Understanding Neighboring Rights

Neighboring rights can be a complicated, confusing sector of the music industry, which is why it’s so important that organizations like IAFAR have made it their mission to help record labels and artists collect the neighboring rights royalties they’ve earned. Neighboring rights refer to the royalties that sound recording owners (typically artists and labels) earn every time a sound recording is publicly played. 

At Exactuals, we work with neighboring rights companies regularly to make sure they’re receiving all the income they’re owed and that they’re distributing that income correctly. Based on our experience, here’s a step-by-step guide on how to make sure you’re collecting all the neighboring rights royalties that are out there waiting for you. 

1.) Make sure your song catalog metadata is accurate and up-to-date, and that you’re aware of every single recording of your songs out there. 

Before you begin this process, it’s important you have your song catalog data in one place. You will only be able to collect neighboring rights royalties on the master recordings you own, so exclude any covers or other recordings you don’t have the rights to. If you need assistance taking inventory of your catalog, Exactuals has developed a music metadata technology called RAI that can help clean it up. It’s highly recommended you clean your music metadata first, as any inconsistencies will lead to lost royalties. It’s much more difficult to fix your song metadata once your songs are already out in the world. 

For example, there are 29 distinct ISRCs (recordings) associated with Sara Bareilles’ “Love Song.” There are 140 UPCs (album barcodes) associated with those 29 recordings, which means Sara Bareilles’ renditions of “Love Song” appear on 140 different albums. Each of those albums generates neighboring rights royalties for the sound recording owners, so if you’re not aware of even one, you’re missing out on income. If you’d like to try out some songs yourself, you can do so for free at https://royalties.ai/resolution. 

2.) Make sure your songs are copyright protected. 

If you live in the U.K., your work is automatically copyrighted upon creation, so you don’t need to file any paperwork. That said, it’s always advisable to have evidence of creation, so make sure to protect yourself as much as possible. 

If you live in the U.S. or Canada, your song is also technically copyrighted as soon as it’s in a fixed and tangible state. However, if you anticipate needing to sue infringers or seek legal fees in a case of copyright infringement, your song must be registered federally. In these countries, you can register for copyright protection via the U.S. Copyright Office or the Canadian Intellectual Property Office. There is a small fee for each song, but especially for bigger songs, it’s well worth it to protect your intellectual property. 

3.) Make sure your songs are registered with a Performance Rights Organization. 

Performance Rights Organizations (PROs) are national collection societies that collect and distribute performance royalties whenever songs are played in public places like restaurants or bars, whether it’s live or over the speakers. It’s essential to register with a PRO in your country to collect these royalties. 

However, the U.S. is unique in that it does not pay neighboring royalties for terrestrial radio. Since the U.S. doesn’t pay neighboring royalties to other countries, many countries have returned the favor by not paying them on songs recorded in the U.S. However, there might still be some revenue to be claimed. The main PROs in the U.S. are ASCAP, BMI, SESAC, and GMR. ASCAP and BMI are open to everyone, but SESAC and GMR are invitation only. 

Internationally, Canada’s PRO is SOCAN, the UK’s is PRS, Germany’s is GEMA, and France’s is SACEM. 

4.) Make a list of all the outlets your song is being played on, so you can identify all the possible revenue streams for your songs. 

Here’s some examples of common revenue streams for neighboring rights: 

• internet radio (i.e. Pandora, Slacker, Spotify, etc.) 
• satellite radio (i.e. SiriusXM, etc.) 
• terrestrial radio outside of the US (i.e. BBC Radio, Capital Xtra, Magic Radio, etc.) 
• cable TV music channels (i.e. MTV, VH1, Fuse, etc.) 
• public performance (You don’t need to make a list of all the establishments your song recordings are played in, but you will need to keep track of live show setlists and submit them to your PRO to earn public performance royalties on them. Many artists don’t know they get paid royalties for playing their own songs!) 

5.) Register with a company that collects neighboring rights royalties. 

These administration companies administer your songs on your behalf and use their pre-existing relationships with foreign PROs to collect worldwide income for you. There are plenty of administrators who handle neighboring rights, but a couple great ones to check out would be Zanoise and Media IP Rights. 

6.) Go through your sales statements, and make sure that you’re collecting income from all the revenue streams you should be. 

You can do this by cross checking your sales statements with the list you generated in step four. If there’s a revenue stream missing, contact your neighboring rights administrator from step five. 

7.) Use royalty calculation software to efficiently and effectively figure out how much to pay out to each rightsholder. 

At Exactuals, we recently acquired a system called SR1 that facilitates royalty calculation. This way, you don’t need to manually calculate artists’ earnings. 

8.) Develop a system to process payments and send royalty statements to your rightsholders. 

If your payments originate in USD, Exactuals can process them on your behalf to over 200 countries and territories via PaymentHub. If you’re paying out to a lot of different artists and companies, PaymentHub is able to process all of those outbound payments and house the royalty statements associated with them in individualized online portals. 

9.) Give yourself a pat on the back, you’re done. 

For the time being, at least!

Via IAFAR