20 October - 2012
Changes to Online Royalty Distribution By: Help For Bands, 1 Comments

The way musicians will receive their royalties is changing. We break down some of these changes here and explain how online royalty distribution works.

What are the Changes?

The PRS for Music brand is the amalgamation of two companies, MCPS (Mechanical-Copyright Protection Society) and PRS (Performing Rights Society). The two societies were operating separately until 1997, when the MCPS-PRS Alliance was formed. This was then rebranded as PRS for Music in 2009.

PRS for Music recently announced changes in its method for online royalty distribution. Intentions were for the distribution process to become more efficient: a vital initiative as the digital services expand further.

Their so-called ‘residual blanket licenses’ work by targeting 100 percent of online service usage in the UK. These licences combine both the mechanical and performing rights required. In some incidences, royalty money cannot be attributed at the time of invoice. Currently, 25 percent of unidentified money is retained, in order to process claims at a later date. The remaining 75 percent is distributed across all registered works at the time of the invoice.

However, this approach is changing starting from the October distribution period. Now, 100 percent of the copyright revenue will be held back. This essentially means that once copyright works have been set up fully, PRS for Music will be able to distribute the royalty shares to the appropriate personnel. In the future, there are plans for a fully automated system to increase productivity and time efficiency. However for the time being a manual system is being planned and developed.

Why is Online Royalty Distribution Changing?

PRS for Music claim that the decision was the result of extensive discussion and consultation. They recognise that a more effective system is needed as the level of online income rises.

This will lead to decreased initial royalties across major UK download services. Amazon, iTunes and Beatport will see a percentile fall of between 12.5 and 15 per download. However, in the long run, artists and publishers will be paid the correct sums.

Due to the complicated nature of streaming platforms such as Spotify, changes in the accounting system were not announced. Perhaps we can expect an update in the not-so-distant future.

So what does this mean from an artist’s perspective? Well, in essence, it makes the whole system fairer. While it will take a longer time to receive the royalty payments, relevant members ought to feel reassured that they are being paid the true amount, as opposed to a ‘guesstimate’.

With digital platforms and services expanding so rapidly, it’s highly important that the system becomes dynamic and efficient as soon as possible. The transition from manual to automatic systems also means there should be less issues in the future, whilst helping to drive down costs in the logistics area of the industry.

Will it Work?

In a time where artists are finding it tougher to ‘make it’, it is reassuring that the industry is taking steps to help. Record deals may be scarce, and you may find it hard to get your music noticed, but at least you don’t have to worry about anything behind the scenes.

From an artist’s point of view, everything stays the same. Record deals are still available for fresh and exciting music. Remember, to forward your music careers, you need to work extensively on promoting yourselves, and making sure your music is available to all interested parties. If you’re looking to share your music, there are possibilities for worldwide music distribution with no upfront costs at Horus Music.  If you are registered with PRS For Music, Horus Music is even able to collect your royalties on your behalf, eliminating your time costs!