Understanding how royalties work
How do musicians make money? It’s a tough question. As we engage in the annual revelry that is Iceland Airwaves and a bunch of just-starting-out musicians are taking the stage, we reached out to Sindri Magnússon, Member Service Manager at the Composers’ Rights Society of Iceland (STEF), to delve deeper into this subject. With a database boasting over 70,000 registered works and a membership of about 10,000, STEF provides insights into how musicians can monetise their craft while managing music copyrights for Icelandic and international performances in Iceland.
GV: What is the role of STEF?
At STEF, we collect royalties from music played publicly in Iceland and redistribute them to the composers of the music. This includes Icelandic composers who are members of STEF and those who are not members under our licensing agreement with the Ministry of Culture. We are obligated to distribute royalties to all Icelanders, as far as we have enough information, regardless of their STEF membership status.
We also have reciprocal agreements with sister societies worldwide and compensate composers from around the world. If foreign artists’ music is played in Iceland, whether on the radio or in live performances, we pay them royalties, along with our members, for the use of their music. Similarly, if the music of Icelandic musicians who are STEF members is played abroad, we receive royalties that are then distributed to our members.
STEF is neither a government nor a private entity; it is an organisation owned by its members. This structure is similar to comparable societies worldwide. STEF is also a part of the international umbrella society known as SESAC.
GV: What should beginner artists in Iceland know about licensing and selling music?
For general usage on radio, on Spotify and for live performances, STEF covers the licensing part to simplify the various roles a composer may have. Typically, artists in Iceland take on multiple roles – they are performers, composers and writers, while often handling their own PR, band management or record label responsibilities. STEF holds the royalties for the writers, making it easy. As long as you are signed with STEF, the money should flow whenever your works are being played, provided we receive setlists for live performances, for example. When it comes to filming, commercials or writing for stage performances, you must obtain a license directly.
STEF also assists musicians with advice on various aspects. We recommend that our members contact us for any assistance with contracts or other general inquiries. Often, getting a second opinion is useful – whether from STEF, the union or the Iceland Music Export agency. It’s always good to get different perspectives, for example, when registering your work.
We have seen that people often write songs in their bedrooms, on an acoustic guitar, and then go into the studio. Sometimes, they give the performers half of the song’s royalties on a specific recording. For example, take the song “I Will Always Love You,” made famous by Whitney Houston. Dolly Parton originally wrote the song. Dolly Parton recorded it in a studio and shared half of the royalties with her band members. Some years later, Whitney Houston made that song one of the biggest hits in the world. The performers who played on Dolly Parton’s record have nothing to do with that song. It’s Whitney Houston’s version that’s generating royalties. It wouldn’t be fair to Dolly Parton if the drummer from the original version would get royalties from that.
(This is a hypothetical example. Dolly Parton did not share the splits of ‘I Will Always Love You’ with her band members.)
We recommend thinking about these things when registering a song – who wrote it, who contributed to the songwriting and how should the royalties be split when the song is played elsewhere?
GV: Do members need to pay a membership fee?
STEF is funded through a commission from everything we collect. We collect royalties for all performances around Iceland. For foreign or online collections, we collect between 1.5% to 3%. For live performances, there is a 10% collection fee; It’s a bit higher for radio and TV due to the additional work involved. In general, this fee structure is very similar to other societies worldwide. Membership is free, but we deduct a percentage just to run the office. There are no monthly or annual sign-up fees.
Whether you are a member or not, STEF is obliged to pay out to Icelanders and foreigners. We do our best to get the money to you. If you do not want to become a member, we would ask you to provide your kennitala and bank details so we can at least pay you. If that’s a no, we cannot do anything. The funds we’ve collected will remain with STEF for the retention period, and after two years, the money will be thrown into something else if no claims are made.
GV: What role does STEF play in advocating for fair compensation of musicians?
Our role is to collect royalties. We set up tariffs. STEF is owned by musicians and musicians are on the board. In general, it’s musicians who decide how a tariff should be structured, determining how much should be paid for royalties. Additionally, there is FÍH, a musicians’ union, which decides the compensation for live performances and other aspects. Our primary goal is to ensure that composers and music writers receive fair compensation.
GV: There’s a rumour that Icelandic musicians playing at Iceland Airwaves are not getting paid. Do you know anything about that and does STEF influence musicians’ payment at the event?
If someone plays music publicly and doesn’t pay for the writers’ side, STEF should collect the money. Iceland Airwaves has been in great cooperation with STEF throughout the years, and to my knowledge, they have always had a deal with STEF regarding payments. Based on what I’ve heard and my recent experiences, mainly since SENA took over Iceland Airwaves, they have been paying the musicians to perform. This is outside of STEF’s job, though.
About a decade ago, when I was playing IA myself, there was a discussion that the off-venue gigs were not being paid for and artists were trying to encourage other artists not to do unpaid gigs. From everything that I know, artists have been getting paid for performing at Iceland Airwaves in recent years.
FÍH has been debating musician payments with the Icelandic Symphony Orchestra and the Icelandic Opera. This is precisely the platform for musicians to voice their concerns. In my opinion, people should be getting paid for their jobs. This issue extends to the entire creative industry, where individuals are often told, “It’s great exposure,” and so on. I completely disagree with that; People should get paid for their work.
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