Performing rights organization

A performing rights organization exists to solve a transaction-cost problem. A radio station, a streaming service or a coffee shop cannot negotiate individually with the owner of every song it might play, and the owner of a song cannot police every venue that might play it. A society aggregates the repertoire, issues a blanket licence covering all of it, collects the fee, and distributes the money to the writers and publishers of the works actually performed.

Writers and publishers affiliate with one society, usually in their home territory. That society allocates the writer an IPI, registers their works, and enters into reciprocal agreements with societies elsewhere so that performances abroad are collected locally and remitted home. This is why foreign income arrives late and net of a local commission.

Distribution depends on usage data. Broadcasters and digital services report what they played, so those payments can be matched precisely to registered works. Smaller licensees — venues, shops, gyms — are typically licensed on a tariff and their income distributed using surveys, sampling or analogy to reported sources, which means live and background performance income is estimated rather than counted, and small performances can go unpaid unless separately notified.

Two limits are worth being clear about. A society licenses the public performance right in compositions only; it does not licence reproduction, synchronisation or the recording itself, all of which are handled elsewhere. And the writer's share of what it collects is paid direct to the writer, not through the publisher.

In the US, the largest societies operate under long-standing antitrust consent decrees, and where a licence rate cannot be agreed it can be determined by a court rather than purely by negotiation.