Ever asked what is public performance licensing?
Whether you’re a recording artist, performing musician, or both, you need to understand performance licensing.
These licenses are necessary to play a song in public.
That includes the music you hear playing on the radio, in clubs, restaurants, retail stores, concerts, arenas, stadiums or anywhere else.
It doesn’t matter if it’s a stream of the original recording, a live band, or a DJ – it requires a public performance license.
It’s not as easy as just buying the CD or downloading a streaming service like Spotify or Pandora. But how are these licenses issued and tracked, especially by independent artists?
That’s what we’ll discuss in this guide. By the time you’re done, you’ll understand what a public performance license is and how it works. Let’s start with what it is.
What is Public Performance Licensing?
The performance right to a song is defined by the copyright doctrine (Title 17 U.S. Code, S106) for both musical compositions (songs) and sound recordings. Copyright holders (whether artists, record label, etc) license their songs for public performance in exchange for paid royalties.
According to the U.S. Copyright Act, anything outside of one’s immediate circle of friends and family at home is a public performance. There’s also a broadcast clause that covers performances, display, or broadcast using television, radio, or internet.
This means companies like Pandora, Spotify, and Tidal do have commercial public performance licenses to stream. You as a user, however, need a Spotify business account (dubbed Soundtrack), for example, if you were to use it to play music in a public venue. In fact, let’s dive more into the types of public performance licenses below.
Types of Public Performance Licenses
As mentioned above, your recorded song has two licenses when copyrighted: the actual song (lyrics, instrumentals, melodies, etc.) and the sound recording. There are often different copyright owners for each, as the publishing company typically owns the song, the composition, while the record label owns the recording.
This can complicate things, so breaking it down into the different categories of license terms is the easiest way to look at it. There are three basic types of performance licenses:
Blanket music licenses are issued to allow blanket permission of any music in a specified catalog. These are issued by the major performance rights organizations to radio stations, TV networks, and large venues to play the music they represent. Blanket licenses make it easier for these types of entertainment-based businesses to keep up with all the latest hit music.
Fees are based on the business type more than the number of times the song is streamed, which is why you’ll often hear musicians like Taylor Swift or Jay-Z complain about streaming services. It’s a bit like socialism, where those top 1% artists support the bottom.
A per-program license is like a blanket license in that it includes the full musical archive. However, the fee structure changes to cover the individual songs used in the channel programming.
This means every play must be tracked, which is why radio DJs and television broadcasters keep such detailed records of tracklists and songs played in every program.
In fact, modern mechanical licenses negotiated for streaming and digital download mechanical royalties spawned from these per-program licensing deals.
Direct and Source Licenses
Despite having blanket licenses, many TV networks, radio stations, websites, and live venues also negotiate direct licenses with musicians for public performance. A production company may also use a source license that grants them the right to authorize a network or website to publicly perform the music.
Synchronization licenses are a form of source license, where the production of a movie, TV show, music video, etc. licenses the song for use with the video.
While direct and source licenses can be negotiated directly by an artist, the other two are typically done on a larger scale. That’s where the performance rights organizations come in.
Role of Performance Rights Organizations
A performance rights organization (PRO) acts as an intermediary that enforces licenses, collects royalties, and performs all the operations behind the scenes. They’re also known as performing rights societies or copyright collectives. There are six major PROs in the United States, and the list is continuing to grow.
PROs act somewhat as an artist union, giving artists more power through the collective bargaining rights of a large entity.
When artists like Post Malone or Lil Nas X were independent for example, they may have signed to a publisher or record label that’s a PRO member, which exposes the music to widespread radio, TV, and streaming services that would otherwise be impossible to attain. This is just the U.S. so keep in mind that there are foreign PROs too.
Role of Foreign PROs
Although many of the above PROs can also work internationally, some artists choose to work directly with agencies based internationally. This helps get them targeted exposure outside the U.S., something that greatly helped someone like David Hasselhoff, whose fame in Germany far outpaced his American relevancy.
Aside from this, these PROs do a great job of catering to the needs of the artists already within their residing countries.
Many indie artists though do find it easier to gain a following in foreign markets looking for new sounds, so think outside the box to keep generating new income streams in hundreds of countries outside your native soil.
Now we’re at the part you’re most interested in – how much money is all this worth?
How Much Money Can Be Made from Performance Licensing?
You love music – we all do. But at the end of the day, the music industry is a business. Money is your goal, and there aren’t any standard rates for public performance royalties.
According to Rolling Stone, the average per-stream payment is $0.006 – $0.0084 to the artist. Video services like YouTube pay as high as $3 per 1000 streams.
The use of music by broadcasters and public venues accounts for 14% of total revenue at $2.7 billion. It has steadily increased over the past ten years.
Synchronization revenue (i.e. music in videos) represents 2.3% of revenue, while 47% of artist revenue comes from streaming.
But you can’t earn that money unless you get your music registered, copyrighted, and licensed properly.