by Pablo Tupinambá, Smart Rights International Director
Music royalties can be complex for most artists and songwriters. There are different ways to pay them for their creations, depending on how it was recorded, how it was reproduced and where. There are cases where songwriters and performers are entitled to earn royalties, as well as situations where only one of the two is entitled to compensation. Neighboring rights comprehend one of these situations where only performers (and record labels) are entitled to claim their earnings, with some exceptions regarding territories (see The 1961 Roman Convention below) and type of use (interactive/non-interactive).
Neighboring rights can be defined as the remuneration for performers regarding the use of their recordings in a public performance context. Public performance can be understood as a non-interactive broadcast of a master recording to an audience. This includes television, radio (terrestrial or online), ambient music in private places such as nightclubs, supermarkets or even elevators, and a few more. It does not include, though, streaming services like Spotify and Apple Music, because they are considered interactive services (you choose directly what you want to listen to, you can skip and rewind/fast forward). It is arguable that some of the radio functions of the streaming players should be considered as non-interactive, which could generate a collection of neighboring rights. In fact, Spain is the first country to do so.
Speaking of differences between country laws, not every country foresees the collection of neighboring rights. The Rome Convention in 1961 produced a treaty where signatory countries recognized the performer’s rights that became what we know today as neighboring rights. Ninety six countries have signed the treaty up to today. You can get the full list here. Among the biggest music markets in the world, the U.S. is one example of those countries who are not signatory. This implies no collection is made for this type of right if a song is played in US territory. In 1996, the WPPT treaty expanded neighboring rights to digital broadcasting, and this time the US signed it. So, today the US only collects neighboring rights arising from online radios (such as Pandora, Sirius XM and iHeart Music) but not from television or terrestrial radio, which is still a big deal.
This leads us to a central point: Since there is no such collection in these non-signatory countries, most artists are not well informed about the possibility of collecting it in the 96 signatory countries. These performers are required to actively engage in a neighboring rights collection firm to do it, since their Performing Rights Organisation won’t cover that (in some countries like Brazil, they do). The main point being: a lot of artists are leaving money on the table!
In the UK, PPL generated 225.7 million pounds only in 2020. In Brazil, 25% of all neighboring rights credits collected were distributed to foreign artists in 2020.
So let’s look more specifically to countries like the US (didn’t sign the treaty) and Brazil (signed the treaty). We know that american music is very popular in Brazilian television and radio. These broadcast companies are paying money as neighboring rights to Brazilian entities (namely ECAD, which distributes to the Brazilian music societies and they pay the owners). If no performer is identified for those songs or if he or she has not set up this money stream through a collection company, the money gets retained and keeps waiting for a claim for up to five years, when it expires and gets redistributed into the system to other performers.
So if you are an north-american performer (but not only), you may have money waiting for you!
Smart Rights offers a neighboring rights service where we can not only collect your royalties, but many times we are able to discover unclaimed credits. Thanks to our proprietary artificial intelligence solution, we are able to quickly import your catalog information and match it to the retained royalties information. Then we can check for what issues to solve (there are a few possibilities) and update all metadata to unlock what is due to you and establish this new revenue flow. Most of our processes are automatized, so you don’t have to do much.
Our company is closing partnerships that cover neighboring rights collection in the UK and the European territories, and expect to add most of Latin America to this list very soon. All in an integrated system to make everything easy. Imagine how much money can be waiting for you! The clock is ticking… Will you let it expire?
Keep calm and collect your rights! Our expert team is here to help.
