Music Copyrights & Royalties in Canada
The laws and rules around music royalties and copyrights can be very confusing. If you write a song, or perform on a song recording, or are involved in some other way in the production or creation of music, you may have a right to collect royalties for that music. You are able to collect these royalties on your music through copyright law.
A songwriter is someone who creates a song, including the musical composition, and the lyrics (if any). When someone creates a song in Canada, they immediately own the exclusive rights to use that song. Generally speaking, nobody else can use that song without their permission. The songwriter has a right to be paid money as compensation every time his or her song is played. There are 4 basic ways this happens.
Public Performance Royalties
The songwriter is entitled to a royalty anytime their song is played or broadcast publicly. Any business that plays music in the public, either pre-recorded or live, must pay royalties. When you are in a club, bar, or pub, and someone is playing live music, the business owner must pay royalties for each song played. When you hear song recordings being played over speakers at a retail business, restaurant, or any other public place, the business owner must pay royalties for each song played.
The amount of royalty that is paid for each performance is set out by the Copyright Act and regulations. The Society of Composers, Authors and Music Publishers of Canada (“SOCAN”) is the performance rights organization (“PRO”) that collects these royalties on behalf of the songwriter.
Any time a song is reproduced, the songwriter is entitled to a royalty. In the past, this reproduction was onto a “mechanical” format, such as a record, tape, or CD. That is why this royalty is typically referred to as a “mechanical” royalty. However, mechanical royalties are also triggered when the song is reproduced as a file (mp3 for example). This applies where songs or albums are sold and the buyer downloads an actual file, but it does not apply to streaming services like Spotify.
The amount of royalty that is paid for each reproduction is set out by the Copyright Act and regulations. The Canadian Musical Reproduction Rights Agency Ltd. (“CMRRA”) is the PRO that collects these royalties on behalf of the songwriter.
A person that creates a video recording cannot use a song in that video without the permission of the songwriter. When a songwriter gives the video-maker permission, or a license, to use their song, we call this “sync” licensing (because the sound “synchronizes” with the video). Unlike the other examples so far, there is no set “fee” or “tariff” for this. Instead, the individual songwriter (or someone representing them) negotiates the licensing fee each time a video creator wants to use their song. If the song or songwriter (or artist that has recorded the song) is well-known, the fee will probably be significant. Of course, if no one knows the song or songwriter, the fee the video creator is willing to pay will be lower.
The only person that has a right to license a song for a video recording is the songwriter. Performers and owners of the “master” (see below) get nothing.
Making Available Rights
This is what we call the right to stream a song. Spotify, Deezer, Apple Music, and other music streaming services negotiate the “per-stream” royalty amount or formula directly with the representative of the songwriter. In practice the way this works is, the songwriter has a “publisher” who represents a number of other songwriters as well. There are also publishers who enable independent artists to release their sound recordings to all (or basically all) streaming platforms. For example, CD Baby, or Landr are both web-based companies that make it easy for anyone to release their sound recordings to all the major streaming services. CD Baby keeps a portion of the royalties for this service, while Landr takes a payment up front for the service.
Because of the “ad-hoc” nature of streaming, different streaming services pay different royalties, based on the deal they have negotiated with the publisher. The publisher collects the royalties on behalf of the songwriter and pays them according to their contract.
A person that performs part of a sound recording is a performer. If you sing or play an instrument on a recording, you may have rights to royalties related to that sound recording.
Public Performance Royalties
Performers also get public performance royalties. Anytime a business plays a sound recording that the performer performed on, that business must pay them a royalty. These royalties are set out in the Copyright Act and regulations, and is administered by Re:Sound, which is another PRO.
Of course, because this is a royalty that is related to a performance on a recording, this does not apply to live performances. You cannot get performance royalties for a song being performed by someone else live. You only get it for when someone plays your recording in public.
Making Available Rights
The performers of a recorded song are also entitled to be paid royalties from streaming services. These are handled the same as the royalties for the songwriter. However, it is important to note that different publishers may handle this differently. Some will pay the performer directly if the performer has an “account” with that publisher. However, others will pay the full royalty to the songwriter or master owner, and it is up to them to pay the performer their fair share.
In general, if you are going to perform on a sound recording, you should enter into a formal written agreement with the songwriter and owner of the master to make sure you get paid. Sometimes they will not pay any ongoing royalties, but instead pay the performer a lump-sum of money up front. It is really up to the songwriter, master owner, and performer to figure it out amongst them.
Sound Recording Copyrights
The person that owns a sound recording also has rights to royalties. When we are referring to the sound recording in this way, it is usually called a “master”. This is a reference to the master recording that is used to make physical copies (records, tapes, CDs). In practice, the owner of the master is the record label. However, there are more and more independent recording artists who hold all of the rights, including the sound recording.
Public Performance Rights
As with performers, the owner of the master is only entitled to royalties if someone publicly plays the sound recording they own. They do not get any royalties if a “cover band” covers a song that is on that recording. Only the songwriter gets a royalty for that performance.
Re:Sound also collects the royalties on behalf the sound recording owner, and pays them.
Just like the songwriter, the master owner gets mechanical royalties too. However, while SOCAN administers these royalties for the songwriter, CONNECT is the PRO that collects these royalties for the master owner.
Making Available Rights
Sound recording owners also get paid by streaming services, the same way that the performers and songwriters are paid. The streaming service pays the negotiated rate to them. If the owner is a large record label, the streaming service will likely pay them directly for all of their artists and recordings. However, if you are an independent artist who owns your own recording, you will have to distribute to the streaming services through a service such as CD Baby or Landr. The streaming service will then pay that company, who will in turn pay you according to their end user agreement.
A Note About Re:Sound
Re:Sound has member organisations that work with them, and this makes things confusing. Artistl, ACTRA RACS, and MROC can administer royalties for performers. CONNECT is also a member organization of Re:Sound, and they collect royalties for master owners as mentioned above.
Another service that Re:Sound and its member organizations provide is collecting “private copying royalties”. This is a fee that everyone that buys a CDR pays in Canada. SOCAN, CMRRA or the Society for Reproduction Rights of Authors, Composers and Editors of Canada (“SODRAC”) administer these royalties for songwriters. However, as CDRs are more and more irrelevant, this royalty is also becoming more and more irrelevant.
Rights for people involved in music production is a somewhat complicated area of the law. There are many good, free resources available to help with getting your music published and available widely, and making sure you get paid if people consume that music. If you need help with copyright law and royalties for your music, or help with any other music law in Canada, give us a call right away. Kahane Law Office is ready to help. Just call our Edmonton office at 780-571-8464 or email us at [email protected] to get started today. We offer discounted initial consultations for independent musicians.