The Guide to Neighbouring Rights

Originally written by John Regan, Dean Francis, and Filip Nallamilli

Neighbouring rights, an oft-misunderstood and commonly overlooked right type, has become increasingly relevant for performers, producers, and record labels. The neighbouring rights sector is a fast-growing area of global rights management.

But what are neighbouring rights? “Neighbouring rights” is the term for a royalty earned from the public performance of a sound recording. They are similar to the public performance royalties for a composition, in that they are earned when a song is broadcast or played in a public place, but while those are paid to songwriters and their publishers, neighbouring rights royalties are paid to recording owners and performing artists. The term “neighbouring” refers to the fact that these rights are similar to - or “neighbour” to - the public performance rights for compositions.

Where are Neighbouring Rights Collected and Paid? 

Note that neighbouring rights are NOT collected and paid in the U.S.; recording owners and performing artists do not earn a royalty when a recording they control/appear on is broadcast over the radio airwaves. There are a lot of reasons this is the case; but one factor is that U.S. record labels historically relied on broadcast radio for promotion, and were therefore unwilling to alienate them by asking for additional royalties.

Further, due to reciprocity restrictions, many organizations do not compensate rights holders in the U.S. for neighbouring rights royalties earned in their country. Recordings created outside of the U.S., or by non-U.S. citizens, on the other hand, are eligible to collect neighbouring rights royalties outside of the U.S. 

To counter these eligibility restrictions, it’s not uncommon for U.S.-based artists who expect significant radio play outside of the U.S. to record in international studios, so that these recordings are eligible to receive neighbouring rights royalties.

What about the U.S.?

While the U.S. does not have neighbouring rights, there is a similar type of royalty payable to recording owners, performing artists, and featured musicians when their songs are played over digital and satellite radio in the U.S., such as Pandora, Sirius, and iHeartRadio. These are called “digital performance royalties” - not to be confused with the performance royalties earned by compositions - and are most often collected by the U.S. organization SoundExchange.

Who gets paid?

When it comes to neighbouring rights and digital performance royalties, the revenue is split evenly between the sound recording owner (often a record label) and the performers on the recording. The performer share is split between the featured performing artist and any non-featured performers (such as session musicians), with the performing artist generally keeping 45% or so. This means that the neighbouring right royalty is the only royalty due to those hardworking session musicians whose riffs we may know by heart, but whose names we do not.

How This Affects Songwriters

The Neighbouring right affects songwriters only if they are also a performer on the sound recording. This means it’s crucial to make sure you’re credited for all your involvement - say you’re a co-writing producer who also lays down a keyboard track or two? Make sure you get your name on those tracks so you can collect your performer royalties. And if you’re a performing artist who owns your own recordings, you’ll be able to collect these royalties as both the recording owner and the performer.

Who Collects Neighbouring Rights and Digital Performance Royalties?

Many countries have local organizations collecting neighbouring rights for their regions, and we recommend you register locally or with an international neighbouring rights administrator to make sure you’re collecting everything. A few examples of these organizations include:

  • SENA - Netherlands
  • GVL - Germany

SoundExchange

SoundExchange is the leading provider of digital performance royalty collection and disbursement in the U.S. If you own your recordings, or you are a performing artist or featured musician, sign up with SoundExchange to make sure you’re collecting this piece of the puzzle.

To make sure you’re collecting all the types of royalties your songs earn, download our Royalty Checklist.

Home-Page_Modules

PROTECT YOUR RIGHTS WITH SONGTRUST'S MUSIC PUBLISHING SPLIT SHEET.

Get Free Split Sheet

Join