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What does RightsFlow do?

RightsFlow provides artists, record labels, distributors, and online music services with an end-to-end solution for the licensing, accounting, and payment of mechanical publishing rights.

RightsFlow acts as an agent on behalf of its clients and acquires licenses with affiliated publisher as well as independent publishers. These licenses include physical reproduction (i.e. CDs, cassette, etc); permanent digital downloads (a la iTunes); ringtones; and interactive streaming and conditional downloads (i.e. Rhapsody or imeem). RightsFlow handles the entire licensing process as well preparing quarterly royalty reports, and administrating payments to publishers.

RightsFlow provides artists, record labels, distributors, and online music services with an end-to-end solution for the licensing, accounting, and payment of mechanical publishing rights.RightsFlow acts as an agent on behalf of its clients and acquires licenses with affiliated publisher as well as independent publishers. These licenses include physical reproduction (i.e. CDs, cassette, etc); permanent digital downloads (a la iTunes); ringtones; and interactive streaming and conditional downloads (i.e. Rhapsody or imeem). RightsFlow handles the entire licensing process as well preparing quarterly royalty reports, and administrating payments to publishers.

When would I, or my company, need RightsFlow’s services?

RightsFlow’s services are designed for artists, record labels, distributors, online music services, and similar companies who are distributing or selling recorded music which was written, co-written, published, or otherwise owned by a third party in the United States.

This includes situations such as:

• An artist records and releases a song written or co-written by someone else (i.e. a cover song).
• An artist has signed a deal with a publisher, and this publisher must be paid directly for all of the artist’s compositions.
• A distributor is distributing multiple artists and record labels, including some who are selling recordings of compositions to which they do not own the rights.
• An online music service intends to make a wide range of recordings available, including some which feature compositions that are not controlled by the record label (or distributing party).
• A group making a compilation album, or otherwise licensing master recordings from another source.

What is a mechanical license?

A mechanical license is a broad term that refers to the reproduction for distribution or sale of musical compositions in the form of sound recordings. Any time you reproduce a recording of a composition you do not control – including through physical and digital means – you need a mechanical license.

Who issues mechanical licenses?

Mechanical licenses are issued by the owner or controller of the composition in question. Typically, these are publishers, which are acting on behalf of songwriters or composers. Some agencies represents many US publishers for mechanical licensing, although there are US publishers who are not represented by agencies and must be licensed directly.

What types of uses are considered a “mechanical”?

Mechanical licenses include the following:

• Physical reproduction and distribution – i.e. CDs, cassettes, vinyl, etc.
• Permanent Digital Downloads (termed Digital Phonorecord Deliveries, or “DPDs”) – i.e. iTunes.
• Ringtones.
• Interactive Streaming and Conditional Download – i.e. Rhapsody.

Many publishers require a separate license for each use.

What are the mechanical royalty rates in the US?

The royalty rates per reproduction, set by the Copyright Royalty Board (CRB) are:
• For physical mechanicals and DPDS:
• For recordings under 5 minutes in length: $0.091.
• For recordings 5 minutes in length or longer: $0.0175 per minute or fraction thereof.
• For ringtones: $0.24.
• For interactive streaming and conditional downloads:
A per stream royalty, based on 10.5% of a service’s gross revenues, less royalties paid to performing rights organizations (ASCAP, BMI, SESAC), and certain other deductions. These rates are calculated quarterly and applied pro-rata to all recordings streamed during the quarter.

How do I calculate Interactive Streaming or Conditional Downloads royalties?

In general, the calculation starts with an All In Royalty For Service, defined through comparing a percent of total service revenue for the period against a floor (which varies depending on the service type). Amounts paid to PROs are deducted from the All In Royalty. A Payable Royalty Pool is then created by comparing the All In Royalty (adjusted for PRO deductions) against a different floor (which varies depending on the service type).

A per play royalty is then calculated by dividing the Payable Royalty Pool by the total number of plays. The royalty for each composition is then determined by multiplying the per play royalty by the total number of plays each composition has received during the period. After October 1, 2010, plays of recordings which are over 5 minutes in length will be adjusted so that 0.2 plays is added for each minute or fraction thereof over 5. Therefore, a recording that is 5 minutes and 25 seconds long will count as 1.2 plays; a recording that is 6 minutes and 1 second will count as 1.4 plays, etc.

Note that the calculations aboves are a description of how a service will arrive at a “per play” royalty. In the case where a label has the contractual responsibility to license, account, and pay publishers, this per play royalty will then be reported back to the label, which will use it to calculate royalties for the period. Naturally, the label will not be able to perform these calculations as they require a comprehensive knowledge of the service’s revenue, royalty expenses, subscribers, and play counts.

How does RightsFlow help my company?

RightsFlow provides a turnkey licensing and royalty service; able to handle the entire process of mechanical licensing end to end, acting as an agent on your behalf. Further, RightsFlow will manage the ongoing quarterly accounting and royalty process on your behalf. All that is required from you is information on which recordings you need licensed, and a quarterly feed of sales information. We’ll handle all the license administration, royalty report preparation, and payment administration.

What are the benefits of outsourcing mechanical licensing and royalties?

Mechanical licensing and royalty operations represent a hard cost to your company. Outsourcing through RightsFlow can save significant time and money, allowing you to reinvest the resources currently assigned to licensing and royalties into other areas.

Furthermore, mechanical licensing in the US can often be confusing and intimidating. Licensing incorrectly, or not licensing at all, can open your company to substantial risk from audits or lawsuits. Working with RightsFlow’s years of experience and industry expertise manages and minimize that risk as much as possible.

What if I don’t know who the songwriter or publisher is for some of my tracks?

In order to license on your behalf, RightsFlow requires that your data submissions include all songwriters and publishers for each track. If you do not know the songwriters or publishers for some or all of the recordings you need licensed, you can use the following resources to research this information:

• ASCAP – www.ascap.com
• BMI - www.bmi.com
• SESAC – www.sesac.com
• All Music Guide – www.allmusic.com

RightsFlow also recommends checking against other resources such as non-US rights societies, www.copyright.gov, MySpace, and a general Google search.
If you are still unable to determine songwriter and publisher information, RightsFlow can research it for you for additional fees.

How is mechanical licensing different in the US than in many countries?

In many countries around the world, mechanical royalties are paid directly by the manufacturer (in the case of physical products) or online service (in the case of digital products) to one central rights society. Publishers are then paid by the societies.

In the United States, royalties are paid directly to the publishers or their agents. Moreover, most online services pay record labels inclusive of mechanical royalties. It is then the record label’s responsibility to locate and pay the publishers.

Who are some of RightsFlow’s clients??

RightsFlow services over 9,500 record labels and distributors. Some of the many clients we service include marquee companies such as imeem, E1 Entertainment, The Orchard, Hoodiny (MSN), Beatport, Muzak, EMI Music, Active International, Tapulous, CD Baby, IODA, Audible Magic, YouLicense, Constellation Wines (Blackstone), X5 Music Group, Zebralution and Disc Makers, among others. You can view a complete list of our clients here: Clients & Partners

Is RightsFlow a royalty accounting software platform?

No. Although RightsFlow provides royalty accounting services for mechanical licenses through a proprietary internal system, RightsFlow does not retail or license its royalty platform for other uses.

Does RightsFlow handle accounting for artists??

No. RightsFlow’s services are specific to licensing royalty accounting to publishers for mechanical uses.

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