What's the difference between master and publishing royalties?

In the music industry, royalties refer to the payments that music creators receive as compensation for the use of their work. There are two main types of music royalties: master royalties and publishing royalties. Both are essential for artists and rights holders, but they operate differently.

1. Master Royalties: These royalties are paid for the use of the original recording of a song, also known as the "master recording." The owner of the master recording rights (often a record label, or the artist if they are independent) receives payments every time the recording is played or used commercially. This includes plays on streaming services, radio broadcasts, use in TV, movies, commercials, and other forms of public broadcast.

2. Publishing Royalties: These refer to the copyrights of the musical composition itself, meaning the music and lyrics. Songwriters, lyricists, and music publishers receive publishing royalties every time a song is performed publicly, whether through live performances, radio, TV, or even when a song is covered or re-recorded. Publishing royalties are generally split into two parts: performance rights and mechanical rights. Performance rights are generated when a song is played in public, while mechanical rights are due when a song is physically or digitally reproduced (such as on CDs, downloads, or streams).

A key difference between the two is who receives the payments. While master royalties compensate the owner of the recording, publishing royalties are paid to the composers and their publishers. Moreover, the mechanisms for collecting and distributing these royalties are managed by different entities. For example, in the United States, performance rights organizations (such as ASCAP, BMI, or SESAC) collect and distribute performance royalties to composers and publishers, whereas master royalties are usually managed directly between streaming platforms, radio stations, and record labels or independent artists.

In summary, while master royalties relate to the recording of a song, publishing royalties are tied to the musical and lyrical composition of the work. Both are vital to the music industry ecosystem, ensuring that creators and rights holders are compensated for their work.