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What are performing rights royalties?
Here's a quick introduction to the subject:

ASCAP, BMI, and SESAC are performing rights organizations in the United States. Their main function is to collect performing rights royalties from those who commercially use the music of their member writers and publishers. They distribute royalties to their members after administration costs are deducted.

Performing rights organizations license public performances of their members' music in the United States for non-dramatic rights, which generally includes use on domestic television, cable TV, pay-cable networks (such as HBO and Showtime) and use in commercial facilities such as nightclubs, restaurants, and music-on-hold services.

Dramatic Rights, which are not within the realm of the performing rights organizations, are performances such as Broadway and off-Broadway plays and ballets. Audio books sold for retail are not covered by the performing rights organizations unless they are broadcast on television or otherwise used in the situations described above.

In the United States, performances of music on television are covered while performances of music in movie theaters are not. In almost every other country, performances of music in movie theaters are covered by the local performing rights organization which has a reciprocal agreement with the U.S. performing rights organizations.

What do ASCAP, BMI, and SESAC mean to the filmmaker?

1. Each music performance when a show or film is broadcast on television has the potential to generate performing rights royalties for the writer(s) and publisher(s) of the music. Live performances can also generate royalties.

2. If a performance is logged (i.e. identified by ASCAP/BMI/SESAC as having been broadcast), a royalty will be paid based on the number of times the film or show is broadcast and other factors such as the length and type of music performed. There are very specific weighting formulas that are used to calculate the royalty payments for each performance of a composition. In some cases the historical popularity of a composition will increase the current royalties paid for performances of the composition. You should consult the performing rights organizations for specific rules and formulas that determine the calculation of royalties.

3. Equal royalties are paid to the writer(s) and publisher(s) of the music, and are paid on a quarterly basis. In order to collect publishing royalties, the composer or filmmaker must have a registered publishing company with ASCAP/BMI/SESAC.

What's the typical royalty situation for film and television projects today?

1. With very few exceptions, it is customary that composers retain all writer's royalties. Only in special circumstances such as when the composer is an employee of a larger organization (such as a staff composer for a company) is it customary for the composer to give up writer's royalties. The subject of whether ghostwriters, sub-composers, and others employed by some composers have a claim to writer's royalties is a frequently discussed topic, as is the legal and artistic role of these uncredited personnel. In theory, anyone who contributes original creative material to a piece of music may have a legal claim of authorship or co-authorship to the material. The simplest way to avoid any disputes in this area is to insist that the composer who is hired write all the music and not use noncredited personnel.

2. Today it is a common and accepted business practice that the filmmaker or television production company retain publishing rights to original music created for a film or television production. In this situation, the publisher's performing rights royalties would be paid to a publishing company owned by the film production company. The only requirement here is that the production company must set up a publishing company with ASCAP, BMI, or SESAC depending on the affiliation of the composer(s) and must submit cue sheets (see example "What is a Cue Sheet?") to these organizations listing the music contained in the production. Composers that retain the publishing on music they write will usually set up their own publishing company with the performing rights organization with whom they are affiliated.

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