If you ve written a piece of original music, you own the copyright to that composition and you get to decide how that copyright is exploited.

Transcription

1 Yvette D. Arledge Music Administration Influence Music 1445 North Boonville Ave, 3 rd Floor #340J Springfield, Missouri yarledge@influencemusic.com ext All Articles By: Chris Robley What is Music Publishing? Music publishing is the owning and exploiting of songs in the form of musical copyrights. Randall Wixen, The Plain and Simple Guide to Music Publishing If you ve written a piece of original music, you own the copyright to that composition and you get to decide how that copyright is exploited. In most aspects of life, exploitation is a bad thing. But in the music industry, exploiting a musical copyright is very, very good! Exploiting a musical copyright means that the owner of a particular composition (the music and the lyrics) is putting that song to use in a way that generates money in the form of: mechanical royalties performance royalties licenses for synchronization licenses for sampling print rights for sheet music Fun Fact: Speaking of sheet music, that s exactly how this whole business first came to be called music publishing because back before the advent of recording and radio, publishing sheet music was one of the only ways to earn money from a musical copyright. Page 1 of 14

2 So to reiterate, music publishing is all about earning money from the usage of the song itself, as a separate piece of intellectual property from any specific sound recording of that musical composition. If you ve contributed to the writing of original music, you re owed publishing royalties whenever your songs are sold, downloaded, streamed on sites like Spotify or Rdio, played on the radio (including satellite and internet radio like Pandora), used in TV/film/commercials/games, or performed live in a venue. Page 2 of 14

3 5 Ways to Make Money in Music Publishing If you write or co-write a song, you are owed royalties every time that song is played in a public setting. This includes radio, TV, movies, restaurants, venues, and more. You are also owed a publishing royalty every time someone purchases your music (in any format CD, vinyl, MP3, etc.) Music publishing has the potential to generate big money for songwriters, composers, and lyricists. If you ve written a song and haven t signed away the rights to someone else, then YOU are the publisher which means that all royalties collected for that song should be paid to you. Here are the five most common kinds of publishing royalties you can collect: 1. Mechanical royalties As a songwriter / publisher, you are owed a royalty every time your composition is sold, or reproduced with the intention of being sold (on vinyl, tape, CD, MP3, etc). The mechanical royalty is generally equal to 9.1 cents per reproduced copy, regardless of whether those albums or singles are sold. So, in other words, if someone covers one of your songs and they manufacture 1000 CDs they owe you $91 regardless of whether those CDs ever get purchased. You are also owed a mechanical royalty for the sales of your music on YOUR OWN albums. Though if you re acting as your own label, you ll basically be paying that royalty to yourself from album proceeds. On-demand streaming services such as Spotify also pay a small mechanical royalty every time your song gets queued for streaming. 2. Performance royalties As a songwriter/ publisher, you are owed a royalty whenever your compositions are performed in public. This includes: plays on terrestrial and satellite radio (Sirius, KEXP, etc.) usage on network and cable TV plays on internet radio (Pandora) 3. Licenses for synchronization Synchronization refers to when a piece of music and a picture are synced together like in a movie soundtrack. Page 3 of 14

4 When a recording is used as the soundtrack for a TV show, film, commercial, video game, presentation, or YouTube video, a fee is owed to the songwriter/publisher, AND the copyrighter owner of the master recording. If you wrote the song and haven t sold the rights, you are the publisher. If you own the recording you are the copyright holder. In this case you would get paid both royalties. 4. Licenses for sampling If someone wants to use a drumbeat, sound bite, or any other portion of a song you have written and recorded, they must first get your permission and then also pay you royalties for its use. Both copyright holders (the owner of the master recording and the songwriter/publisher) are owed money when an artist uses a sample from another artist s original work. 5. Print rights for sheet music As the songwriter/publisher, you are paid whenever your composition is duplicated in print form, including sheet music, lead sheets, fake books, etc. Page 4 of 14

5 Who Owns Your Music Publishing Rights and How Does the Money Get Split? If you re a songwriter, and you ve not signed a deal with a music publishing company you own your music publishing rights! What are those rights exactly? Well, you get to determine how the musical copyright to a song you ve written (meaning the composition itself, as a separate entity from any particular master recording of that song) is used or exploited. And you earn money any time that song is sold, performed, or covered. How do publishing royalties get divided up? For all publishing royalties that are generated from the usage of your music, 50% is paid to the songwriter/s and 50% is paid to the publisher/s. As I mentioned above, if you ve not signed a deal with a publishing company, you are considered both the songwriter AND the publisher. You are owed both shares (50% for the songwriter, and 50% for the publisher) of any mechanical royalties, performance royalties, or licenses that your songs generate. However, it s up to you to exploit the copyright to your compositions, and it s up to you to collect the royalty payments. Unless, of course, you work with an established music publisher who can (either for a fixed period of time or in perpetuity) help you find opportunities to earn money from your songs. What does the publisher get out of the bargain? As mentioned above, a typical royalty split between the songwriter and the publisher is 50/50 but 50% is a small price to pay if they re using their publishing expertise to generate big income from the exploitation of your copyright. Page 5 of 14

6 What is a Performing Rights Organization? What is a Performing Rights Organization? A Performing Rights Organization (or P.R.O.) helps songwriters and publishers get paid for the usage of their music by collecting one of the most important forms of publishing revenue: performance royalties. As a songwriter, composer, or lyricist, you re owed what is called a performance royalty any time your music is played on radio stations (terrestrial, satellite, and internet), used on TV shows or commercials, or performed in live venues. Those performance royalties are paid by radio stations, venues, and TV networks to Performing Rights Organizations like ASCAP, BMI, SESAC, and SOCAN (in Canada) who then distribute the money to their affiliated songwriters and publishers. Performing Rights Organizations collect: performance royalties for publishers and songwriters Performing Rights Organizations do NOT collect: mechanical royalties sync fees digital performance royalties associated with the creation of a master recording (paid by SoundExchange to labels, session players, etc.) Page 6 of 14

7 Music Publishing Royalties Explained: What is a Mechanical Royalty? There are a number of different kinds of publishing royalties you can earn from the usage of your original music. One of the big sources of publishing revenue you ll earn as a songwriter is performance royalties. But an even bigger revenue stream (at least for the music publishing industry at large) is mechanical royalties. Mechanical royalties: The term mechanical and mechanical license has its origins in the piano rolls on which music was recorded in the early part of the 20th Century. Although its concept is now primarily oriented to royalty income from sale of compact discs (CDs), its scope is wider and covers any copyrighted audio composition that is rendered mechanically; that is, without human performers. In a nutshell: every time a song you ve written is manufactured to be sold in a CD, downloaded on a digital music retail site, or streamed through services like Spotify and Rdio, you are owed a mechanical royalty. Now for the longer explanation of mechanical royalties As a songwriter/publisher, you are owed a royalty every time your composition is reproduced (on vinyl, tape, CD, MP3, etc). In the United States, this royalty is generally equal to 9.1 cents per reproduced copy of that song, regardless of whether those albums or singles are sold. (The mechanical royalty rate for on-demand streams through services like Spotify and Rdio is far lower; and yes those services owe you both a mechanical royalty AND a performance royalty for your music s usage). But let s get back to mechanical royalties for CD sales and downloads for a second If someone covers one of your songs and they manufacture 1000 CDs they owe you $91, regardless of whether those CDs ever get purchased by customers. If they sell 100 MP3s of your song, they owe you $9.10. You are also owed a mechanical royalty for the sales of your music on YOUR OWN albums. But here s where things get a little virtual; if you re acting as your own label and putting out music that you ve written, you ll effectively be paying that royalty to yourself from album proceeds. At least that s how it works in the US, where download retailers like itunes and Amazon pass on that mechanical royalty to you as part of the net payment for the sale of the MP3. But in many countries outside the US, mechanical royalties are set aside BY the retailer, to be paid to collection societies who then distribute those royalties to publishers and writers. Page 7 of 14

8 BUT performing rights organizations like ASCAP and BMI do NOT collect mechanical royalties. Their job is to collect performance royalties, NOT mechanicals. So How do you collect foreign mechanicals generated outside the US? In order to collect international mechanical royalties (as well as mechanicals for both global and domestic streams), you d need to register your music with many royalty collection societies around the world. As our friend Justin Kalifowitz of SongTrust is fond of saying, you CAN do it yourself if you really want to but you ll probably have to stop making music for a while. Affiliating yourself and registering your songs directly with all the international collection societies would not only take hundreds of hours of paperwork and filling out online forms, but you d need to be proficient in dozens of languages or hire a translator. And who wants to do that when you ve got gigs to play? Page 8 of 14

9 Music Publishing Royalties Explained: What is a Performance Royalty? Some industry experts claim that the amount of performance royalties distributed to songwriters and publishers each year accounts for as much as 30-35% of the total available publishing royalties so there s big money to be made. What ARE performance royalties anyway? A performance royalty is owed to the songwriter and publisher of a particular song whenever that composition is broadcast or performed in public. These instances include: 1. plays on terrestrial and satellite radio (Sirius, KEXP, etc.) 2. usages on network and cable TV, film, commercials, games, etc. 3. plays on internet radio 4. plays on online music streaming services (Spotify, Pandora, etc.) 5. performances in live venues The stations, networks, venues, and music services that benefit from the public broadcast/performance of your music owe you a performance royalty for those usages. But they re not psychic, and they don t have time to hunt down every songwriter individually. That s where Performing Rights Organizations come in. How do you collect performance royalties? As a songwriter, you ll need to affiliate with a Performing Rights Organization (or P.R.O.) such as ASCAP or BMI (if you re in the USA). These societies collect and distribute performance royalties on behalf of songwriters and publishers. Page 9 of 14

10 What is a Musical Copyright? And what does musical copyright have to do with music publishing? Copyright is a designation of intellectual property similar to a patent or trademark. Once an original composition has been fixed in a medium from which it can be reproduced (having either been recorded or written down in some fashion), the composer is granted exclusive rights to that piece of music, including: the right to reproduce the song the right to distribute the song the right to perform the song The right to create derivative works One of the keys to understanding how money is made in the world of music publishing is the fact that every recorded piece of music has two separate copyrights (which are not always owned or exploited by the same persons or parties). The two separate copyrights for recorded music are: The composition itself a song s music and lyrics, apart from any particular recording of that composition. This copyright is owned by the songwriter and/or publisher. The sound recording a particular recorded version of a musical composition. This copyright is owned by the recording artist and/or label. Music publishing involves the exploitation of the first of those forms of copyright. Page 10 of 14

11 Why Signing Up with ASCAP or BMI is Not Enough Why Signing Up with ASCAP or BMI is Not Enough If you re an independent songwriter, composer, or lyricist, there are more opportunities than ever to earn significant income from music publishing. Sadly though, many artists think they ve covered all the bases in terms of royalty collection when they affiliate themselves with an organization like ASCAP, BMI, or SESAC. ASCAP, BMI, SESAC, SOCAN, and other associations that collect performance royalties on behalf of songwriters and publishers are called Performing Rights Organizations or P.R.O.s. Performing Rights Organizations are not collecting all the publishing royalties you re owed While these services do perform a valuable and vital role in making sure songwriters/publishers get paid, they don t do it all. In fact, they don t even do half of it and that means songwriters are leaving a lot of money on the table in the form of uncollected publishing royalties. 1. You re not getting mechanical royalties. What is a mechanical royalty? It s a fee that is owed to the publisher/composer of a piece of music (that s you! unless you ve signed your publishing rights away to a publishing company) any time that song is sold digitally or manufactured in physical form (CD, vinyl, etc.). This fee is owed to you whether you are selling a recording of your own music or if another artist is covering your songs. In many countries, any time your song is downloaded, you (as the songwriter/publisher) are owed a mechanical royalty. Any time one of your songs is streamed on popular services like Spotify or Rdio, you are owed a mechanical royalty. Despite the fact that your songs are generating income in the form of mechanical royalties, P.R.O. s like ACSCAP and BMI do NOT collect them for artists. (They only collect performance royalties). This means there is money out there waiting to be collected money you ve EARNED. But these mechanical royalties have traditionally been inaccessible to songwriters unless you re represented by a major label, big publishing house, or had the muscle of an agency like Harry Fox on your side. With CD Baby Pro, you ll be set up to collect all the mechanical royalties you re owed. No more getting shut out from collecting YOUR OWN money. 2. You re not getting all your performance royalties from overseas. Page 11 of 14

12 What is a performance royalty? Well, any time your music is played on the radio (terrestrial, satellite, and internet), on TV shows, films, video games, and presentations, or performed in a live venue you are owed a performance royalty. ASCAP and BMI do NOT register your songs with foreign royalty collection societies. So unless you have a co-writer or an artist who has covered your song and sent that information to a foreign collection society, those international Performing Rights Organizations will probably never know about your songs, never know they should be on the lookout for tallying performances, and never know who to pay. The only way ASCAP and BMI will collect international performance royalties is if a foreign society knows about it through happenstance and directs the payment to the appropriate US-based P.R.O. That likelihood is unlikely. You don t want to leave something like royalty collection up to chance. 3. You re not getting the publisher s share of your royalties. Even if, by luck, a foreign collection society does pay a performance royalty to ASCAP or BMI for the usage of one of your songs, the chances are even less likely that you ll be paid the publishing share of your performance royalty for that same usage. Performance royalties are split into two shares, 50% going to the songwriter and 50% going to the publisher. Unless you ve signed away your publishing rights to a publishing company you are BOTH entities: the songwriter AND the publisher. But even if you ve set up a publishing company and affiliated with a P.R.O. as both the writer and the publisher it s really just a vanity publishing company. Sorry to say it, but it s true. You don t have the money or the muscle to do all of the administrative work that a real publishing company can. And that means that P.R.O.s have less incentive to fight for you when it comes to collecting every cent you re owed. So even if you DO get paid your songwriter s share of performance royalties, the other 50% you re owed is going to go uncollected. Page 12 of 14

13 When Should I Pursue a Publishing Deal, and What Can I Expect? Many artists wanted to know about pursuing publishing deals, in terms of timing and what to expect. Publishers are in the business of acquiring rights to songs, and looking for opportunities to license and exploit the song for money. When you just want to focus on making music and have someone else handle the business end of things, a publishing deal can be a wonderful arrangement, like Lennon and McCartney, Nutter Butter, or pickles and ice cream (for the pregnant readers). In terms of timing, this will obviously be personal to each artist, but the industry has changed drastically in recent years, and advances to artists are not what they once were. It can be best to wait until you are at a certain stage of your career if possible so you have the most bargaining power in the deal. The best deals often come to legacy acts with a solid earning history on their catalogue; artists with top charting hits; and artists who are about to break. If you don t fit into one of those categories, you may still be able to get a publishing deal, but the terms will be less favorable, like showing up on a blind date with one of the Baldwin brothers, only to realize it s Daniel instead of Alec. Legal Issues Related to Publishing Deals Publishing deals come in many different shapes and sizes, and almost everything is negotiable. There are publishing and co-publishing deals, single song agreements, songwriter agreements, and administrative deals much like the Baldwin brothers, some more coveted than others. In all of these deals, you can limit the rights under which a publisher may license your songs, or impose other restrictions, with the caveat that if you don t have high bargaining power, they may quickly lose interest. If you are offered a publishing contract, this is one of those areas where I highly recommend that you consult with a music attorney to review the agreement, explain the terms, and negotiate with the publisher to get the fairest deal possible. So, here s the quick recap: Publishing deals are basically whatever both parties agree to. If someone is really interested in one of your songs, consider a single song agreement rather than a publishing deal of your entire music catalogue. Since these agreements are so broad, I would advise writing down what you want before negotiations start, then hiring an attorney to fight for those terms, and ensuring that the contract reflects what the parties ultimately agree to. Page 13 of 14

14 Are You Getting Paid Everything You re Owed from Spotify? Have you collected all the royalties you re owed from streaming services like Spotify and Rdio? If you don t have a publishing administrator working on your behalf, the answer is probably NO. But I should make it clear upfront that this isn t Spotify s fault. It s not like they re holding out on you! It s just one of those crazy things about how the world of music publishing works (or doesn t) for indie artists. So which monies have you been missing out on? Read on to find out Four ways you can make money through Spotify 1. The regular ole payment for the stream Some folks call this a master use royalty; others call it the artist royalty; technically, it s a payment for streaming your licensed sound recording. If you re distributing your music through CD Baby, it s the money you re paid by Spotify each time your music is streamed. You ll see a complete report of streams and payments in the accounting section of your CD Baby member s account. 2. Mechanical royalties Services like Spotify, Rdio, even YouTube, owe you a mechanical royalty every time music you ve written is streamed. Sadly, mechanical royalties generally aren t paid directly to independent songwriters but to agencies like HFA (in the US). If you have a lot of plays on Spotify, those royalties are adding up AND going uncollected unless you have a publishing administrator working on your behalf. 3. Performance royalties If you re registered as both a songwriter and publisher with a performing rights organization such as ASCAP or BMI, then you ll receive these royalties through them for any Spotify plays. 4. Performance royalties for the master recording So what about the people who own the sound recording that is actually getting played? That s where a company called SoundExchange comes in. SoundExchange is now authorized to collect performance royalties on behalf of the people who helped create a particular sound recording including session players, record labels, etc. Spotify pays these kinds of performance royalties to SoundExchange for non-interactive plays via Spotify Radio (though NOT for on-demand streams). To collect them, register with SoundExchange today. Page 14 of 14