(By Bruce Lampcov, Billboard, 20 July 2013)
The U.S. music business and its artists are leaving millions of dollars on the table in neighboring rights. That must change The music industry has faced many well-covered challenges during the two decades where the business has shrunk some 50%, so it’s surprising that many U.S. artists are either unaware or indifferent to a steady stream of revenue from global neighboring rights. In 1961, the Rome Convention established an internationally acknowledged performer’s right to “equitable remuneration,” thus creating a new royalty stream for artists known today as neighboring rights. When a recording is broadcast, played in public or streamed, it generates income, or neighboring rights, for the artist, session musicians and the label. This differs from the song copyright that generates royalties for composers. For example, when the Beatles version of “Yesterday” is played on the radio, John Lennon, Paul McCartney and publisher Sony/ ATV receive publishing royalties. However, neighboring rights royalties are also paid to Lennon, McCartney, George Harrison and Ringo Starr as the featured artists and EMI Records as the owner of the recording.
These
royalties can be substantial, and are distributed by local rights societies in
the territory of exploitation, such as PPL (United Kingdom), SENA Netherlands), GVL (Germany) and ACTRA
(Canada). These societies are separate from song copyright societies like
ASCAP, BMI and their international affiliates. Session musicians are also
eligible to collect neighboring rights royalties. For instance, Eric Clapton
collects such royalties, along with the Beatles, for “While My Guitar Gently
Weeps” for his contribution as the lead guitarist. Harrison collects the music copyright
royalties as the composer. Fintage House
estimates that there is potential neighboring rights income of some hundreds of
millions of dollars for U.S. artists. The
Rome Convention provided that artists, band members and session musicians would
be paid a royalty when the songs they performed on were played on the radio,
whether or not they were composer. Had the United States been a signatory of the
Rome Convention, artists like Frank Sinatra, Ella Fitzgerald, Bing Crosby and
Tony Bennett would have been able to collect a royalty when their recordings
aired on the radio.
However, the
United States didn’t sign the treaty as it was against granting (unwaivable)
rights to individual performers with respect to their artistic contributions at
the time, thus excluding its citizens from the benefits of this substantial
royalty stream when their records aired on European and Canadian radio
stations. It’s estimated that about half of the income available is still
uncollected by U.S. artists. Fast-forward
to the ’90s. When the societies that were set up to license these rights to
radio stations and collect the fees began paying performers directly, it became apparent that
in some cases U.S. performers could qualify for neighboring rights income for
performances outside the country. In
addition, in 2000, the United States established a performance right similar to
neighboring rights, but only for digital transmissions like satellite
broadcasters (SiriusXM) and webcasters (Pandora).
Unfortunately,
each territory had its own set of rules that made the process seem
incomprehensible to most artists. In fact, most U.S. artists and their
representatives weren’t aware until recently of this royalty stream’s earning
potential. Worldwide radio hits could
generate many hundreds of thousands of dollars if the qualification criteria is
met, and catalog artists could have significant payments that have accumulated
through the years. With the help of
neighboring rights agencies, as well as informed managers and lawyers, many
U.S. artists are now benefiting from this income source. There are many aspects that artists should
consider in order to secure maximum income for their royalties, but below are
the most important ones:
1
Performances should be recorded in a “qualifying country.” Most countries
outside of the United States qualify, including Canada and Mexico.
2 Own your
masters. Masters owners can collect in many cases, even if the owner is a U.S.
company.
3 Sign to a
foreign label. Some territories will pay U.S. performers if the label is based
in a qualifying country.
4 Some
territories now pay U.S. artists. Countries like Spain, Brazil, Russia and
Hungary all pay such artists regardless of the country of recording.
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