Frequently Asked Questions….

Neighbouring Rights are the rights related to the public performance of master recordings. Literally, Neighbouring Rights sit beside, or neighbour the composition copyright of a work. Also known as Related Rights, these apply to any audible contribution made on any sound recording. The artists who have contributed to the sound recording are due their Equitable Remuneration for that contribution. Equitable Remuneration cannot be sold, transferred, assigned, or otherwise passed on to any other person except to a specifically named beneficiary in a will once that contributor has passed away.

Neighbouring rights royalties are split into two shares: a Performer’s Share’ and a Rightsholder’s Share. Anyone who made an audible contribution to a recording may qualify for the Performer’s Share. This can include artists, background singers, session musicians, kazoo players, producers, conductors, drummers, etc. The owner of the copyright in the recordings (usually a record label) is entitled to the Rightsholder’s Share.

No. As mentioned below, Neighbouring Rights sit next to or neighbour the composition copyright of a work. For example, Dolly Parton wrote the song, “I Will Always Love You” which Whitney Houston famously covered in the film, The Bodyguard. The publishing income for the writing of this work will always go to Dolly Parton and her publisher. However, when Whitney Houston’s version of this song is played in public, i.e. on the radio in the UK, there is a royalty paid to the contributors on that version of the sound recording. Money therefore goes to Whitey Houston and all other musicians that contributed to that sound recording, in addition to the public performance money that goes to Dolly Parton for the use of the composition copyright.

In order for a recording to be legally performed in public, a licence must be obtained from the owner of the sound recording. This is typically handled through a Neighbouring Rights organisation such as PPL, or Phonographic Performance Limited, is the Neighbouring Rights organisation in the UK.

Any business that plays recorded music within PPL’s repertoire in public, such as a shop, bar, office, restaurant, gym, community building, not-for-profit organisation will need to have a PPL licence. A PPL licence is required when master recordings are played in public (including on radio and TV) in the UK, Isle of Man and Channel Islands. In exchange for the licences, PPL collects licence fees from the entities performing the recordings and distributes royalties to the owners and performers of those recordings.

No. PRS handles publishing and PPL handles sound recordings. They are two separate companies. That being said, if you are playing music in public and you are looking to secure a licence, PRS and PPL have a joint venture so that a licensee can go to one place to licence music from both sources. However, as a musician, it’s really important to understand that these two societies are different and they do not pay for the same thing.

Reciprocity- America and the Rome Convention

In 1961, America had to opt out of the “International Convention for the Protection of Performers

Producers of Phonograms and Broadcasting Organizations” because it did not federally recognize a separate copyright in master recordings prior to 1972.  This treaty, otherwise known as the Rome Convention, established Neighbouring Rights Royalties in Phonograms as law for its signatories. Although later treaties such as the WIPO treaty brought digital recordings into the fold and allowed for the establishment of Sound Exchange, and the collection of royalties for digital and satellite sound recordings in the USA, the fact that they never adapted the treaty of Rome has been a divisive factor in this income stream.

In the United States, someone who owns a hair salon pays the Performing Rights Organizations (PRO’s) for the use of the composition copyright. However, there is no royalty paid for the use of the sound recording in public. The same goes for terrestrial radio. Outside of the USA, royalties are paid for both the publishing to the local PRO, but there is also a royalty paid to the Collection Management Organization (CMO) for the use of the Sound Recording. Because  money is not collected and paid through from the USA, some countries will not pay money that is allocated to an American performer because he/she is considered ‘non-qualifying’. In the simplest terms, it’s all about reciprocity. The US doesn’t pay Paul McCartney when his recording of ‘Yesterday’ is played in a  US restaurant, so the UK won’t pay Billy Joel directly for his recording of ‘Piano Man’ when it’s played in a UK restaurant. The UK collects the income but does not pay it through to the US performer.

Reciprocity issues are fluid and vary significantly by territory.

  • Sound Exchange pays a huge amount in digital sound recording income and because of this, societies are beginning to relax their stance on ‘non-qualifying performers’.
  • In addition, because money is nearly always allocated to the non-qualifying performers, some territories pay out that money to the rights holder (usually the label) who can then potentially distribute that to the performers.
  • Some territories pay Americans as long as the release of the record occurred in a Rome Convention country within 30 days of an American release.
  • Some will pay if the label is based in a country that signed the Rome Convention.
  • If a recording itself is qualifying – as in, the record was recorded in a Rome Convention country, then it’s qualifying no matter what the nationality of the performers.
  • Some countries will pay all performers if there are Rome Convention performers on that recording and some will do so if the producer is from a Rome Convention country.

There is little certainty for most performers in this income stream. However, there is even less certainty for American performers who record in America than there is for their ex-US counterparts.

Are you American and want to record a hit record? Find a recording studio outside of the USA. It will be worth it!

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