Canadian Music Royalties Explained

Vel Omazic is the executive director of Canada's Music Incubator (CMI), a not-for-profit based in Toronto with a mandate to help artists and artist managers evolve from starter companies into sustainable businesses through hands-on networking, mentoring and collaboration.

Originally founded by Coalition Music in 2012, CMI partners and sponsors include The Canada Arts Training Fund, Ontario Music Fund, The Canadian Academy of Recording Arts and Sciences, The Juno Awards, Canadian Country Music Association, Bell Media, City of Toronto, TD Bank Group, Newcap Radio, Stingray Music, Warner Music Canada, Sony Music Canada, and Music Canada.

The CMI team has worked with hundreds of artists and managers over the past five years and travelled some 300,000kms+ across the country trying to explain Canada’s music royalty eco-system.

"We’ve taken all of those experiences and worked to create one clear, concise and artist/manager-friendly resource document that explains everything," Omazic says.

"I’m sure there are discussions and panels dedicated to this subject at CMW and I wish that someone during my 15 years between two major labels would have taken the time to explain all of this to me," he continues.

"I picked things up through osmosis during those label years, but really learned from the great people and partners at all of the PROs that always make the time to connect with the artists and managers coming through the doors of the incubator.”

 Canadian Music Royalty Ecosystem Explained

Music royalties involve a complex bundle of copyrights, uses and rights holders. One of the easiest ways to understand the Canadian music royalty ecosystem is to think of a musical creation as being made up of two distinct parts: The first is the sound recording of a musical work, which is performed by musicians. The second is the underlying musical work (or song) created by songwriters.

There are four major groups of people involved in the making of recorded music. These groups are technically referred to as “rights holders” and they are each entitled to earn royalties for their role in the making of recorded music. In the case of an independent songwriter who performs on and funds his/her own recordings, they hold the rights of all four groups.

The first and perhaps most obvious rights holder is the performer.  The performer includes recording artists, band members, backup singers and session players who perform on a sound recording of a musical work. The Weeknd is a performer, as is Stephan Moccio who plays the piano on “Earned It”.

The second rights holder is the maker. This is the record label who usually owns the sound recording. Dine Alone Records is a maker. So too is any independent artist funding their own recordings.

The third rights holder is the songwriter/composer. The songwriter composed the musical work and or wrote the lyrics if there were any. Amy Foster-Gilles is a songwriter.

The fourth rights holder is the music publisher. These are the people that buy musical works (or catalogues of musical works) from songwriters and who own or co-own the rights to the musical work.  Sony ATV is a music publisher. Independent songwriters/composers are considered self-publishers.

Public Performance Royalties

When your music is played or broadcast publicly you may be entitled to royalties. All businesses that are playing your music commercially (from radio stations to bars, restaurants, nightclubs and gyms) must pay public performance royalties to Canadian collecting societies, SOCAN and Re:Sound. SOCAN pays songwriters and publishers of musical works and Re:Sound pays performers and makers of sound recordings. All Re:Sound royalties are split 50/50 between performers and makers.

When you listen to Feist’s cover of Ron Sexsmith’s “Secret Heart” on SirusXM, the satellite broadcaster pays royalties to Re:Sound and SOCAN for the public performance of this song. Re:Sound will pay royalties to Feist (and the musicians that recorded with her) as well as the record label, Arts & Crafts. SOCAN will pay the songwriter, Ron Sexsmith and the Publisher, Universal Music Publishing Group.

Songwriters and publishers also enjoy a right to public performance royalties when their musical works are played live. For instance, when a cover band plays Justin Bieber’s “Sorry,” in a bar, the songwriters and publisher of the song are entitled to receive public performance royalties.

Songwriters and publishers are also entitled to public performance royalties when TV shows or films that contain their music are played or broadcast publicly.  One of the great inequities of the Canadian copyright system is that performers and makers are not entitled to public performance royalties when their sound recordings are used in TV and film. This means that when Celine Dion’s “My Heart Will Go On” plays in the film Titanic neither Celine and the musicians who performed on that recording nor the label that funded it receive a penny of public performance royalties, whereas the songwriter and the publisher do. This costs performers and makers as much as $45 million in lost royalties a year.

This isn’t the only inconsistency found in Canadian copyright when it comes to paying one set of music creators and not the other. Not so fun fact if you’re a performer or maker: annually, commercial radio stations pay full public performance royalties to songwriters and publishers on their first 1.25 million of advertising revenue but not to performers and makers. This works out to around $8 million in lost royalties for performers and makers a year.

If you’re a performer or a creator, you can access your public performance royalties Re:Sound or one of the agency’s member organisations: ArtistI, ACTRA RACS and MROC for performers; CONNECT and SOPROQ for makers.  Additional administration fees may be charged if you choose to access your royalties through one of Re:Sound’s member organisations rather than directly through Re:Sound itself.  

You should get clarity on this when making your choice of where to sign up.  To find out if you have uncollected royalties simply visit Re:Sound’s website and type your name into their searchable database.

If you’re a songwriter, composer or publisher, you can access your public performance royalties via SOCAN.

Private Copying Royalties

While no longer as relevant, when someone burns a CD-R with copies of your music for their personal use you may be entitled to private copying royalties. Private copying royalties are paid for by the manufacturers of CD-Rs or other blank media. If you’re a performer or maker of a sound recording you can access your private copying royalties through the Canadian Private Copying Collective (CPCC), Re:Sound or its member organisations (ACTRA RACS, MROC, ARTISTi, CONNECT and SOPROQ).

If you are a songwriter or publisher of a musical work, you can access your private copying royalties via SOCAN, the Canadian Musical Reproduction Rights Agency (CMRRA) or the Society for Reproduction Rights of Authors, Composers and Editors of Canada (SODRAC).  

Interesting to note, in many other countries a private copying royalty is also applicable when a listener copies their music library from their computer to their phone or tablet. Here in Canada however, the Private Copying Right is only triggered for private copying onto CD-Rs, which is a much narrower right (and means that private copying royalties in Canada are much lower than in countries, like France for example).

Reproduction Royalties

A musical creation can be reproduced in many ways: reprints of CDs, copies of sheet music, best of collections, compilations, etc. When your music is physically or digitally reproduced, you may be entitled to reproduction royalties.

If you’re a music publisher or a self-published songwriter/composer you access your reproduction royalties via CMRRA or SODRAC. If you’re a maker of a sound recording you access your reproduction royalties via CONNECT or SOPROQ.

Making Available Right

The Making Available Right gives performers, makers, songwriters and publishers the right to allow or disallow their music being made available on an interactive platform that gives listeners the power to choose when and where they’ll be listening.

For example, a listener can choose to access an album on Spotify rather than buying a physical album. Spotify has made the album available to the public and this triggers the Making Available Right.

Normally performers assign their making available right to the record label (makers) in a recording contract. Fully interactive streaming services (Spotify) are licensed by the labels under the Making Available Right, while non-interactive (CBCMusic) or semi-interactive (Internet Radio) streaming services are licensed by Re:Sound.

How do you actually get your royalties?

You want to spend your time and energy making music but you should also spend some time making sure you’re getting paid.

As a music creator, you have a set of rights, protected by the Copyright Act of Canada, that entitle you to be paid royalties when your music is used commercially. It is in your best interest to know and understand these rights, that you sign up with the appropriate collecting societies and that you get in the habit of registering new musical works and recordings in order to collect all of your royalties. Luckily, all of the organizations mentioned above have helpful websites and people you can speak with to guide you through the sign up and registrations processes.

Remember, signing up is important business. You need to present identification and sign a contract and you also need to submit a list of your musical creations, commonly referred to as your repertoire, otherwise the collecting society can’t know what royalties to pay you.

A good tip for all rights holders, and especially for busy session players, is that you should keep a detailed account of your repertoire of music. It is your responsibility to track and update your repertoire, just as a business owner would keep inventory. That way, when you sign up with different collecting societies over the course of your career, you will be able to claim the full amount of royalties that you are entitled to.

If you’re a songwriter or composer sign up with SOCAN or SODRAC.

If you’re a music publisher or self-published songwriter/composer sign up with SOCAN or SODRAC for your public performance royalties and with CMRRA or SODRAC  for your reproduction royalties.

If you perform on recordings sign up with Re:Sound or with one of Re:Sound’s member organisations: MROC, ACTRA RACS or ARTISTi for your public performance royalties.

If you’re a maker (label or self-released) sign up with Re:Sound or CONNECT or SOPROQ for your public performance royalties and with CONNECT or SOPROQ for your reproduction royalties. Something new – as of July 2016, CONNECT members get their public performance royalties directly from Re:Sound.

Most, but not all, of these organisations are not-for-profits and simply charge their actual costs (which may vary from year to year).  

Others may charge fixed administration percentages, which do not vary.  When talking with any of these organizations, you should ask them what their cost structure is, and whether signing with the organization will expose you to more than one level of cost (e.g. where revenues flow through more than one organization before they reach you, as would be the case for performers' royalties collected by Re:Sound and passed on to a Re:Sound member organization for distribution to you by that member organization.

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