Performance royalty

Public performance is one of the exclusive rights granted to the owner of a musical work under section 106 of the US Copyright Act. Anyone performing a song publicly — a broadcaster, a bar, a gym, a streaming service — needs a licence, and the money that licence generates flows back to the writers and publishers of the songs performed.

Almost nobody licences song by song. Performing rights societies exist because the transaction cost of clearing millions of songs against millions of users would be prohibitive, so societies issue a blanket licence covering their whole repertoire, collect the fee, and distribute it against usage data. A broadcaster reports its logs; a streaming service reports its plays; a small venue is typically licensed on a tariff based on capacity or turnover rather than on what it actually played.

The distinctive feature of performance income is that it splits in two before it is paid. The writer's share goes directly from the society to the writer, and the publisher's share goes to the publisher. This matters in practice: even under a full publishing deal, the writer's half of performance income is normally paid straight to the writer and never passes through the publisher's account, which is why it is often the first money a songwriter actually receives.

Sound recordings are treated separately. In the US, recordings carry no general public performance right, so terrestrial radio pays the songwriter side and not the recording side. A narrower digital performance right does apply to non-interactive digital transmissions, and that money is collected by a recording-side body and split between the rights holder and the featured and non-featured performers. Most other countries do grant a broader right in recordings, which is what the term neighboring rights describes.