Production music (also known as stock music or library music) is the name given to recorded music that can be licensed to customers for use in film, television, radio and other media.
Production music libraries own all of the copyrights of their music. This is so it can be licensed without the composer’s permission, as is necessary in licensing music from normal publishers. Operating in this way makes the process of sourcing music much more convenient and affordable for media creatives.
License or synchronisation fees
These are the fees paid upfront to the library for permission to synchronise its music to a piece of film, video or audio (like on the radio). These fees can range from a few pounds for an internet usage, to thousands for a large TV network. Libraries often split these fees with the composer of the music. In the UK, license fees for production music are nationally standardised and set by the Mechanical-Copyright Protection Society (MCPS). In the US, non-mcps members and elsewhere, libraries are free to determine their own license fees.
Performance income (or performance royalties)
Performance income is generated when music is performed in public – for example, on television or radio. The producer of the show or film that has licensed the music does not pay these fees. Instead, fees are paid annually by broadcasters (such as television networks and radio stations) to performing rights organisations (PRO’s) such as ASCAP, BMI and SESAC in the US and the PRS in the UK, who then distribute income among their members. To ensure it is distributed fairly and accurately, most broadcasters are required to keep note of what music they have broadcast and for how long. This information is then used by the performance societies to allocate income to their members. Typically, a library will receive 50 percent of the performance income (this is known as the publisher’s share), with the composer receiving the remaining 50 percent.
Further info – http://www.mpaonline.org.uk/music_publishing