The music industry banks on royalties collected by the licensing of copyrighted songs and recordings as a key form of payment for musicians. Intellectual property law and licensing systems have gone through considerable revisions over recent years as a result of the upsurge of digital music. However, in Bangladesh much of the industry's legal framework for royalties remains unsettled.

Generally, there are two types of musicians – songwriters and performing artists including singers. For any given musical track, two distinct copyrights come around: songwriters hold the rights to the lyrics and melody of a piece of music, while performing artists hold the rights to a particular recording of a song, which is called a master recording. Songwriters may only claim copyright for a full song, and cannot split lyrics and melody into separate rights.The copyright for the song is marked by a © (“c” with a circle around it) and the sound recording copyright is marked by a ℗ (“p” with a circle around it). 

Instead of attempting to track a song's use and pursue for payment individually, both songwriters and recording artists usually assign their rights to a third party for management – music publishers and record companies, also referred to as labels or producers or the masters. Song copyrights are commonly assigned to music publishers, while master recording copyrights are given to a record label.Publishers sign publishing contracts with individual songwriters. The contract may enumerate that the publisher will represent the work of a composer or lyricist and promote its use. In return, the publisher holds part of the copyright to this work and turn into rightholders. Further, record companies furnish contracts with recording artists. Under the contract, the record company often becomes the owner of the master tape of recordings. In many cases, it is also the record company that pays copyright remunerations to produce CDs from recordings of songs and develops into the music user. It is to be noted that these contracts cannot override any of the existing legal provisions.

In traditional music businesses, the sound recording copyright is always owned by the record company.  As a result, the writers do not have anything to do with it but to accept the royalty how scanty is it.  To get relieved of the grievances, writers or publishers now a days tend to own the sound recording because it is easier to self-distribute than it used to be and because the sound recording proves to be cost-effective and lucrative. This dual role makes them holders of both© copyright and ℗copyrights. Further, there is only one © copyright, but there might be multiple sound recordings, or ℗ copyrights for a song as in the case of cover versions.

A musician can earn, from the use of an original music, two different types of publishing royalties – performance royalties and mechanical royalties.

A performance royalty is owed to the songwriter and publisher of a particular song whenever that composition is “broadcast” or performed “in public.”These cases include: plays on terrestrial and satellite radio, usages on network and cable TV, film, commercials, games, ringtones etc., plays on internet radio, plays on online music streaming services (torrentbd, Pandora, etc.), usages in hotels, restaurants, stores or intercoms etc., and performances in live venues. However, musicians are not bystanders and they do not have time to get hold of every individual. Consequently, Performing Rights Organizations (PRO) come in play as facilitators. As a musician, for an example in the USA, one needs to affiliate with a PRO such as ASCAP or BMI. These societies collect and distribute performance royalties on behalf of songwriters and publishers. However, in countries such as Bangladesh where awareness for copyright is pitiable, the absence of such effective societies affects musicians insufferably.

Further, musicians are owed a mechanical royalty every time a song is reproduced on vinyl, tape, CD, MP3, etc. and sold, or downloaded on a digital music retail site, or streamed through services. In the western world, this royalty is statutorily set to a rate and often paid straight to the publisher. For example, the US Copyright Act 1976 and its rules set mechanical royalty to1.75 cents per minute of composition, or 9.1 cents per reproduced “copy” of that song whichever is greater, regardless of whether those albums or singles are sold. If someone covers one of the musicians's songs and they manufacture 1000 CDs — they owe the musician $91, regardless of whether those CDs ever get purchased by customers. Further, if a song is sold on iTunes for $0.99, they keep $0.29 leaving $0.70.  Out of that comes for songwriter/publisher $0.091 leaving $0.609 for whomever owns the sound recording aka master.  That is 60.9 cents for the sound recording copyright owner and only 9.1 cents for the songwriter and publisher.

Such mechanical royalties are sometimes collected by mechanical rights agency. For example, Harry Fox Agency in the USA, which is the licensing subsidiary of the National Music Publishers' Association collects the royalties and charges the publisher a commission of approximately 4.5% of the gross royalties collected. In either case – mechanical or performance, the collected royalties are then shared with the publisher and the copyright owner, following their own songwriting agreements. This agency also registers music albums with foreign collection societies.

However, in many countries including Bangladesh, mechanical royalties are not set yet and frequently a lump sum payment is made without following any calculation or standard contract. In addition, no agency stands in the fore as of today to register music home and abroad and collect royalties therefrom.

Given this, Bangladesh can have facilitating societies to collect and distribute stakeholders' royalties in music. For setting equitable royalties, it can follow the international best practices by adding specific provisions in the Copyright Act 2000 and the Copyright Rules 2006.

The writer teaches Intellectual Property Law as an Associate Professor at the Department of Law, University of Dhaka.