Music Catalog Glossary: Rights and Royalties

The key terms you’ll hear when selling, licensing or financing a music catalog, explained in plain language.

Advance: An upfront payment made against future royalties. The payer recoups it from your income before you receive further royalties. You usually keep ownership.
Artist royalty: The percentage of recording income a label pays the artist under a record contract. It can be sold even if the label owns the masters.
Catalog: The collection of songs and/or recordings that an artist, songwriter, producer or company owns or controls.
Catalog buyout: A payment that closes an unrecouped balance or ends an existing deal so the artist can leave and regain control of the catalog. It is usually financed and repaid from future catalog income.
Chain of title: The documents that prove who owns a right and how ownership passed from creator to current owner.
Co-publishing deal: A deal where the songwriter keeps part of the publisher’s share and the publisher takes the rest in exchange for services and often an advance.
Collecting society (PRO): An organization that collects royalties for public performance or reproduction, such as SGAE, PRS, ASCAP or BMI.
Cross-collateralization: A contract clause that lets a label or publisher use income from one album, song or deal to recoup advances from another. It can keep you unrecouped even when one record earns well.
DCF (discounted cash flow): A valuation method that forecasts future income year by year and discounts it to today’s value.
Decay: How quickly a catalog’s income falls as songs get older. Low decay means stable income and higher value.
Distribution advance: An upfront payment from a distributor against the future income of the recordings it distributes. It is recouped from that income, and you keep ownership of the masters.
Due diligence: The buyer’s detailed review of statements, contracts and rights before closing a deal.
ISRC: The unique code that identifies a specific sound recording.
ISWC: The unique code that identifies a musical composition.
Key person clause: A contract term that lets you end or renegotiate a deal if a named person, such as the executive who signed you, leaves the company. It protects you from being left with a team you did not choose.
Letter of direction: A signed instruction telling a distributor, label or collecting society to pay royalties to a different party, such as a buyer or financier. It is how income is redirected after many deals close.
Letter of intent (LOI): A document that sets out the main terms of a deal and usually a period of exclusivity before the final contract.
Licence term: The fixed period during which a licensee can exploit your recordings or songs, for example 5, 10, 15, 20 or 25 years. When it ends, the rights return to you.
Masters: The sound recordings themselves. Whoever owns the masters earns income when those exact recordings are used.
Mechanical royalties: Royalties paid for reproducing a composition, including on-demand streams and downloads.
Multiple: The number by which annual net income is multiplied to estimate a catalog’s value.
NDA: A non-disclosure agreement that protects the confidential information shared during a deal.
Neighbouring rights: Royalties paid to performers and recording owners when recordings are broadcast or played in public.
Net publisher share (NPS): The publishing income the owner actually keeps after paying writers, co-publishers and administrators. Buyers usually value publishing catalogs on this figure.
Partial sale: Selling a percentage of a catalog, or selected songs, while keeping the rest.
Publishing rights: The rights in the composition itself (melody and lyrics), owned by songwriters and their publishers.
Recoupment: The process by which an advance and any recoupable costs are recovered from your future royalties. Until recoupment is complete, the royalties go to the company that paid the advance, not to you.
Rights reversion: When rights return to the original owner after a set term, once an advance is recouped or when agreed conditions are met. A clear reversion clause can be worth as much as a larger advance.
Split sheet: A signed document that records each writer’s percentage of a song.
Sync: Licensing music for use with images, such as film, TV, advertising or video games.
Unrecouped balance: The amount of advances and recoupable costs that your royalties have not yet covered. It appears on your statements and is not a debt you repay from your pocket.
Writer’s share: The portion of publishing income that belongs to the songwriter personally.

Music catalog glossary