Tips of the Trade: what are neighbouring rights?

Monday, 28 Oct 2019

Susan Cotchin, MD of Good Neighbour

Do you know your neighbouring rights? Do you know what neighbouring rights are? Don't fret if you don't, or are kind of unsure, or are completely clueless.

It’s one of the more, shall we say, complex areas of the music business. But with the help of Susan Cotchin, a neighbouring rights expert and Managing Director of The Mushroom Group’s Good Neighbour, we’ve pulled together this explainer on the topic.

“It’s crucial for Australian artists and managers to realise how big this income stream actually is, so it’s important to get this message out to our industry,” says Susan.

Neighbouring rights relate to the use of a sound recording

A song has two forms of copyright:

1.       Underlying musical work or composition – i.e., the music and the lyric elements (publishing); and

2.       The sound recording of a song or composition (master)

Put simply, ‘neighbouring rights’ refers to the public performance, broadcast, communication and reproduction rights in sound recordings. “Literally, neighbouring rights sit besides, or ‘neighbour’ the composition copyright of a work,” Susan says.

Public performance rights – similar to broadcast, communication or reproduction rights  are controlled by the record label or individual (referred to as the ‘licensor’) that owns the sound recordings.

In addition, ‘featured artists’ who make an audible contribution on any sound recording, e.g. the vocalist or an instrumentalist, may also have a claim to receive some of this income directly (more on featured artists below).

Income sources for neighbouring rights include the public performance of music used at or broadcast/communication via:

  • retail
  • restaurants and nightclubs
  • broadcast media
  • online radio and terrestrial radio e.g., AM/FM radio (excluding in the US, more on that below)

Neighbouring Rights in Australia

Neighbouring rights are not uniform throughout the world. “Neighbouring rights vary much more widely in scope between different countries than songwriters' and composers' rights,” says Susan.

In Australia, these royalties are generally collected by Phonographic Performance Company of Australia (PPCA), or the relevant rights holder directly. PPCA distributes funds collected from:

  • Public performance via OneMusic Australia
    With OneMusic Australia, the licensing process for businesses using music has gone from two licences for the two rights from two organisations (APRA AMCOS and PPCA) to one licence from OneMusic Australia.

    OneMusic Australia collects the public performance licence fees from businesses and then splits the money accordingly between APRA AMCOS and PPCA.

  • Broadcast licences with TV and radio (free to air, public, community and subscription)

  • Certain communication licences with digital services (e.g., free to air TV catch up, commercial radio simulcasts, or other online radio services)

After the deduction of administration and operational costs, all fees collected are distributed through to PPCA licensors and to featured Australian artists registered with PPCA via its Artist Direct Distribution Scheme (ADDS). 

How to get paid by the PPCA for your sound recordings being played

If you are an Australian recording artist and/or if you control the rights to your sound recordings, make sure you register with PPCA now.

If you own your own recordings, you are considered to be a label and would sign up to PPCA as a licensor.

PPCA distributions are made annually and you need to have your tracks registered with them by the 31 August cut-off date each year in order to receive a direct payment. If you don’t register for particular tracks, any earnings attributed to those tracks will be passed to the rights owner (often the record label) to be distributed as per details of your recording contract. You only need register each track once but make sure you let PPCA know if there are any changes.

PPCA does not collect for Australian featured artists for music use outside of Australia. If artists also own the copyright in their recordings PPCA may be able to collect from some non-Australian territories if the artist wishes.

Neighbouring rights royalties beyond Australia

If a song is publicly used in territories outside of Australia  your song is getting radio airplay in Belgium, pumped into fitness classes in Brazil, used in a TV program in Canada or performed in a club in South Africa – will you be paid for the neighbouring right?

The answer varies to that question, because neighbouring rights legislation differs in each territory. Currently about 80 countries are paying for neighbouring rights uses. Susan says “the sector is currently worth US$2.7 billion.”

So, if you know your sound recordings are getting played beyond Australia, it’s important to review your options to collect potential royalties in other jurisdictions. This might be through a label or a neighbouring rights agent, such as Good Neighbour, who represent artists and labels in Australia and in many territories overseas, or by authorising another collecting society (e.g., SoundExchange in the US or PPL in the UK) to collect from their respective territories on your behalf.

“Artists who have received international airplay should be represented as the current state of play sees money coming in from territories such as Brazil, Canada, Netherlands, France, Germany, Kenya, Mexico and many others, in addition to the UK and the USA,” says Susan.

Neighbouring rights in the USA are a little more complex:

  • The USA does not recognise the terrestrial broadcast right for sound recordings, meaning traditional radio and TV broadcasters do not need a licence (and so do not pay a licence fee), when sound recordings are played on air, although they still require licences to broadcast the underlying musical work.
  • The USA does pay for internet broadcast (communication) of sound recordings, so companies like Pandora and Sirius do have to pay.

Differing legislation in various territories results in a number of factors that may determine whether or not particular artists and/or particular recordings are eligible for payment. These factors can include:

  • Citizenship of featured artists
  • Residency at time of recording
  • Where the recording took place (if you recorded in a country that recognises the right)

Who is a featured artist?

Depending on the territory where the performance took place, royalties may not be paid wholly to the ‘licensor’. The neighbouring rights allocations can be split into two ‘shares’: 

  1. Performer’s share
  2. Rightsholder’s share

Susan explains the featured artist role: “Anyone who made an audible contribution to a recording may qualify for the Performer’s Share. This can include artists, background singers, session musicians, producers, conductors etc. The owner of the copyright in the recordings (usually a record label) is entitled to the Rightsholder’s Share.”

However! Non-featured performers may be eligible in some territories (perhaps you played a very important cowbell).

“In some territories a non-featured performer is entitled to a share of the Performer’s Share allocation as dictated by the society involved, irrespective of any performer agreement they may have signed,” explains Susan.

Tips for managing your neighbouring rights

“I would strongly suggest that the performer (or their manager) feel confident that their neighbouring rights representative (label, authorised sound recording collecting society or dedicated agent) is across the complexities involved in accessing these royalties.

They should know the territories that will pay based on the criteria of the sound recording and the performer themselves,” Susan says.

You, or your manager, should also consider how your recording or distribution agreements treat sound recording performance royalties.

If you would like to speak to Good Neighbour about assisting you and possibly representing you with your neighbouring rights, you can contact Susan at info@goodneighbourrights.com.

PPCA enquiries, and to register to receive performance income for Australia, go to the Licensors section (if you own your own masters) or the Artist section of the PPCA website at ppca.com.au or contact distribution.mail@ppca.com.au


Site Menu

Search the Website

Login