MUSIC PUBLISHING - AN OVERVIEW (Part 1 of 2)
This article is designed to give an overview of music publishing. Although
the details can be less than fascinating, music publishing remains one of the
most financially lucrative areas in the music business, and one of the few areas
where artists can generate real money. As a result, it is particularly crucial
for recording artists and songwriters to protect their publishing rights. The
best way to start is to learn the basics of the music publishing business.
WHAT IS A MUSIC PUBLISHER?
Before the invention of the phonograph, songwriters earned income by relying
on music publishers to sell sheet music of their songs. Even as radio and television
replaced the piano in the parlor, music publishers continued to play an important
role as popular singers continued to rely upon established songwriters to provide
their material. However, with the advent of rock and roll (and especially the
Beatles) popular recording artists began to write more of their own songs. Since
that time, the music publishing industry has taken on a less important role.
Nevertheless, music publishers continue to perform several important functions
that you should be aware of.
WHAT DOES A MUSIC PUBLISHER DO?
Today, music publishers are concerned with administering copyrights, licensing
songs to record companies and others, and collecting royalties on behalf of
the songwriter. Some of the more important music publishing activities are listed
The term "mechanical royalties" initially referred to royalties paid whenever a song was reproduced by a mechanical device (remember that one of a copyright owner's exclusive rights is the right to authorize the reproduction of their work). The term "mechanical royalties" was applied to the reproduction of songs in music boxes, player pianos rolls, and later, phonograph records. This term is still used, and "mechanical royalties" now refers to royalties paid for the reproduction of songs on CD, DAT, audiocassette, flexi-discs, musical greeting cards, and other devices sold on a "per unit" basis.
The amount of money a record company must pay for a mechanical license is generally
set by the Copyright Royalty Tribunal. This rate is sometimes referred to as
a "statutory" rate. The current statutory rate through December 31,
2007 is nine and one-tenth cent ($.091) per song. This means that a single song
can generate up to $.91 cents for every 10 records sold. Unfortunately, it is
record industry custom to pay only 75% of the statutory rate to new or moderately
successful songwriters. This means that a typical songwriter without enormous
clout would generate a little more than 68 cents for every 10 records sold.
After the publisher collects this money from the record company and takes its
share of the income, a songwriter may receive as little as half of this amount.
Foreign countries sometimes have different laws governing the collection and distribution of mechanical royalties. As a result, it is often necessary for publishers to enter into agreements with a foreign publisher (or "subpublishers") to collect a songwriter's mechanical royalties in that territory. After the subpublisher takes a cut (anywhere from 15% to 25%) the rest of this foreign income is divided between the publisher and the songwriter according to their agreement.
Whenever a song is used with a visual image, it is necessary to obtain a "synchronization" (or "synch") license permitting the use of that song. Music publishers issue synch licenses to television advertisers, motion picture companies, video manufacturers and CD-Rom companies. A portion of this money (usually 1/2 the net proceeds) is paid to the songwriter.
Because radio is not a visual medium, the use of a song as part of a radio commercial requires a separate license, known as a "transcription license." Sometimes songwriters are able to negotiate provisions in their publishing contract preventing their songs from use in certain contexts, such as ads for alcohol, tobacco, political campaigns or other uses the songwriter may find offensive.
Although sheet music sales have diminished over the years, many songs are still available in print form. These include books of songs by specific artists, instruction books or compilations of hits within a given genre (i.e., "100 Country Hits of All Time"). The music publisher issues print licenses and collects this income from the sheet music company, while the songwriter receives a small royalty derived from the sale of his or her song in print form.
Administration and Registration of Copyrights
Because music publishers generate money by licensing copyrighted compositions, they must also perform various administrative tasks involving copyright transfers and the registration of musical copyrights with the U.S. Copyright Office. Registering your copyright with the US Copyright Office provides added protection to copyright holders, and can permit the copyright owner to recover statutory damages of up to $100,000 and attorneys fees if the copyright is subsequently infringed.
Public Performance Royalties
A copyright owner also has the exclusive right to authorize the "public performance" of that work. This is why radio and television broadcasters must enter into licenses with performance rights organizations such as BMI, ASCAP and SESAC. These performance rights organizations collect income on behalf of songwriters and music publishers whenever a song is publicly broadcast. A future column of the Fine Print will discuss these performance rights organizations in more detail.
Even though music publishers do not collect this performance rights income,
publishers remain entitled to 50% of the money received by BMI, ASCAP, SESAC
and others. Publishers also register songs with these performance rights organizations.
This obscure term refers to music bizzers who promote the compositions of others. This may involve convincing popular artists to cover your song, or convincing Disney to use your latest tune in their next animated feature.
Publishers may also authorize translations in order to generate income from cover versions of a particular song in foreign countries.
Obtaining a Record Deal
Music publishers are usually generally most in signing established songwriters or recording artists who write their own material. However, some publishers may be willing to sign new songwriters or bands without a record deal. If a publisher believes an undiscovered artist will one day sell lots of hit records, they may help the artist record demos and assist in trying to land a major record deal. If the artist gets signed, the music publisher will hope to see a reward for its investment in the form of mechanical royalties, public performance royalties and other derivative income. A publisher may even be willing to contribute to tour support or provide extra promotions money in order to generate future publishing income from record sales and airplay.
WHY CONSIDER A PUBLISHING DEAL?
The main reason is money. Music publishers may be willing to pay a substantial
cash advance for a songwriter's past, present or future material. In exchange,
the publisher will own a percentage of that artist's musical copyrights and
keep a percentage of money these songs earn.
Of course, publishers are unlikely to pay an advance unless they believe they
can make a profit on the deal. Like everyone else in the industry, music publishers
are in the business of buying something of yours in order to sell it to others
at a profit. Unfortunately, many artists do not realize how valuable their publishing
rights are. The history of the music business is littered with sleazy promoters
who paid pennies for songs that later generated millions in income.
Not every artist needs a publishing deal, and some artists may be better off
by avoiding traditional publishing deal altogether. Many different publishing
options may be available to an artist today. Some publishers may be willing
to enter into a more limited "co-publishing" deal, and "administration"
deals may be available for independent artists who seek to retain their valuable
copyrights. The next column will look at each of these deals more closely.
Law Office of Alan Korn
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