Rightsholder

In-Depth Explanation

What is a Rightsholder?

In the music industry, a Rightsholder is exactly what it sounds like: a person or business entity that holds the legal rights to a piece of intellectual property.

When a song generates money (through streaming, radio play, or a TV commercial), the money is not paid to the song itself; it is paid out to the various rightsholders based on the specific percentage of the copyright they own or control.

The Two Distinct Types of Rightsholders

To understand how money flows in the music business, you must always remember that every recorded song contains two completely separate copyrights. Therefore, there are two completely separate groups of rightsholders for every song.

1. The Composition Rightsholders (The Song)

These are the people who own the underlying musical work (the lyrics and the melody).

• Songwriters / Composers / Lyricists: The individuals who actually wrote the song. They are the initial rightsholders the moment the song is created.
• Music Publishers: Companies that acquire a percentage of the composition rightsholders' ownership in exchange for administering the catalog and actively pitching the songs.

2. The Master Recording Rightsholders (The Audio)

These are the people who own the specific physical or digital audio recording of that song.

• Record Labels: In traditional record deals, the label pays for the studio time and assumes 100% ownership of the Master Recording. They are the sole rightsholders of the master.
• Independent Artists: If an artist pays for their own recording and distributes it themselves via DistroKid or TuneCore, the artist is the 100% rightsholder of the Master Recording.

How Many Rightsholders Can One Song Have?

A single pop song can easily have 10 to 15 different rightsholders.

Imagine a hit song on Spotify:

• The Record Label owns the Master (1 Rightsholder).
• The track was produced by two different beatmakers, written by three different lyricists, and features a guest rapper. That is six different writers.
• Each of those six writers is signed to a different publishing company.
• This means there are 12 different rightsholders just on the Composition side alone (6 writers + 6 publishers).

Whenever that song is streamed, or placed in a movie via a Sync License, the resulting money must be mathematically divided and paid out to all 13 rightsholders according to their specific contractual percentages (determined by their Split Sheet).

Transferring Rights

Being a rightsholder is not always permanent. Intellectual property can be bought, sold, traded, and inherited just like physical real estate.

• Catalog Sales: In recent years, legacy artists like Bruce Springsteen, Bob Dylan, and Justin Bieber have sold their entire catalogs to private equity firms (like Hipgnosis) for hundreds of millions of dollars. When they do this, the private equity firm becomes the new rightsholder and collects all future royalties.
• Reversion Clauses: In modern, artist-friendly record deals, artists often negotiate a "reversion clause." This means the record label is the rightsholder of the master recording for a limited time (e.g., 10 years). After 10 years, the copyright automatically reverts back to the artist, making the artist the rightsholder again.