How Money and Rights Flow in Music

Nearly every confusing question about music money traces back to a single fact that nobody mentions until it costs you something: a released piece of recorded music carries two entirely separate copyrights, owned by two potentially unrelated parties, and using it legally means dealing with both.

This lesson explains how the law is structured so you can ask the right questions and read a contract without being lost. It is not legal advice, and nothing in it is a substitute for a lawyer on anything that has money attached to it.

Two copyrights, two symbols, two owners

The first copyright covers the underlying work — the composition. Under the Copyright Act, 1957, a musical work is defined precisely, and the precision matters: it is the music, including its graphical notation, but expressly not the words intended to be sung with it. The lyrics are protected separately, as a literary work.

So a song is already two rights before anyone has recorded anything, which is why a composer and a lyricist are two rights holders and not one, and why an Indian film song's credits list them separately. This copyright is marked with the familiar ©.

The second copyright covers the sound recording — defined in the Act as a recording of sounds from which those sounds may be produced, regardless of the medium or the method. That phrasing was doing work long before anyone had a hard drive, and it is why the definition still covers a file as comfortably as it covered a lacquer. It belongs to whoever made or financed the recording, usually a label, and it is marked with (P) in a circle — the phonographic copyright.

Two consequences follow immediately, and they are the whole practical point of the distinction.

• Record your own version of an existing song and you need permission for the underlying work — but you have not touched anyone's recording, and the recording you make is a brand-new copyright belonging to you. Ten cover versions mean one © and ten separate (P)s.
• Sample four seconds of a record and you have used both copyrights at once, so clearance is two negotiations with two parties who may want very different things. This is also why there is no safe number of seconds: the question is whether you used the thing, not how much of it.

The Indian film-music structure, which is not the textbook one

Most writing on this subject describes an artist signed to a label who writes and records their own songs. That describes a minority of Indian recorded music, and following it will mislead you about who actually holds what.

In the dominant film-music model, a producer commissions a composer to write the songs and a lyricist to write the words, hires playback singers and session musicians to perform them, pays for the recording, and then typically sells or licenses the music rights to a music label. The label markets and monetises the songs; the singer, in the classic arrangement, was paid a fee and had no continuing share at all.

That last point changed. The 2012 amendment to the Copyright Act introduced a right that anyone working in Indian music should know about: authors of the literary and musical works used in a film retain a non-waivable right to receive royalties for uses of those works other than exhibition in a cinema hall — and an assignment that purports to take that right away is void. Performers were given statutory rights in the same amendment, including a right to share in royalties for commercial use of their performance.

So a composer who assigned everything in 2005 and one who assigned everything in 2015 are in genuinely different positions when the song turns up on a streaming service, and a contract that reads as though the 2012 amendment did not happen is a contract to be suspicious of.

Five things that get paid, and they are not the same thing

Untangling royalties gets much easier once you stop saying "the song" and separate five distinct objects. Each is owned by someone, and each earns from different uses.

1. The artist — the act signed to a label, earning from the exploitation of their recordings.
2. The work — the composition and the lyric, independent of any recording, owned by the writers and their publisher.
3. The recording — one specific captured performance, owned by whoever financed it.
4. A recorded performance — an individual musician's contribution inside that recording, which since 2012 carries statutory performer's rights of its own.
5. A live performance — the same song played on a stage by anyone, which is a separate event generating a separate payment to a different party under a different licence.

A single evening can trigger several of these at once. A DJ plays a track in a club: that is a public performance of a sound recording and of the underlying work, so both need licensing. A band plays a cover of the same song an hour later: the recording is not involved at all, and only the work is.

The four royalty types, named properly

• Mechanical — paid for reproducing the underlying work onto a format. The name is a leftover from mechanical reproduction and it now covers the copying involved in a stream just as it covered a pressed disc.
• Performance — paid when a work or a recording is performed in public or broadcast. This is what venue, radio and television licences fund.
• Synchronisation — paid to combine music with moving images. Unlike the others, sync is negotiated freely rather than at a standard rate, which is why one placement in an advertisement can be worth more than a year of streaming.
• Print — paid for reproducing the notation. Small in most careers and not zero in education and church music.

Different bodies collect different ones, and the split runs along the same two-copyright line as everything else: the underlying work's performance income is administered separately from the sound recording's. The next lesson covers who does what in India.

Worked: one stream, in rupees

Streaming payouts get quoted as one number, which hides where the money actually goes. Here is the shape of it, with a deliberately illustrative rate — real per-stream rates vary by platform, by country, by whether the listener is paying or ad-supported, and by the specific distribution deal, and no single figure is true everywhere.

Take ₹0.05 per stream as a working figure for an Indian audience, which is in the region people actually see and is comfortably above what ad-supported plays often return.

1. One lakh streams (100,000) generates roughly ₹5,000 in total. That is the pool, not the payment.
2. Most of it — commonly in the region of 80 percent, depending entirely on the deal — is attributed to the sound recording, and goes to whoever owns it. If that is a label, the artist receives their contractual royalty share of it, and only after any advance is recouped.
3. The remainder is attributed to the underlying work and splits again between the mechanical and performance components, then between composer, lyricist and publisher.
4. If you released it yourself through a distributor, you own the recording, so the first share is yours minus the distributor's cut — which is the entire financial argument for staying independent, and it is a real one.

Run the number that matters before a release rather than after it. At ₹0.05, earning ₹25,000 in a month from streaming alone needs about five lakh streams — every month. That is not a reason not to release music. It is a reason to know which part of a career is actually paying for itself, and in most Indian careers the answer is live work, sync, and teaching, with streaming as the thing that makes those possible rather than the thing that pays.

Advances, and the word that costs people money

The word is recoupable. An advance is not a payment for the record; it is a loan against the artist's future royalty share. Until it has been earned back out of that share, the artist sees nothing further, however well the record does.

The size of the advance is the part everyone negotiates and the smaller half of the question. The larger half is what else is recoupable — recording costs, video costs, tour support, marketing, independent promotion. Each of those, if recoupable, is added to the balance the artist has to earn back out of a fraction of the income, while the label recovers from the whole of it.

Two related terms to watch for. Cross-collateralisation lets the label recover a shortfall on one project out of the earnings of another, so a successful album can be quietly paying off an unsuccessful one. And a 360 deal extends the label's share beyond recordings into touring, merchandise, publishing and endorsements — sometimes a fair exchange for real investment across all of those, and sometimes a share of income the label had no hand in producing.

What a publisher is actually for

The word turns up constantly and is rarely explained. A music publisher administers the underlying work — registering it with societies, collecting mechanical and performance income worldwide, licensing sync, chasing unpaid royalties, and in some arrangements finding collaborators and pitching the writer for work.

They take a share for doing it, and the arrangements sit on a spectrum:

• Administration — the publisher collects and registers for a percentage of income, typically in the low tens of percent, and the writer keeps ownership. Least invasive, least active.
• Co-publishing — the writer assigns a share of the publishing to the publisher, keeping the writer's share plus part of the publisher's. In exchange there is usually an advance and real effort behind the catalogue.
• Full publishing — the publisher takes the publishing share outright for the term. The largest advance, the smallest ongoing share, and the most reason to read the reversion clause.

The honest test of whether a deal is worth it is not the percentage. It is whether the publisher will actually do things you cannot: register your works in twenty territories, get you into rooms, and place your music with people who do not answer strangers. An administration deal with a company that collects competently is worth more than a full publishing deal with one that does not.

What the engineer and the producer own

This is where people in a studio get caught, and it is a question of default rules meeting unspoken assumptions.

A producer who contributed to the composition — a topline, a chord change, a structural rewrite that survived — has a claim on the underlying work, not merely a fee. A producer who shaped the record without writing has a claim on the recording side, conventionally settled with a fee, or points (a royalty percentage), or both. An engineer ordinarily has neither unless something says so, and a session musician has performer's rights in their contribution.

None of that is settled by who was in the room or who was nicest about it. It is settled by whatever anybody wrote down, and if nobody wrote anything down, by the default rules in the next lesson — which may not match what everyone assumed.

The fix costs ten minutes. Before anyone leaves the session, write a one-page split sheet: the song title, the date, every contributor, what they contributed, and the percentage split of the underlying work, signed by everyone. It is not a legal fortress and it does not need to be. It is a contemporaneous record of what four people agreed when they still liked each other, and it settles ninety percent of the disputes that otherwise surface two years later when the song is worth something.

How long any of this lasts

Terms differ by the type of work, which is why a song and its own recording routinely fall out of copyright decades apart.

• For published literary, dramatic, musical and artistic works, copyright runs until sixty years from the beginning of the calendar year following the year in which the author dies.
• For sound recordings and cinematograph films, it runs sixty years from the beginning of the calendar year following publication — measured from the work, not from a person.

The practical consequence turns up constantly in Indian catalogue work: an old recording can be out of copyright while the song on it is still firmly in copyright because its lyricist lived a long time. Using the recording is then a different question from using the song, which is the same two-copyright distinction the lesson opened with, arriving one last time.

Releasing it yourself, and what nobody does for you

Independent release is now the default rather than the exception, and it changes who holds the rights without changing what has to be done. The chain runs: you own the recording, a distributor delivers it to the streaming services for a fee or a percentage, and the services report and pay back up the chain.

What a distributor does not do is the whole of the underlying-work side. That is a separate set of registrations, and skipping it is the single most common way independent artists lose money they have genuinely earned.

• Register as a writer with the relevant society, and register each work with its correct title and agreed splits.
• Make sure every recording carries an ISRC and every release an appropriate identifier, so usage can be matched back to you rather than sitting unallocated.
• Keep credits accurate at delivery. Metadata entered once at distribution propagates everywhere and is painful to correct afterwards.
• Decide, before release, who owns the master — particularly if a producer or an investor funded it. That conversation is easy in advance and expensive in arrears.

The habit worth building

When any rights question comes up — a sample, a cover, a sync request, a café asking what it needs — do not start with how long the excerpt is or whether the use is commercial. Both change the terms and neither changes who you are talking to.

Start with: which of the two copyrights is being used, and who owns that one? Everything else in this course is detail hanging off that question.

What to practice

• Take one track you like and write down who would need to be paid if it played on a radio station, in a café, and in a film. Three uses, three different lists.
• Find a cover version of a song you know and work out which of the two copyrights the cover created and which one it merely licensed.
• Work out how many streams your own release would need to earn one month's rent at a realistic Indian per-stream rate. Do it before you plan a release, not after.
• Look at the credits on any Indian film soundtrack and separate the composer, the lyricist, the singer and the label. Four parties, four different rights.
• Read one royalty statement — anyone's — and identify which line is mechanical, which is performance and which is the recording's share.