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Understanding royalties and catalogues in Music

The issues resulting from royalties and the ownership of the music catalogue are not new in Nigerian music. King Sunny Ade (KSA) had a protracted dispute with Chief Abioro over the ownership of the album he recorded under Abioro’s African Song Limited and the royalties resulting from the sale of the albums. The dispute between the Grammy-nominated King Sunny Ade and African Song Limited started in 1974 and was a subject of litigation for nearly four decades until the Federal High Court settled it in favour of KSA in 2013.

In 2022, Nigerian Street Hop sensation Mohbad broke the relationship with Marlian Music over irreconcilable differences, part of which was the label’s failure to pay him any royalties since he signed to their books in 2019.

In a public release by Mohbad’s team on September 16, 2023, they stated they were still in court to retrieve Mohbad’s catalogue and the royalties being owed to Mohbad by Marlian Music.

For those who may not understand what these terms royalties and catalogue mean, this article is for you.

In simple terms, royalties are the money made from the exploitation of music.

Music royalties are the payments made to individuals who hold the right over a song. These individuals include recording artists, songwriters, producers, and other parties like the label and publisher.

Two types of rights are attached to the ownership of a song. They are The Composition and the Masters.

The composition is the lyrics, the melodies, and harmonies that make up a song and this right belongs to the songwriter and their publisher who collect their share of the royalties.

The Master is when the composition (lyrics, melodies, and harmonies) is recorded on a production to create the song in its final and consumable form. The master rights belong to the recording artist, producers, and record labels.

The royalties from composition and masters accrue from the exploitation of a song from any form of commercial use including:

  • Public Performance Royalties: These are the royalties paid by Performing Rights Organizations (PROs) to songwriters and publishers whenever their music is broadcasted publicly via Radio, in Malls, etc. 

  • Mechanical Royalties: This is the payment made to songwriters whenever their compositions are distributed or reproduced in both physical and digital formats on streaming platforms.

  • Digital Performance Royalties: These are royalties from digital musical consumption platforms.

  • Synchronization Royalties: These are royalties generated when a song is licensed for use in movies, shows, advert jingles, video games, etc. 

  • Songwriters 

  • Recording Artists 

  • Producers 

  • Record Labels

  • Distribution Companies 

  • Publishers

  • Licensing Companies 

The rights to a song depend on the contributions of each party to the song and also the negotiations between them.

Contractually, these rights are defined and stated in a document known as a Split Sheet.

Royalty collections are determined by the structure of each country. The Nigerian music industry sadly can’t be counted in the comity of nations with structured royalty collection bodies.

Composition royalties are collected by Publishing companies which collect a cut before paying the songwriters.

For other kinds of royalties from the Master like mechanical, performance, and licensing, there are different bodies responsible for collecting them.

Performance Rights Royalties are collected by Performance Right Organisation like BMI collect royalties from usage on radio, concert halls, malls, restaurants, and on television shows and commercials.

Typically, each country has one Performance Right Organisation.

Licensing royalties are collected by the licensing companies who pitch and find suitable placement for the songs. They collect the revenues for the licensing and take a cut based on a pre-agreed contract before paying the rest to the artist.

Just as songwriters sign a publishing deal, artists also sign recording deals that cover the reproduction of the masters. Some of these companies like the major labels Sony, Universal, and Warner own both distribution and publishing companies.

For artists not signed to majors and who use different independent distribution companies to get their music on streaming platforms, different collection companies collect the distribution royalties.

There are companies such as Tunecore, Distrokid, and Vydia that collect this distribution revenue, and take a cut based on the agreed cut with the artists before paying the artists their cut.

A music catalogue is a collection of songs or albums owned by a particular person. It’s the total sum of the copyright registered to an entity’s name be it an artist or a record label.

Sometimes, artists sign contracts that pass off the rights to every song recorded by them to the record label for a particular period. In that case, the record label owns the artist’s calatogue during the duration of that contract, and at the expiration, the catalogue then returns to the artist.

Some artists with attractive catalogues have sold their catalogues to investment companies who become the new owners and find creative ways to exploit the catalog.

Whoever owns the catalogue owns the right to the music therein and is entitled to royalties that accrue to such rightsholder from the exploitations of the catalogue.

Whoever owns several copyrights to their name has a catalogue.

This includes songwriters, recording artists, producers, and record labels.

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