There are different types of royalties paid to music artists from track sales, and effective tracking systems have been strategically designed in response to evolving e-commerce trends. Optimizing these systems is an area of interest, while certain types of services can present tracking challenges. Tracking music royalties has ultimately become more demanding from streaming service use.
The types of music royalties that are paid to music artists are affected by how modern technologies are used to obtain or experience their products. Online, some of these mediums may involve a sale, while others may involve only exposure, and sales tactics have evolved somewhat to address internet using preferences associated with music.
Basic royalty types paid in the music industry may include mechanical or writer, performance, recording or session, and publishing royalties. The name associated with most music tracks is the name of a known music artist, and royalties are paid to this official music author as well as the range of service providers who assisted in track creation. Tracks sold online can benefit the primary provider greatly in terms of both fame and earnings, and the nature of online commerce and availability has greatly affected a range of sales-related areas in the music industry.
Modern technology has made it possible for music tracks to be browsed and sampled online, while sampling processes have been developed in a way that facilitates sales while restricting abuse for entertainment. The objective is to optimize sales and therefore royalties, and in the process, aspects of user engagement and entertainment potentials have been optimized. Amid this, royalties are due to organizations and developers following an artist’s death, and promotions online may be the primary marketing focus of organizations responsible for art that does not legally permit live reproductions (or further performance-related development).
Streaming services have affected aspects of traditional music industry, including basic online availability of track purchase. Streaming offers a potential for music to be sampled and experienced, and some streaming services have facilitated unregulated uploading that may be difficult to control or restrict. Traditional stream processes create performance and mechanical royalty opportunities, affecting performance rights organizations in addition to artists. Preferences may exist for royalties being paid in a per play manner, while streaming services such as Spotify have circumvented this, integrating a premium use option that is associated with track values. In-app advertising can be used as a basis of setting artist royalty rates.
Mechanical royalties from streaming have been calculated as 10.5% of an organization’s gross revenue, minus public performance expense. A mechanical licensing agent works to collect royalties, rather than the artist’s distributor or performing rights organization; SongTrust and Harry Fox Agency are among the most common agents while Broadcast Music Incorporated (BMI) and American Society of Composers, Authors, and Publishers (ASCAP) are among the most common performing rights organizations.
The methods organizations such as BMI and ASCAP have been using include increasingly complex software programs applied in tracking, in order to record member song playing times and location across the developments in service types. The programs that they use to do this have to be accurate in their capacities to track use, to address royalty demand requirements for publishing and development figures in addition to artists. This has been increasingly more difficult than previous requirements in this area, such as radio playing or music video airing tracking, and organizations may use different methods believed to be the best combination of efficient and effective. For example, BMI has recently been using a combination of report compilations and online monitoring, while ASCAP has been using online monitoring only.
The future of music royalty tracking is expected to include expansions and improvements in these areas, as well as integrations in new areas. NFTs have become significant amid their capacity to tokenize, and there is demand for using them to assist with the implementation of a universal royalties standard. NFT developments and marketplaces that optimize integration may benefit buyers and artists alike, and while they may challenge software developers in creating sufficient tracking systems, there is demand to pursue these areas in continuing research and development.