Neighboring rights royalties can be a great source of income for rights holders.

The last report published by IFPI revealed that the value of the neighboring rights sector reached the $2.3 billion mark. There’s no doubt that there’s a highly profitable business behind the world of neighboring rights.

However, every year, a large amount of these type royalties remain uncollected. Especially in markets like the U.S., where the legislation differs from the ones from other countries.

But what exactly are neighboring rights royalties and how can you collect them?

Let’s find it out!

What are Neighboring Rights Royalties?

There are several types of music royalties. Neighboring rights refer to those royalties generated from a public performance or broadcasting of sound recordings on non-interactive digital services such as satellite and internet radio as well as on terrestrial radio outside the U.S., television, cable music channels, cinemas, public spaces, and businesses.

Let’s put this in a simple way. Every recording has two sides: There’s the copyright for the sound recording and the one for the underlying composition (the song itself). Neighboring rights are related to the first one.

While composition royalties are paid to publishers and songwriters, neighboring rights royalties are paid to master recording owners, usually record labels, and performing artists.

When it comes to distribution rules and payments for this type of royalties, the legislation varies depending on the country.

Who collects Neighboring Rights Royalties?

In most countries around the world, the local performance rights collection societies manage and distribute neighboring rights royalties to their members when sound recordings are, for example, played on radio airwaves or performed on TV.

In the U.S. it works in a different way. Traditional terrestrial neighboring rights royalties (radio, TV, and venues) aren’t technically recognized by law as there isn’t an official rights collection society specially dedicated to that matter.

This is one of the main reasons why many US-based rights owners have a significant amount of uncollected royalties: The so-called black box royalties or “unallocated royalties”.

Nevertheless, entities like SoundExchange are collecting and paying out digital performance royalties in the U.S. to performers, master rights owners, and independent artists owning the masters.

What is SoundExchange?

SoundExchange

SoundExchange is a non-profit collective rights management organization that collects digital performance royalties in the U.S. from three sources:

• Non-interactive webcasters.
• Satellite and digital cable TV.
• Digital and satellite radio services.

More than 3,600 digital radio providers, including services like Pandora, iHeartRadio, SiriusXM or Live365, are currently paying SoundExchange to get the statutory license that allows them to access and use any commercially available sound recording.

Currently, SoundExchange collects and distributes digital performance royalties on behalf of more than 245,000 master rights owners’ and recording artists’ accounts.

SoundExchange also has agreements with over 40 international collection agencies, including in strategic markets like Australia, Brazil, Canada, France, Germany, Spain, Italy, South Korea, Mexico, Japan or the U.K.

This allows them to collect and pay rights holders and artists when their music is played in one of the partnering countries.

To this date, SoundExchange has paid more than $8 billion in distributions.

How to collect your neighboring rights royalties with SonoSuite and SoundExchange?

If you’re a sound recording rights holder and want to collect potential digital performance royalties you may be owed, in SonoSuite we can give you a hand!

You can use our integration with SoundExchange to register your sound recordings and manage your royalty collection with full flexibility.

Contact one of our account managers to find out more!

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Tags: #Black box royalties #music royalties #Neighboring Rights #Neighboring Rights Royalties #Pandora #record labels #Royalty collection #Sirius #XM #sonosuite

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