“How should I collect my Neighbouring Rights? Navigating your options...”
Now we’ve established that neighbouring rights (NR) is something all artists and labels or rights owners need to have a handle on, this blog will give you an idea of what to consider when deciding how and who manages this income stream for you. Even if you already have this in-hand, we’d encourage you read on for tips around what you might want to review in your current set-up.
There are a number of options available to you, and things to consider, whether you’re just starting to look at getting your neighbouring rights collections set up, or are already receiving monies from societies around the world. The reality of a creative industry is that all of us are different in our requirements. You could have two record labels based in the same building, using the same distributors and partners, but with totally different requirements when it comes to collecting their NR. It could come down to genre, it could come down to individual artists being more popular in different territories, the list goes on. One size definitely does not fit all, but unfortunately that is the approach that has traditionally been applied to collecting NR.
As we mentioned in our last blog post, there are tens of societies around the world who could have monies available for you, as long as you are registered with them and they know what recordings you contributed to or own.
Broadly speaking, your options to manage these registrations and repertoire submissions (both of which steps are essential in order to get paid) are:
- You register yourself at all societies directly around the world.
- You appoint a third party (either a NR expert/agent or society) to manage this for you.
- A hybrid of the above.
The main pro in terms of managing everything yourself is obviously that you don’t have to pay anyone else so get to keep all the money a society distributes. Each society has a different registration process and different data requirements, however, which can make doing everything directly pretty admin-heavy. So this option isn’t generally that feasible for creators. (Having said this, we are working on something special that will help relieve the pain of managing this yourself, click here for more on this...).
On the flip side, if you use a third party you generally lose a portion of your NR money to them in commission, but have to do far less work yourself. There are also occasions whereby you need to concede elements of your copyright in order for the other party to collect on your behalf – this all depends on how the third party operates. As a label, this is something to bear in mind in case it has implications on existing, or future, deals you wish to make. It can also complicate the revenue flow further down the line if you wish to switch partners.
So, it’s a balance. We would probably advise a hybrid approach to begin with - you register directly in your local territory and maybe one or two other high-earning territories, and appoint someone to manage the rest for you. Some of the more established societies (eg SoundExchange in the US, PPL in the UK, Sena in the Netherlands) have online systems that make registering with them pretty straightforward so it makes less sense to lose money to a third party to assist you in these cases.
In terms of choosing the right third party to work with, we implore you to ASK QUESTIONS! Get inquisitive and become annoying, because these things are important and if something isn’t right it may not be possible to make it right before revenue is lost. Things it is important to ask anyone you’re considering include:
How much will they take in commission? Does this vary by territory (eg do they take less for the monies it’s easier to access)?
What is the length of the contract? Often there is a fixed initial term, followed by a rolling term with a specific resignation clause that can determine how easy it is to terminate, should you wish to. Sometimes there is an additional post-term collection period that can extend the time the third party is entitled to collect for you, which isn’t always clear in the contract, so it’s worth asking about that.
How long will they hold the money once they’ve received it from the society, before paying it out to you?
What work will they do to check you’re receiving all the monies you should be, from each society?
What information will they be providing around what your payments relate to? For example, will you receive raw society statements, any further analysis that gives you insight as to which tracks are being played where?
And finally, but absolutely crucially, how do they intend to structure your collections? When selecting a neighbouring rights third party they should work with you to decide the best way to structure your collections. Many aren’t immediately transparent about the territories they’ll actually register you with directly, and which they will outsource to another third party; for example your NR may be with your distributor, who may outsource to an agent in some or all territories. Obviously, where outsourced, that party will likely also take a cut which can significantly decrease your earnings.
Sometimes it’s appropriate, or even necessary, to outsource collections to a party more able to extract money from a given territory. Societies in some territories don’t allow direct registration as they aren’t equipped to distribute to and administer a high volume of artists/labels. Some societies in, for example, South East Asia and Central/South America are either still inaccessible to many outside of their territory or their earnings are comparatively low (see previous blog post). The key is that you should know it’s happening, which, as we say, isn’t always the case, due to a lack of transparency.
If you have an existing NR partner, it is worth revisiting the above with them, and challenging your existing agreement if necessary.
We would encourage you to opt for an NR partner who will create an NR structure that’s specific to you and your music. Your NR partner should be communicating with you regularly, giving you proper transparency around where your monies have come from, demonstrating that they’re monitoring the money coming in for you and advising you where a different option is available in a given territory. Working with you as a partner, you should benefit from their expertise, that’s what you’re paying them for!
As always, we’d be happy to chat with you to establish together what is the best way for you to collect your Neighbouring Rights revenues – get in touch here.
