What Are Neighboring Rights?

In countries outside the U.S., where public performances compensate the songwriter or music publisher when their song is broadcasted publicly, neighboring rights compensate the recording artist or record label associated with the sound recording of the song.

Neighboring rights do not currently exist within the U.S.—that is, sound recording copyright owners do not receive any royalties from the broadcast of sound recordings in the United States. The U.S. is one of only four developed countries in the world that don’t mandate traditional performance royalties for sound recordings — the other three being North Korea, Iran, and China.

Check out some of our other guides on music industry topics at Exploration Learn, or subscribe to our YouTube channel for more information.

In this newsletter:

In its Q3 distribution, UK’s leading Collective Management Organization PPL paid out $15.43 million to over 25,500 performers and recording rights holders.

At the request of music publisher Warner Chappell Music and copyright owner Artist Publishing Group, the US Supreme Court is set to make a decision on statutes of limitations for copyright lawsuits. The decision could impact how long rights holders have to file infringement complaints.

Music streaming giant Spotify is considering withdrawal from Uruguay over proposed amendments to music copyright law in the market, which would see ‘social networks and the Internet [added] as formats for which, if a song is reproduced, the performer is entitled to financial remuneration’.

Now, the details...

Exploration Weekly - October 6, 2023
Compiled by Ana Berberana

PPL Pays £12.7 Million ($15.4 Million) in Neighboring Rights Royalties for Q3 2023

PPL’s Director of International Laurence Oxenbury commented on the Q3 distribution, highlighting how cross-border collaboration continues to be a priority for the CMO ‘as we continue to work on maximizing the reward for those who create the music which keeps our world turning.’ Oxenbury communicated his delight at seeing the third multi-million-pound payment of 2023 going out to members, adding, “For many of the performers and independent labels included in this international distribution, this payment represents a consistent source of income when the challenges of earning from music are well-documented.” Becky Hill, Digga D, Ellie Goulding, Emeli Sandé, Gregory Porter, Gotcha, and Trevor Horn are among the thousands of musicians that receive international royalties from PPL. The quarter’s payment includes international revenue from 69 CMOs from organizations in Belgium, Denmark, France, Spain, and the US. The £12.7 million payout also includes £1.9 million ($2.31 million) from Video Performance Limited (VPL) for the use of music videos played across MTV channels in Europe, Africa, and the Middle East. PPL is the UK music industry’s premier CMO for performers and recording rights holders. It ensures members across genres and territories are paid when their music is played in the UK and overseas territories. PPL also specializes in metadata management, which allows the industry to better understand and analyze ownership and performance rights of a specific recording.

US Supreme Court To Take Up Warner Chappel Case Around Limitations on Copyright Damages, After Appeal Over Flo Rida “In The Ayer” Lawsuit

At the request of music publisher Warner Chappell Music and copyright owner Artist Publishing Group, the US Supreme Court is set to make a decision on statutes of limitations for copyright lawsuits. The decision could impact how long rights holders have to file infringement complaints. It involves an unusual case where an alleged copyright holder waited for years to file a copyright complaint because he was serving a prison sentence. However, due to a series of contradictory appeals court rulings on the issue, industry groups say there is uncertainty about the law when it comes to the time allowed for a copyright infringement suit to be brought. In a petition to the US’s top court in June, Warner Chappell and Artist Publishing Group asked the court to resolve a disagreement between federal appeals courts on whether or not a copyright holder can sue for damages over copyright infringement that took place more than three years prior to the lawsuit being filed. The case has drawn the attention of the US Chamber of Commerce and the Recording Industry Association of America (RIAA), both of whom filed “friend of the court” briefs urging the Supreme Court to take up the case. According to a report at Reuters, the Supreme Court is scheduled to hear arguments in the case in its fall term, which began on Monday (October 2). The Supreme Court will look at a 2018 case filed by Sherman Nealy, who alleged that some rights for songs he co-wrote in the 1980s were improperly sold off by his business partner, Tony Butler (aka Pretty Tony), while Nealy was serving sentences for cocaine distribution from 1988 to 2008, and again from 2011 to 2015. Nealy’s complaint alleged that 321 Music, a company owned by Butler, unjustly licensed the rights to one of the songs the duo co-owned, Jam the Box, to Warner Music Group’s Atlantic Records, without Nealy’s permission, while Nealy was incarcerated.

Spotify Threatens Uruguay Exit Amid Proposed Changes To Music Copyright Law

Music streaming giant Spotify is considering withdrawal from Uruguay over proposed amendments to music copyright law in the market. The modifications were initiated by the Uruguayan Society of Performers (SUDEI) earlier this year, advocating for revisions to the nation’s music copyright regulations. This week, the Parliament of Uruguay is voting on a budget bill that includes these proposed changes, Articles 284 & 285 in the Rendición de Cuentas bill. According to local publication El Observador, SUDEI successfully lobbied for the inclusion of two articles in Uruguay’s ‘Rendición de Cuentas’—Articles 284 and 285 — through the Executive Branch of the government. SUDEI spokesperson Gabriela Pintos told El Observador at the time that the group is not against the platforms, but is campaigning for the fair distribution of revenue. As explained by Bloomberg Línea, Article 284 would see ‘social networks and the Internet [added] as formats for which, if a song is reproduced, the performer is entitled to financial remuneration’. Bloomberg Línea explains further that the introduction of the broader focused Article 285 would set into copyright law the ‘right to a fair and equitable remuneration’ for all ‘agreements entered into by authors, composers, performers, directors and screenwriters with respect to their faculty of public communication and making available to the public of phonograms and audiovisual recordings’. As reported by news outlet El Pais, Spotify sent a letter to the Minister of Education and Culture, Pablo Da Silveira in July arguing that the proposed changes imply “an additional mandatory payment for music services”. In other words, Spotify argues that if the amendments are made, it would potentially be required “to pay twice for the same music” – a move SPOT claims could jeopardize its operations in the Uruguayan market. “If implemented, and Spotify were forced to pay twice for the same music, it would make our business of connecting artists and fans unsustainable in this market. Spotify would then have no choice but to stop being available in Uruguay, to the detriment of artists and fans,” the company said in a statement issued to MBW.

Civil Rights Lawyer Ben Crump Preparing Legal Case on Heritage Artist Streaming Royalties

Prominent American civil rights lawyer Ben Crump has confirmed he is working on what could be a major legal challenge regarding the way record companies pay streaming royalties to heritage artists. Speaking to The Times, Crump says: “R&B artists began contacting me saying they believed they were being discriminated against and the music industry was not compensating them fairly. We soon discovered the music industry and the record companies are actually equal-opportunity oppressors - they oppress all the artists, whether they are black, white, hispanic, it doesn’t matter”. There has been much criticism within the artist community over the years about how many record companies interpreted pre-digital record contracts in the context of digital income. Where contracts do not specifically mention how digital revenue should be shared between label and artist, labels need to decide what royalty rate to apply. Many labels have been accused of unilaterally deciding to apply CD royalty rates - and sometimes even deductions and discounts that applied to CD sales - to digital income, meaning artists end up seeing a small cut of the streaming money generated by their recordings. There has been much debate as to the legal right of labels to unilaterally interpret old contracts in a self-serving way. Some old record contracts distinguished between sales and licensing income, with a higher rate paid to the artist on the latter. Yet some labels still pay the lower sales rate on streams, even though streaming income clearly stems from licensing deals. Streaming also exploits an element of copyright called the making available right, which was only added to copyright law in the 1990s. Some have argued that labels should have got explicit permission from each artist to exploit that new element of the copyright, which would have provided the artist a chance to negotiate a new better royalty rate around digital. But in most cases that didn't happen. There have been some lawsuits in some countries challenging decisions made by labels in this domain, including class actions in the US. In some cases this has resulted in royalty rates being increased, and certainly some bigger name artists have reached their own confidential settlements that resulted in them getting a bigger cut of the money. And some indie labels have chosen to pay modern streaming royalty rates across their entire catalogs, so heritage artists earn at the same rate as those on new deals. But there are still plenty of heritage artists receiving a much lower cut of streaming income than would be the norm on a new deal negotiated today.

Vinyl Sales Surge 13.2% in 2023 Ahead of Black Friday and Blockbuster Q4

Vinyl sales have surged by 13.2% year-on-year for the first nine months of 2023. According to data from the BPI, 3,952,262 vinyl LPs were sold during the year to the end of September. The year-on-year increase was ahead of the 12.4% growth for the first half of 2023. At 15.1%, the year-on-year increase was even bigger during the three months of the Q3 period. A total of 1,237,620 vinyl LPs were sold in the quarter. Vinyl sales increased by a fairly modest 2.9% in 2022, but double-digit growth for the format looks likely to return for 2023. With a potential blockbuster Q4 line-up – including albums from Take That, the Rolling Stones and Taylor Swift – vinyl is set for another strong quarter during the gifting season. Black Friday, Record Store Day’s sister event, will take place on November 24. More than 90 artists, including De La Soul, Sia, Joni Mitchell, Prince, Rilo Kiley, The Doors and Post Malone, will release limited edition vinyl editions. The indie retail sector spoke to Music Week for a feature in our current edition – you can read insights from Rough Trade, Crash Records, Banquet and Drift. Speaking about the impact of Record Store Day as part of the feature, ERA CEO Kim Bayley said that the annual event “stands alongside the invention of streaming as a landmark moment for music” and became “the single most important catalyst” for the vinyl revival. “Are there wrinkles in it? Are there challenges? Of course,” she told Music Week. “That is why we tweak the day every year and take feedback from the entire industry as to ways to shape the day. But the big picture is that it has been and continues to be a resounding success.”

Random Ramblings

  • The impact of Indie video game music.
  • Ed Sheeran is the first British artist to hit 10bn streams in the UK.
  • What is the future of the DAW?
  • Beyoncé surpasses Michael Jackson, The Weeknd with the highest-grossing tour for a black artist.
  • Taylor Swift extends Artist 100 longevity record to 80 weeks at no. 1.

Who is Exploration?

Exploration is proud to be the company of choice to administer much of the world’s most important media. We rely on advanced technology and a competent, full-time staff of 70+ people to help our clients and partners better control their data and collect their money.

We wrote a free book on how the music business works.

To see who is collecting your royalties, request a free copyright audit.