Why is P.R.O. a thing in an era where music can be bought for a flat fee?

I kind of just don’t understand who is paying for royalties when they can buy something for a flat fee. What’s that all about? Never really knew much about it.

P.R.O is mostly about businesses and not that much about people listening to music. Meaning that the main stream that P.R.O handles is from radio stations, film companies, media companies and you name it that utilise music in their own businesses and hence gain their own income partially because of the music. I agree that nowadays the basic business model of music sales is totally different from the original physical album stuff, but it doesn’t really relate to what P.R.Os are all about.

The main point is that while you can easily listen to any music “for free”, you still can’t build your own business on top of “free music”.

I mean, doesn’t anyone who buys anything from here gain “their own income” partially because of the music they buy from here? I still don’t quite understand it, it seems more like a problem of market transparency, that the customers don’t know platforms like AJ exist.

I don’t think you understand what PRO money is.

PRO money is performance royalties and broadcasters are required by law to pay this to the PROs of that country. Not the buyers of your track.

If John buys a royalty free track from you, a track that is PRO registered, he only pays ONE time. His little commercial that he did for another company then runs on an English TV channel 1,000 times. John doesn’t pay anything else, the company doesn’t pay anything else, but the TV channel (the broadcaster) pays the PRO.

You get A LOT of money. This can be several thousand dollars for one commercial.

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Better example is this: If Microsoft or Google LICENSE (not buy) a track from any author on Audio Jungle for the ridiculously low fee of $308, then run the commercial on NATIONAL USA or European television with your music 10,000 times (They buy 10,000 “spots”) …These mega corporations will have to pay the broadcaster (NBC for example) Millions and Millions of Dollars to buy air time. This is known as a “media buy”. NBC says “OK Microsoft you owe us $5000 for every 30 seconds of air time (adverrtising space)”

Microsoft launches (for example Windows 11) They buy 10,000 spots to promote their new operating system. Each spot is sold at $5000 a spot 10,000 x $5000 = $50,000,000 in advertising revenue for NBC Universal.

Our Performing Rights Organizations make a deal with NBC Universal (TV NETWORK) They say “hold on here, you are PERFORMING music from our members and making money off selling this air time, our members deserve a cut. You are making $5000 a spot, you need to pay the writer and publisher of the music a portion of that because you are performing their music (broadcasting it to huge audiences)” The PRO COLLECTS THAT MONEY FROM THE TV NETWORKS ON OUR BEHALF AND THEY POCKET SOME OF IT TOO. THEY THEN PAY Writer and Publisher (for example on average) $5 a spot. Potentially $50,000 to the writer and $50,000 to the publisher. (In this HYPOTHETICAL example above)

This is all an example, but not far fetched nor exaggerated. Writers never collect this money all in one lump sum, the performance royalties are paid quarterly based on how often a commercial runs on air and how large the viewing audience is, etc… A major advertising campaign, with a major brand, that runs every day for an entire year can produce these kinds of numbers. I am not making this up. These are facts.

The residual fees or royalties does not just exist for writers and publishers. Voice Over artists, and on camera actors, they too can get “residuual fees” every quarter when their voice and image is broadcast in heavy rotation in front of large viewing audiences.

Who is really paying the writer and publisher in my example above? answer: Microsoft! When you follow the money trail ultimately it is the advertiser who pays writers and publishers royalties even though the checks come from our PRO. Our PRO’s collect from networks, networks collect from advertisers. PRO’s collect on our behalf then pay us.

Does this kind of deal happen here often? No
Can it happen here? Yes
Has it happened here? Yes
Have writers been screwed and short changed by the old NO PRO policy and have had their music run in large advertising campaigns “performance royalty free” ? YES most likely.
Did Envato somehow benefit from that happening? No
Was money senselessly and recklessly left on the table for no good reason? Yes
Have we corrected this problem by allowing PRO music on AJ? Yes
Do I have to sit back and do nothing and watch the money rain down when I know my music is on a commercial? NO, you better pay attention to who is using your music and for what kinds of projects and hunt the paper work down and inform the customer and your PRO what is going on by e-mailing them, get the title registered, report usage, provide youtube links to the spots using your music, etc. etc. file advertsing claims at your pro or report use of a jingle, demand that the client reports usage to your PRO or the PRO they deal with in their country. Get educated, do the work, provide the evidence to the PRO, file the proper claim forms, then you get paid.

How can Envato help us collect more performance royalties? By making the customer report exactly how they are going to use the music on every invoice. Just have a check box:

  1. Personal use on internet or personal web site
  2. Tradeshow video small audience
  3. In a game
  4. On an APP
  5. Small business usage on internet
  6. Radio commercial
  7. Independent film
    8 Tutorial video for internet or podcast
  8. Youtube only small business video presentation
  9. Local tv commercial
  10. regional TV commercial
  11. National TV Commercial and country to air in
    13 Worldwide Commercial
  12. Major Motion Picture
  13. On a TV show
  14. OTHER Please explain_________________________

Envato, this will add probably 15 more seconds of time to the buyers purchase, we should know how the music is being used especially when the customer checks off commercials and buys the $308 license. We think it’s very cool that you created invoices and we can get an idea of who bought a license, now just add the “How will you use this track” checkbox as part of the invoice. Will that be difficult to develop into the site?

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Excellent explanation that deserves a thread of its own! I am pretty sure that making the buyer enter the desired usage of the track will “magically” lead to more of the bigger licenses being sold.

So in other words, when people specifically use music for commercials, they have to pay royalties to the AJ author?

Broadcasters paying only. They pay to PRO and if author is a member then he got royalties.

No.

Simplified, this is how it can work:

  1. A company wants to make a commercial to air on Channel 2 - let’s say it’s Joe’s Office Supplies.
  2. Joe’s Office Supplies is a company that knows nothing about making videos, so they hire an advertising agency.
  3. The person at the advertising agency in charge of the music buys an AudioJungle license. Let’s call him Matt.
  4. Joe’s Office Supplies pays the advertising agency for the entire ad.
  5. The advertising agency pays Matt his usual monthly salary, no matter what the AJ license cost.
  6. Joe’s Office Supplies pays Channel 2 to be able to air the ad.
  7. Channel 2 (or the network that owns Channel 2 - a.k.a. the broadcaster) pays the PRO.
  8. The PRO pays the AudioJungle author - but ONLY if the AJ author is a member and has registered the track. If not, the money goes somewhere else.

And it doesn’t have to be a commercial. It can be anything that airs on TV or radio (or YouTube for that matter).

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Yes, it is TV networks such as NBC, ABC, BBC, SKY, RAI, CNN, MTV, VH1, CBS, and so on that pay PRO’s annual license fees to create a huge pool of money to pay writers and publishers “performance” royalties.

Remember though: How do TV networks get their money? Through advertising sales. They sell spots to advertisers. So when you really follow the money trail advertisers pay TV Netwroks, TV Networks pay PRO’s, PRO’s pay writers and publishers for their performances. Conclusion: the money really comes from advertisers who buy the spots.

A TV show is supported by advertising revenue, so if your music is a background cue on a TV show, you will collect performance royalties because the show is being supported by advertisers who buy “spots” during the show to advertise their product or service.

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