How can a musical work be performed publicly? How are the royalties generated by these performances calculated?
The copyright in a musical work includes performing rights, which protect the music creator’s right to perform their work publicly or authorize others to do so. And the Copyright Act’s definition of a “performance” includes almost every way a musical work can be played for members of the public—not just a live concert or production.
SOCAN—Canada’s sole performing rights organization (PRO)—has negotiated tariffs (or licence fees) with the Copyright Board of Canada, and privately with certain licensees, for the following types of public performances:
- Live concerts presented by arts and entertainment organizations
- Live performances at commercial venues (including bars, restaurants, etc.)
- Traditional radio and TV broadcasts
- Streaming music (including podcasts, internet radio, and online concerts)
- Streaming films and TV shows
- Screenings at theatres and drive-ins
- Background music (at restaurants, clubs, gyms, stores, theme parks, etc.)
- Other performances
An Exception: Grand Rights
The licensing of musical works for inclusion in live dramatic productions like musicals, operas, and ballets is not administered by PROs. Instead, the music creators’ copyrights are essentially bundled with those of the other creative contributors (e.g., choreographers) under the umbrella of “grand rights.” In such instances, music creators and publishers negotiate a share of royalties with the producers directly.
Visit the Canadian League of Composers website for more information on grand rights.
In most cases, when music is played publicly (as defined by the Copyright Act), the music creator and the publisher are entitled to receive performance royalties.
In Canada and many other countries, all performance royalties automatically comprise a 50% “writer’s share” and 50% “publisher’s share.” While the writer’s share should always be held by the writer, the publisher’s share can be a point of negotiation. For example, a self-published music creator is entitled to both shares. But when a writer partners with a music publisher, the exact percentage of the royalties the publisher is entitled to receive varies according to the terms of the publishing agreement negotiated. Typically, the music publisher isn’t entitled to receive more than 25% of the total royalty “pie” (or half the publisher’s share).
SOCAN is wholly responsible for collecting performance licence fees in Canada, and for paying out performance royalties to its music creator and publisher members as well as foreign affiliates. In general, payments are calculated based on these factors:
- The venue or medium in which a musical work is played or performed (e.g., at a live concert, over traditional radio, via streaming services, at a free show, etc.)
- The total licence fees collected for the applicable medium (e.g., traditional TV, on-demand streaming TV, etc.) or venue (e.g., a bar, a retail store, or a stadium)
- The size of the audience and how much they’re paying (e.g., for a ticket, a subscription, a pay-per-view rental, etc.)
- How the work is used (e.g., as background music in a dentist’s office, as the opening theme in a movie, etc.)
As a specific example, when an episode of a TV show is aired via traditional broadcast, the amount of the performance royalty the musical work embedded in that AV production generates depends on the following variables:
- How long the music is played in the episode
- How exactly the music is used (opening/closing themes and featured music result in higher royalties than background and logo music)
- Note: While not applicable to SOCAN, some international PROs also pay different rates depending on whether the featured or background music is vocal or instrumental.
- The time of day the production is broadcast (the fewer the viewers, the lower the royalty)
- The station airing the program (those that pay more in licence fees to SOCAN are assigned a greater “station weight” in the calculation)
- How many times the episode airs in a given period (SOCAN tracks and distributes royalty payments quarterly)
- How much money exists in the “distribution pool” for broadcast TV royalties (each pool comprises the revenue from various licence fees minus SOCAN’s overhead expenses)
While much of the variable information listed above is submitted to SOCAN via cue sheets—which must be completed for all AV productions—some (i.e., the value of the various distribution pools) is known only to them.
Further, SOCAN collects data for other types of performances in different ways. For live concerts, a Notification of Live Music Performance (NLMP) form—providing all concert details including the repertoire or set list—must be submitted to SOCAN along with evidence that the performance actually took place (in the form of a program book, ticket stub, contract, etc.). For music streaming, digital service providers (DSPs) share usage data with SOCAN directly. Read more about how streaming royalties are calculated.
Tools like SOCAN’s royalty calculator are available in the members section of its website so music creators can more easily estimate how much they’re likely to make in a given quarter. To see exactly how SOCAN calculates royalties for all applicable types of performances, check out their Simplified Distribution Rules guide).
A Quick Wave to Neighbouring Rights & Royalties
The Copyright Act stipulates that, in certain instances, “equitable remuneration” is also due to the maker of the sound recording and performers. These provisions are referred to as “neighbouring rights” (or “related rights”), and they specifically apply to the sharing of sound recordings over traditional radio, as background music at a commercial venue, via non-interactive or semi-interactive music streaming, or as part of some live events (e.g., parades and fairs).
Similar to how performance royalties are divided, neighbouring rights royalties automatically comprise a 50% “maker’s share” and 50% “performer’s share”—with the latter to be distributed to all musicians and vocalists on the sound recording, and with featured performers receiving a larger proportion of the earnings than background artists receive (typically 80% vs. 20%).
Notably, neighbouring rights royalties are not currently paid out for interactive/on-demand music streaming (via services like Spotify or Apple Music) or AV broadcasts in Canada. And in the US, they are only distributed for non-interactive and semi-interactive music streaming (via services like iHeartRadio and Pandora, respectively), which is why they’re often called “digital performance royalties” there.
Learn about the collective societies that distribute neighbouring rights royalties.