How to Claim Your Royalties as a Music Producer

Music producers play a crucial role in the music industry, being responsible for the final quality and sound of recordings. Their importance has been increasingly recognized, and since the 1980s, producers started receiving royalties thanks to fairer contractual agreements and growing awareness of their role in music creation.

Current trends show an increase in demand for producers due to the rise of digital music and the accessibility of production tools. Additionally, the recognition of the producer’s work has increased, reflected in awards and recognition in the music industry.

In this article, we’ll explore the steps necessary to claim your royalties, the different types of royalties you may be entitled to, and why it can be beneficial to create a business in the United States to manage your income.

Types of Royalties for Music Producers

Mechanical Royalties

Mechanical royalties are generated every time a copy of your musical work is manufactured, distributed, and sold. This includes physical sales (CDs, vinyl) and digital downloads. In many countries, these royalties are administered by mechanical rights societies such as:

• Harry Fox Agency (HFA) in the United States
• MCPS in the United Kingdom

Performance Royalties

Performance royalties are generated when your music is broadcast on the radio, played on television, in public venues like restaurants and stores, and through streaming platforms. These royalties are collected by performing rights organizations such as:

• ASCAP, BMI, and SESAC in the United States
• SOCAN in Canada
• PRS in the United Kingdom

Synchronization Royalties

Synchronization royalties are generated when your music is used in combination with visual media, such as movies, TV shows, commercials, and video games. These royalties are typically negotiated on a case-by-case basis and can be quite lucrative.

Producer Royalties

Producers can receive royalties through specific contractual agreements that stipulate a share in the revenue generated by the recordings they have produced. These royalties are usually based on a percentage of the sales or streams of the recording.

Steps to Claim Your Royalties

Register Your Musical Works

The first step to claiming your royalties is to ensure that all your musical works are properly registered with the relevant performing rights organizations and mechanical rights societies. This includes providing detailed information about each track, such as the song title, composers, performers, and, of course, the producer.

Use a Royalty Administrator

Consider hiring a royalty administrator that specializes in collecting royalties for producers. These companies can help ensure that no royalties you’re entitled to are missed. Some well-known royalty administrators include:

• Songtrust
• TuneRegistry
• Sentric Music

Review and Sign Clear Contracts

Ensure that all contracts you sign as a producer include clear clauses regarding the royalties you will receive. This can include both producer royalties and a share of the composer and performance royalties. Consulting with a lawyer specializing in music law can be very helpful in understanding and negotiating these terms.

Monitor Your Income

It’s crucial to regularly monitor your income to ensure you’re receiving all the royalties you’re entitled to. Use the analytical and reporting tools provided by performing rights organizations and royalty administrators to keep track of your earnings.

Benefits of Creating a Business in the United States to Receive Your Royalties

Tax Advantages

Creating a business in the United States can offer significant tax benefits. Tax rates can be more favorable, and there are various tax deductions you can benefit from. Structuring your business as:

• LLC (Limited Liability Company) allows you to separate your personal finances from those of the business, making tax filing easier and avoiding double taxation.
• Corporations (C-Corp and S-Corp) can be suitable for those seeking rapid growth and investment capital.

Asset Separation

One of the biggest advantages of having a business in the United States is the protection of your personal assets. This means that in case of legal or financial issues, your personal belongings are protected as they are separated from the business assets. This separation can be crucial for protecting your wealth.

Increased Credibility

Operating under a corporate entity in the United States can enhance your professional credibility. This can open doors to new opportunities, collaborations, and more favorable contracts. A company registered in the United States can be seen as more reliable and stable, which can be a decisive factor for potential partners and investors.

Ease of International Business

The United States has an advanced financial system and robust infrastructure for managing international transactions. This can facilitate the management of your royalties and other income from multiple countries. U.S. financial institutions offer advanced services that can help you manage your finances more efficiently and securely, allowing you to focus on your creativity and music production.

Claiming your royalties as a music producer requires a clear understanding of the different types of royalties and the necessary steps to ensure you receive what you deserve. From registering your musical works to using a royalty administrator and monitoring your income, each step is crucial for your financial success. Additionally, creating a business in the United States can offer you numerous tax benefits, asset protection, and greater market credibility.

At Prodezk, we offer personalized service at every step of the way, ensuring a hassle-free experience in the U.S.