactive eligibility
Musicians may be eligible for unpaid royalties dating back several decades. Neighbouring rights payments are available retroactively to 1998.
Neighbouring rights royalties apply to sound recordings, not works
Once a sound recording (officially called a phonogram) has been made available to the public, the rights holder receives compensation (equitable remuneration) for the usage of that sound recording. Remember, a sound recording is distinct from a musical work when it comes to rights and royalties.
The Rome Convention
Neighbouring rights might have been overlooked in the past because they are relatively new. Only since 1961, with the signing of the Rome Convention, have producers and performers been recognized as having rights in receiving royalties for the public performance and reproduction of their sound recordings.
The Rome Convention was instrumental in recognizing the rights of producers and performers to receive royalties for the public performance and reproduction of their sound recordings.
As the streaming economy has become an international phenomenon, it is universally agreed that creative endeavours need protection and more countries should start to pay digital performance royalties.
WIPO and the Rome Convention
WIPO is jointly responsible for the administration of the Rome Convention, along with the International Labour Organization (ILO) and the United Nations Educational, Scientific and Cultural Organization (UNESCO). The WIPO Performances and Phonograms Treaty (WPPT) also deals with the rights, particularly in the digital environment of (i) musicians; and (ii) producers of phonograms.
Let MusicTeam® help you collect what’s rightfully yours
The management of neighboring rights in Canada relies heavily on accurate music metadata, which is the key to ensuring that performers, recording artists, and record labels receive proper compensation for their contributions. Otherwise, your royalties could end up in the black box.
MusicTeam® helps streamline the registration process so that music rights societies can collect and distribute royalties to rightsholders in Canada, the UK and the United States.
We are your all-in-one platform for music distribution, registration and catalog management. Let us help you get paid what you are owed. Sign up today!
