Introduction

Performance royalties are a crucial source of income for songwriters, composers, and music publishers. These royalties are collected and distributed by Collective Management Organizations (CMOs) like ECCO, which ensure that rightsholders are compensated when their music is publicly performed. Understanding how CMOs generate performance royalties provides insight into the broader music industry and the value of intellectual property rights.

1. Licensing Public Performances

CMOs grant licenses to businesses and entities that use music in public settings. This includes:

• Radio and Television Broadcasters – Stations must obtain licenses to play copyrighted music.

• Streaming Platforms – Digital services like Spotify, Apple Music, and YouTube require performance licenses for their music catalogs.

• Live Venues and Events – Concerts, festivals, clubs, and restaurants must pay licensing fees to perform copyrighted music.

• Retail and Hospitality Businesses – Hotels, bars, shopping malls, and other establishments use background music that falls under performance rights.

2. Collecting License Fees

Once licenses are issued, CMOs collect fees from music users. These fees vary based on factors such as the size of the audience, frequency of music use, and the type of business. For instance:

• A large television network may pay a higher licensing fee than a small radio station.

• A live event featuring multiple artists may have different licensing structures compared to a background music service.

3. Monitoring Music Usage

CMOs track music usage to determine which songs have been played and to ensure accurate distribution of royalties. This is done through:

• Broadcast Monitoring – CMOs partner with monitoring services to track airplay on radio and TV.

• Digital Reporting – Streaming platforms provide detailed logs of song performances.

• Surveys and Logs – Venues and event organizers may be required to submit playlists or performance logs.

• Fingerprinting and Recognition Technology – Advanced software helps identify songs played in various public settings.

4. Calculating Royalties

Once music usage data is collected, CMOs calculate royalties based on factors such as:

• The number of plays or streams.

• The total revenue generated by the CMO from licensing fees.

The collected revenue is then allocated proportionally to rightsholders based on verified usage reports.

5. Distributing Royalties

After calculations, CMOs distribute performance royalties to their members. This process involves:

• Songwriters and Composers – Receiving a share based on their contribution to the music.

• Music Publishers – Getting a portion of the royalties for their role in managing rights.

• International Distribution – CMOs work with global sister organizations to ensure rightsholders receive royalties from international performances.

Conclusion

Performance royalties are essential for sustaining music creators, and CMOs play a vital role in ensuring fair compensation. By licensing, collecting, monitoring, calculating, and distributing royalties, CMOs like ECCO help protect the rights of music creators while enabling businesses and media platforms to use music legally. Understanding this process highlights the importance of copyright management and the role of CMOs in the global music ecosystem.