This article appeared in Entertainment Law & Finance, your monthly source for real-world news and strategy from major players in entertainment, contract and intellectual property law — serious analysis of the issues and case law that affect your practice.

In a world of practically unlimited music use and opportunities, the world of royalties and compensation for songwriters, composers, recording artists, music publishers and record companies has changed dramatically with digital/online and social media altering the "rules of the game" for all. What was once relatively straightforward is now a complex set of rates, rules and negotiations upending, in many cases, how the industry works as many have known it.

To understand today's environment and the continuing economic effect it has on the music industry, it is important to understand how rates and royalties are set as well as how they are distributed.