Understanding Neighboring Rights: A Guide for Performers and Record Labels
Neighboring rights, often misunderstood and overlooked, are becoming increasingly crucial for performers, producers, and record labels. This sector of global rights management is expanding rapidly.
What Are Neighboring Rights?
Neighboring rights are public performance rights for a sound recording, akin to the public performance royalties that songwriters earn. These rights are triggered whenever a song is broadcast or played publicly. Unlike composition royalties, which go to songwriters and publishers, neighboring rights royalties are collected by specific organizations and distributed to recording owners and performing artists. The term “neighboring” reflects their similarity to public performance rights for compositions.
Where Are Neighboring Rights Collected and Paid?
In the U.S., these rights are not collected or paid. U.S. recording owners and performing artists do not earn royalties when their recordings are played on American radio. This is because U.S. record labels have traditionally used radio for promotion and avoided the risk of alienating broadcasters by seeking additional royalties.
Due to reciprocity restrictions, many organizations do not compensate U.S. rights holders for royalties earned abroad. However, recordings made outside the U.S. or by non-U.S. citizens can earn these royalties internationally. To navigate these restrictions, U.S.-based artists expecting significant international radio play often record in overseas studios to qualify for these royalties.
What About the U.S.?
While the U.S. does not offer this, it does provide digital performance royalties for recordings played on digital and satellite radio platforms such as Pandora, Sirius, and iHeartRadio. These royalties, collected by SoundExchange, are separate from composition performance royalties. Many U.S. sound recording owners miss out on global neighboring rights royalties because of the absence of such organizations in the U.S.
Who Receives the Royalties?
Revenue from these rights and digital performance royalties is distributed among the sound recording owner (often a record label), the featured performing artist, and non-featured performers (e.g., session musicians). Non-featured artists receive the smallest share, making neighboring rights royalties particularly important for session musicians.
Impact on Songwriters
This affects songwriters only if they also perform on the sound recording. It’s crucial to ensure proper credit for all contributions. For instance, a co-writing producer who also plays an instrument should be credited to collect performer royalties. Performing artists who own their recordings can collect royalties both as recording owners and performers.
Who Collects Neighboring Rights and Digital Performance Royalties?
Several organizations manage these rights worldwide. It’s advisable to register with these organizations or an international administrator to ensure full collection. Examples include:
- PPL International (U.K.)
- PPCA (Australia)
- SENA (Netherlands)
- ABRAMUS (Brazil)
- Adami (France)
- GVL (Germany)
- CPRA (Japan)
- ACTRA RACS (Canada)
- SoundExchange (U.S.)
SoundExchange handles digital performance rights for sound recordings in the U.S., collecting and distributing royalties to performers and content owners. If you own recordings or are a performing artist, register with SoundExchange to ensure you receive these royalties.
For a comprehensive guide on collecting all possible royalties, download our Royalty Checklist.
