Have you ever wondered how music royalties work?


You might not be pulling in big streaming or sales numbers just yet but it pays (quite literally in this case) to be in the know about the ownership of your music.


In this two-part guide we’ll be glancing over the ins and outs of how royalties and music ownership works and how the music industry protects artists (or at least tries to) from copyright theft and unlawful use of their intellectual property – so strap in and let’s get started.


First of all though, what exactly are royalties?




At its simplest level, music royalties are payments for the use of property (in this case music recordings) that go towards artists, songwriters and publishers or whoever happens to own a slice of the rights to that recording.


Royalties can also be paid out through various types of licensing which basically also means the owner has given permission for someone to use their music, something Donald Trump’s team would now be acutely aware of when he used Pharrell’s Grammy award-winning song ‘Happy’ at a campaign rally in mid-2018 which in turn provoked a cease-and-desist letter from Pharrell’s legal team.


More recently, Clive Palmer and the United Australia Party have run into the same issue with their 2019 election campaign, being served with cease-and-desist notices by the likes of Twisted Sister and Boy George for using their songs without permission. 


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Depending on how you plan to use an artist’s music there are different licenses or usage conditions and subsequent royalties attached but we’ll get into those a little bit later.


Now that we have the basics covered, let’s talk about the mechanism that lets the global recording industry keep track of who to pay royalties to, the ISRC.


The ‘International Standard Recording Code’ is a unique identification system for sound recordings with each separate song or recording being encoded with its own unique code to identify it.


It’s actually quite like a unique digital fingerprint which means that if for example you wanted to use a particular song for a commercial you were shooting you can quickly and efficiently track down that recording via the code and then seek permission to use it and pay the subsequent royalties to the owner(s) of that recording.




At its heart, the ISRC is basically the recording industry’s way of keeping track of who owns what and how much they should be paid as well as being a tool for tracking sales on both music-download and streaming sites. With the advent of illegal file-sharing, ISRC codes have also become an increasingly important factor in the fight against music piracy.




Here’s what an ISRC code actually looks like;





You can actually glean a lot of information from this random seeming string of letters and numerals – here’s how it works;


AU is the country (US for United States / NZ for New Zealand / AU for Australia)


ABC is the unique letters assigned to the record label that has released the music.


19 is the year.


12345 is a unique identification number assigned by the label. Most record labels assign them sequentially so their first recording of 2019 would be AU-ABC-19-00001.




Why do I need an ISRC?


First thing’s first – digital retailers or streaming services will not allow you to sell or stream a recording without an ISRC because that’s how they track sales as well as guarantee the integrity of the copyright. It’s also important to note that each individual recording needs to have its own ISRC code so for example if you plan to release several remixes of the same track, each separate recording will need to have its own ISRC code.


It also goes without saying that the recording industry doesn’t allow the re-use of ISRC codes as that would defeat the purpose of it being a unique identifier.




Where do I get an ISRC Code for my recordings?


The Australian Recording Industry Association (ARIA) handles all ISRC applications in Australia – it’s as easy as emailing isrc@aria.com.au which will respond with an automatically generated email which will detail the next steps to securing an ISRC (this process takes about a week). Importantly, there is no fee for getting ISRC codes for your recordings.




So, there you have it.


Keep your eye out for Part Two of this feature on how music royalties work where we’ll be guiding you through the different types of copyright that exist and how you can use this to your advantage and make your music work for you.  



Interested in the business side of the music industry? Why not check out our Bachelor of Entertainment Management course where you'll learn everything you need to know when it comes to managing and promoting artists.