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27th September 2019

Income $treams – How We Collect Your Digital Publishing Income

By Simon Pursehouse – follow me on Twitter.

Life is confusing enough already, isn’t it? Does anyone actually truly understand politics? Because it looks like the politicians themselves actually don’t. The other day I watched a video of Kanye West meeting DJ Khalid on a runway where he’d used his private jet just to give him a pair of trainers, yet apparently it’s us using plastic straws that are killing the environment? Why do I care about my muffin tops so much despite being aggressively aware that there is literally nothing wrong with being a touch overweight and it’s the media who are constantly pushing an unrealistic bodyshape on me in adverts, TV, films, magazines etc and what’s more, even if I did put in the daft amount of time and effort it would take to look like consumerism says I should, I guarantee it won’t make me as happy as chorizo does. Dear lord I love chorizo.

With all this running around our collective minds, I thought it’d be only right to help make one less thing confusing for you. That thing is the outrageously convoluted world of digital publishing royalties and how Sentric collects them. Basically, if you’re getting decent streaming numbers across any of the big platforms (Spotify, Apple Music, YouTube, Amazon Prime etc) then being on top of your digital publishing income is key, because if you don’t collect it efficiently and properly then you could be missing out on rather good money.

So…when a stream happens it generates a royalty for your master rights and a royalty for your publishing rights.

For the ease of understanding, throughout this blog we’re going to assume that 1,000,000 streams on Spotify generates a total of £5,000 in royalties, which is approximately right (taken as an average of the years of distributions we’ve had at Sentric). There are obviously loads of ‘what ifs and maybes’ here including the territory it was streamed in, if the streams came from free or premium accounts and other voodoo and witchcraft that’s forever to be kept hidden thanks to NDAs.

You would generally expect around 80% of the income generated to go to the master rights owner to be distributed to you by your record label or digital distributor. I’m not going to go into the reason why the master rights gets so much more than the publishing rights here as it’s a bit of a minefield, but it’s essentially a hangover from the music industry’s previous practices. I can thoroughly recommend this amazing breakdown of everything by CMU if you wanted to educate yourself more there.

Now, the remaining 20% which is the publishing income is then split again into a performance royalty and a mechanical royalty. Usually this is split 50/50 so it’d look like this for 1,000,000 streams:

  • £4,000 – Master Rights Income
  • £500 – Publishing Digital Performance Income
  • £500 – Publishing Digital Mechanical Income

I say ‘usually’ because of another wonderful quirk of the music publishing industry. Depending on the territory those streams happened and the local PRO (don’t know what a PRO is? Then read here), they might be split 65/35 rather than 50/50. BUT, as this is all about simplifying things let’s stick with the 50/50 split because that’s what PROs in the UK, US and Canada do.

So, let’s say those million streams happened in ten different European countries, miraculously as a dead even split (so therefore 100k streams per country). That means each country’s publishing income breakdown would be:

  • £50 – Publishing Digital Performance Income
  • £50 – Publishing Digital Mechanical Income

So now we’re essentially talking about a micropayment (a stream) broken down into a further micropayment (20% for the publishing income) which is then split in half (one for performance, one for mechanical) and then that’s split into ten further micropayments as it’s spread across ten different territories.

That sentence alone should hopefully show you just how many gaps there are for this income to get lost in. Mind bending at times, isn’t it?

Several years ago at Sentric we realised that the distribution of these royalties from PROs around the world were, frankly, not great and we identified that our songwriters were missing out on income they deserved for their hard work. Therefore we decided to take away the rights from the local PROs to collect the digital income on our behalf, and instead put them with a rather forward thinking company called AMRA.

AMRA directly licenses our songwriters’ digital mechanical rights, (and in some territories, the performance rights as well), to all the major online stores in well over 100 territories worldwide (excluding the US where Sentric collects directly via the local socieites including ASCAP, BMI, SESAC and Harry Fox) Therefore that means Sentric now collects that income like so:

  • 10 x £50 – Publishing Digital Performance Income from each individual PRO that Sentric are members of and have directly registered your copyrights with.
  • £500 – Publishing Digital Mechanical Income via AMRA.

Now, the great thing here is that the income we receive from the PROs and from AMRA should match up with it being a 50/50 split. So say if from AMRA we receive £50 in digital mechanical royalties from your music being streamed in the UK, but we only receive £36 in digital performance royalties from the PRS, it allows us to go to the PRS and say; “Oi, now then, you clearly have underpaid our songwriter £14 and we have the data from AMRA to prove it”.

Simply put, since we started collecting digital royalties via this model, we’ve seen a 400% increase in digital publishing royalties paid out to our artists in just three years.

In the example above, if you weren’t using Sentric and, say, were just a member of your local PRO (ergo the PRS if you’re reading this in the UK), then you’d be relying on nine other PROs around Europe (who your copyrights aren’t registered with) figuring out who you are and with what PRO you are affiliated with. Then all of them would have to pay the PRS your performance income share (after taking a cut) who would then distribute it to you (after taking a cut themselves too). A process that *can* happen, in theory, and if it did, could take years for the money to find its way into your bank account. And also, if you’re not a member of the MCPS then you can essentially kiss goodbye to that mechanical income share.

See. I told you it was confusing.

Basically, if you’re starting to see significant streams for your music on digital platforms, then you really should use Sentric Music’s service. And if you’re already using our service, then go treat yourself to a biscuit, because you’re one of the clever ones.

Any questions just shout them at me on Twitter. Music publishing can be daft.