Neighboring Rights Society

In-Depth Explanation

What is a Neighboring Rights Society?

A Neighboring Rights Society (often referred to more broadly as a Collective Management Organization or CMO) is an administrative body that functions similarly to a PRO (like ASCAP or BMI), but with one massive difference:

• A PRO collects performance royalties for the songwriters and publishers for the broadcast of the Composition.
• A Neighboring Rights Society collects performance royalties for the recording artists and record labels for the broadcast of the Master Recording.

These specific royalties are known as Neighboring Rights.

How They Function

When a terrestrial radio station, a nightclub, a television broadcaster, or an internet radio station plays a recorded song, they must pay for the right to use that specific recording. The neighboring rights society issues a blanket license to the broadcaster, collects the licensing fees, tracks which songs were played, and then distributes the money to the rightful owners.

By international convention, the money collected is almost always split 50/50:

1. 50% to the Copyright Owner: Usually the Record Label that paid for the recording.
2. 50% to the Performers: Paid directly to the featured artist (e.g., the lead singer) and the non-featured artists (e.g., the session bass player) who actually played on the track.

Major Neighboring Rights Societies

Almost every developed country in the world has a designated, often government-mandated, neighboring rights society:

• United States: SoundExchange (Collects only for digital, non-interactive broadcasts like SiriusXM, because the U.S. does not pay neighboring rights for terrestrial AM/FM radio).
• United Kingdom: PPL (Phonographic Performance Limited).
• Canada: Re:Sound (Also works with CONNECT and MROC).
• France: SCPP (for labels) and SPEDIDAM / ADAMI (for performers).
• Germany: GVL.
• Australia: PPCA.

The Challenge for Independent Artists

If an independent artist's music is played globally, tracking down their neighboring rights royalties is a logistical nightmare.

Because every country has its own society, an artist's song might generate $500 in Germany (held by GVL), $200 in the UK (held by PPL), and $1,000 in the US (held by SoundExchange). If the artist is only registered with SoundExchange, they will never see the money sitting in Germany or the UK.

While some societies have reciprocal agreements to share data and money, these agreements are often slow and inefficient. To solve this, many independent artists use a Neighboring Rights Administrator (a specialized company that acts like a publishing administrator, but for master rights). For a percentage fee (usually 15-20%), the administrator will proactively register the artist's catalog directly with every single neighboring rights society around the globe to ensure no money is left behind.