Understanding Royalties: The Difference Between Performance, Mechanical, and Neighbouring Rights
In the music industry, royalties are the lifeblood of creative careers. Whether you're a songwriter, artist, producer, or publisher, understanding how royalties work is crucial for maximizing your earnings and protecting your rights. One area that often causes confusion is the distinction between performance rights, mechanical rights, and neighbouring rights. Let’s break each of them down.
Performance rights refer to the right to be paid when a musical composition is performed publicly. This includes plays on radio, live concerts, streaming, TV broadcasts, and even background music in stores and restaurants.
Songwriters and publishers.
Collected by: Performing Rights Organizations (PROs), such as ASCAP, BMI, SESAC (US), PRS (UK), or SOCAN (Canada).
Example: When your song plays on the radio or is performed at a concert venue, you’re owed performance royalties.
Mechanical rights involve the reproduction of a musical work. This dates back to the days of vinyl and CDs, but today it mainly refers to digital reproductions—downloads and on-demand streams.
Songwriters and publishers.
Collected by: Mechanical rights organizations like The MLC (US), MCPS (UK), or GEMA (Germany).
Example: If someone buys a digital download of your song, or streams it on Spotify (on-demand), mechanical royalties are generated.
Neighbouring rights (sometimes called related rights) are different—they relate to the performance and broadcast of the sound recording itself, not the composition. These rights benefit the performers and the owners of the master recording.
Performing artists and record labels (or whoever owns the master).
Collected by: Neighbouring rights societies like SoundExchange (US), PPL (UK), or SCPP (France).
Example: If a song is played on satellite radio, internet radio, or in public spaces, the recording artist—not just the songwriter—receives neighbouring rights royalties.
Understanding the nuances of these royalty types helps ensure all contributors to a song are properly compensated. It also empowers artists to make informed decisions about publishing deals, distribution channels, and licensing opportunities.
Whether you’re an independent artist managing your own catalog or a stakeholder in a music business, keeping track of these rights is not just smart—it’s essential.
The world of music rights can seem complex, but knowledge is power. With a clear understanding of how performance, mechanical, and neighbouring rights work, you can better navigate the business of music and ensure you’re collecting every royalty you’re entitled to.
