Royalties are your songwriting revenues. They are the standard method of moneymaking in the music industry for songwriters.
As a songwriter, a creator of original material, you are the first rights holder. This is automatically granted to you under copyright law, thanks to the Canadian Copyright Act. Your diligence as a rights holder is key.
It is your responsibility as the original copyright holder to keep track of your rights and royalties – unless, of course you choose to sell your rights to a new owner or transfer your rights to a label or publisher.
A royalty is paid to the author (and/or owner if the songwriter has sold a share to a publisher, for example) of a song when another party us- es it, plays it, reproduces it, broadcasts it or sells it. An agreement grants the other party a licence to use the song for one of the specific purposes listed above, and the royalty that eventually flows to the songwriter (and/ or owner) is generally proportional to the revenue that the other party collects as a result of using the author/owner’s work.
Thankfully, there are several rights organizations, also known as copyright collective societies, that can help you (and/or your publisher) track your rights as a songwriter. A rights organization will work on your behalf to grant permissions, determine the conditions of usage, collect licence fees, tariffs and levies, and also distribute royalties to you and the other the rights holders (cowriters, publishers). You can maintain mem- berships with several rights organizations which collect different types of royalties for different uses of songs (listed in the chart below).
When your material is used abroad, or when a foreign songwriter’s work is used in Canada, rights organizations in other countries will work alongside Canadian rights organizations to pass royalties back and forth across national borders.
Rights and royalties are divided into several categories:
This refers to the mechanical reproduction of your song, whereby physi- cal copies of your song (on CD, for example, or digital download) are sent into the marketplace and sold. A mechanical licence is granted by the publisher or rights holder (you), giving permission for your song to be reproduced and distributed publicly. A mechanical royalty is paid to the publisher/author based on the number of recordings sold. (Unless you self-publish, you will traditionally share 50% with the publisher.) In Canada, these rights and royalties are tracked by CMRRA (Canadian Musical Reproduction Rights Agency; cmrra.ca), which represents over 6,000 North American publishers who own and administer roughly 75% of the music recorded and performed in Canada.
When one of your songs is licensed to be used in a film, TV show or commercial, you will receive a synchronization royalty, which is usually negotiated between the publisher and the producer of the film, TV show