How can a musical work be copied? How are music creators and publishers compensated for these reproductions?
In addition to performing rights, the copyright in a musical work includes reproduction rights, which entitle music creators to make copies of their work, or grant others the right to do so.
These rights are generally broken into two subcategories—synchronization rights and mechanical rights. (The right to produce sheet music is also a reproduction right, but it represents a much less common and less lucrative revenue stream for most music creators.)
In the context of the music industry, “synchronization” refers to the reproduction or “fixation” of a musical work (or any part of it) in an AV production such as a film, TV show, video game, or commercial. Whenever a production company or other licensee wishes to include a particular work in one of their projects, they must first negotiate and conclude a synchronization (or “sync”) licence with the owner or its duly appointed representative or administrator—often a music publisher, lawyer, or sync agent—by way of a sync agreement.
If a licensee wishes to use a sound recording in a production, they must also negotiate and conclude a master-use licence with the owner of the recording. So, while the sync licence grants permission to use the musical work, the master-use licence provides permission for the use of a specific recording of a musical work.
Mechanical rights cover the physical or digital reproduction of a musical work. This includes the production of sound recordings, the mechanical licences for which are negotiated between the publisher of the work, or the reproduction rights organization (RRO) they’ve registered the work with, and the maker of the sound recording.
Further, Canada’s two RROs—the CMRRA and SOCAN RR—have established licence fees, either through direct negotiation or through tariffs certified by the Copyright Board, for the following types of reproductions:
- Manufacturing of physical audio media (i.e., CDs, vinyl records, cassette tapes, flash drives)
- Downloading sound recordings
- Streaming of music and some AV content
- Traditional radio broadcasts
- Some traditional TV broadcasts
- Sharing AV content on certain social media sites
- Other reproductions
In Canada, whenever a musical work is reproduced in any of the ways noted above, the music creator and their publisher are entitled to receive mechanical royalties. The reason radio and some TV broadcasts generate these royalties—called “broadcast mechanicals” in this context—is because sound and AV recordings need to be copied for technical reasons when they’re being prepared for air.
Unlike performance royalties, which comprise equal shares for the writer and the publisher, 100% of the mechanical royalties are distributed to the publisher, who then pays the writer (unless the music creator is self-published, or the publisher authorizes SOCAN RR to pay the creator directly). The percentage of the mechanical royalties each party is entitled to receive varies according to the terms established in the publishing agreement, but many music creators will seek to ensure that they are entitled to receive at least 50% of these royalties.
Either the CMRRA or SOCAN RR is responsible for paying out royalties to the publisher of a musical work, depending on which RRO they’re registered with. And how those payments are calculated differs based on the type of reproduction that’s taken place.
For reproduction via physical audio media, there is a standard mechanical royalty rate in Canada, which is negotiated between music publishers and recording industry representatives. In the US, this rate is set by law, and in most European countries, these royalties are calculated as a percentage of the wholesale or retail price of each track.
The mechanical royalties for other common types of reproduction are determined by a variety of calculations. For example, when a sound recording is played over the radio via traditional broadcast, the amount of the mechanical royalty generated depends on the following variables:
- The percentage of station air time occupied by sound recordings of musical works in SOCAN’s repertoire in a given month (if it’s less than 20%, the station is considered “low-use”)
- The gross income of the station airing the sound recording in a given month (which is itself calculated based on a large number of variables)
- Whether or not the broadcaster is a French-language station
- Whether the station’s yearly gross income has exceeded certain amounts (i.e., $625,000 and $1.25 million)
Private Copying Revealed
The Copyright Act includes a section that addresses the copying of sound recordings—and the musical works embedded therein—onto blank audio media for people’s personal use. While this private copying doesn’t constitute copyright infringement, the act says that rights holders in the work and recording are nevertheless entitled to receive remuneration.
However, since recordable CDs are currently the only media to which this section of the act applies, the royalties collected are minimal—although the Canadian Private Copying Collective (CPCC) is advocating to have a private copying levy applied to cell phones and tablets, as is the case in the US and most European nations.
Read more about how the CPCC administers private copying royalties.