The Distribution of Royalties When a Band Covers a Popular Song

The music industry is a complex web of financial transactions, with royalties playing a crucial role in determining where the money goes. This article explores what happens when a band covers a song and the song becomes popular, particularly focusing on how the royalties are distributed between the original composer and the cover band.

Understanding Royalties in the Music Industry

Royalties in the music industry refer to payments made to the creators of music whenever their work is used or performed publicly. This is a very clear concept, as the Official American Society of Composers, Authors and Publishers (ASCAP) explains:

Royalties go to the songwriters. Period.

However, this statement can be slightly nuanced when it comes to covers and the distribution of these royalties.

The Split: 50/50 by Default

When a band covers a song, the royalties are typically split as follows:

This default split is fair and straightforward, but it can sometimes lead to complications within a band where one member has written all the songs. In such cases, the member who wrote the song would receive more than half of the royalties, which might not be ideal for the rest of the band.

Practical Implications and Challenges

When a cover band enjoys significant success, the royalties from the cover song can be substantial. This can create a situation where the original composer and the cover band share in the financial rewards. However, this doesn't necessarily solve the issue of the song writer who wrote all of the band’s songs.

For example, let's say a band has one member who wrote all their original songs. When they decide to cover a popular song, that member, in addition to the royalties from the original songs they wrote, would also get a share of the royalties from the cover song. This can be seen as unfair to the rest of the band members who contributed to the band's success.

Addressing Inequities within Groups

One common method to address these inequities is to establish a more detailed agreement within the band. This agreement can specify how royalties are allocated within the group, regardless of whether the song was written by an individual band member or not. Such agreements can help to ensure fair distribution of royalties and prevent conflicts within the band.

Alternatively, if a band member writes all their songs, they might consider setting up a separate entity or account to manage these royalties. This ensures that they can collect and distribute the royalties as they see fit, without involving the rest of the band in the management of these income streams.

Conclusion

The process of distributing royalties when a band covers a popular song is a reflection of the intricate interplay between music rights and financial interests. While the 50/50 split by default is standard, it's crucial for bands to navigate the complexities and establish fair agreements to avoid conflicts and ensure that all members feel valued and compensated for their contributions.

By understanding these nuances and working together, bands can ensure that all members are fairly rewarded for their hard work and creativity.