In response to a recent post on the Society of Composers, Authors and Music Publishers of Canada lobbying for increased royalties we received an email explaining who royalties are paid to in regards to ringtones and why, and the fact that it varies country to country. The author, Andrew Sheehy — Research Director at Generator Solutions — emphasised it was about the ringtone market in general and not Canada in particular. It’s quoted below:
There are various forms of publishing rights.
- Mechanical rights relate to the copyright in the musical work: every time a CD is sold a percentage of the retail price (or dealer price) is normally paid to the national collecting society. This payment is then transferred to the music publisher who has registered the work with the collecting society and then the publisher will pay the composer/s.
- Performance rights relate to a public performance of a musical work. Therefore aerobics instructors and clubs need to apply to their national collecting society (might be a different one to the one that handles mechanicals) for a license. In some countries, the playing of a ringtone is regarded as a public performance – the UK for instance. This means that an additional fee needs to be paid when a ringtone is played.
- Adaptation rights apply where a musical work has been used as the basis for another musical work. The composer of the new work needs to approach the collecting society or the publisher who handles the musical work that is going to be used as the basis of a new work to request permission to do what they wish and also this will mean they need to buy an adaptation license (i.e. pay a royalty). This is significant for ringtones in rare markets, such as Germany, where a decision was taken by music publishers that ringtones are derivative works, meaning that ringtone licensees to pay an additional adaptation royalty. So, in Germany, you have to pay for a mechanical right + a performance right + an adaptation right, which is quite expensive. In the UK, the music publishers do not regard a ringtone as derivative work and so ringtone licensees just have to pay mechanical + performance rights.
It’s also worth realising that the whole area of publishing rights in the digital arena – including real music rigntones and digital music – is unresolved: record labels and music publishers have not reached an agreement on what is to be paid. BTW – these issues are explained in depth in our Ringtones report (http://www.generator-solutions.com/products.php).
So, in response to my incredulous question “Are they seriously suggesting that when a ringtone is played because someone called a mobile phone it constitutes a “public performance”?” the answer in some countries is “yes”.