Crash Course on Music Publishing – Part 2

Carlos Alvarez's picture

Major Sources of Income

So lets chat more in detail about how and from what does the song make money from.  How does the songwriter make; hmmm.....what’s that word again....ah yes, ROYALTY!!  =D A song is used in many different ways and on many different media platforms.  To keep this article as brief and informative as possible I will discuss the major ones only.

Mechanical

This source of income refers to the “mechanical reproduction” (reproduction-->a right!) of the song into a certain medium  (CD, cassette, vinyl, mp3, wav...).  music reproduced into a certain format by mechanical means stopped being done so a long time ago, but the term stuck and we still use it today.
So, how does this work?
Copyright law states a song being reproduced “mechanically” (recorded by an artist’s album) must be licensed by the copyright owner (generally, the music publisher) for that particular recording.  and it also states how the copyright owner will be compensated. The mechanical royalty rate is currently:  9.1 cents for a song lasting up to 5 minutes and 1.75 cents per minute for a song lasting longer than 5 minutes.  This is per song, that appears on an album.  the rate usually changes every two years. For example... 10 songs x 0.091 (9.1 cents) = .91 cents -> total due back to copyright owners So if you only wrote one song on the album and it sold 1,000 CDs at retail:
  • 1,000 CD sales x 9.1 cents = $91 for 1 song
Who pays this royalty?
The Record company.  For it is the record company who is reproducing the song and releasing it to the marketplace. They are responsible to pay music publishers for this source of income.  The music publisher issues a mechanical license authorizing the record company to let the recording artist record the song and in turn the record company is responsible to pay any mechanical royalties generated by the sale of the CD (distribution-> another right from Crash Course on Music Publishing – Part 1). This rate can be reduced if approved by the music publisher, but cannot be increased beyond the max rate indicated above* Also, an singer-songwriter signed to a label, might have signed a recording artist contract with a Control-composition clause. This clause basically states that if the artist wrote any of the songs on the album, the label will pay them a much reduced mechanical royalty rate than listed above.

Performance 

This one tends to be a bit tricky when explaining.  Copyright law states that a copyright owner must be compensated for the public performance (performance-->another right!) of their song. Can you imagine trying to monitor every radio station, TV station, network broadcast, live music venues, etc,etc...in the attempt to accurately account for public performances of a song....would be a bit difficult.  So we assign this particular right (remember the rights granted under Copyright law in part 1) over to a Performing Rights Organization (PRO). They are not music publishers!!!  they on behalf of their members (songwriters / music publishers) license & collect public performance $$$$ from businesses that are using music to generate business income.
How does this work?
In The U.S., we (songwriters / music publishers) have 3 PROs that perform this role.  They are: A big piece of the pie of public performance royalties that are collected by the PROs comes from the broadcasting of music--> mainly from RADIO & TV.  Radio more so since its main role is to capture audience by playing music. All three PROs monitor the performances of music in Radio’s programming and TV’s broadcasts.  They each have their unique way of monitoring and collecting. The PROs also license and collect performance royalties from restaurants, live music venues, music services, etc, etc...all establishments that use music to make $$$$.   Visit the PROs sites for exact details on this.

Affiliation & Registration of Works

A songwriter can only affiliate with one PRO at a time (you will sign a contract).  An affiliated member (songwriter / music publisher) should register their works that are being commercially released and performed within their PRO’s system for accurate monitoring and collection.  So, to answer the question I often get asked. . .
Which one is the best one to join?
They all do a great job.  It really comes down to how you feel is the best choice for you.  Some questions to ask yourself are:
  • Who do you feel will return your call or email the fastest when you have a question?
  • Which of the three are willing to help market you as a writer?
  • Whose on their list of songwriters affiliated to that PRO? Do you respect those writers?
  • Which one of the three are willing to help in other ways, like opportunities to network with other writers, securing co-writes (songwriter collaborations)?
*Dont confuse the role of the PRO with promoting your song, They don’t do that!! They collect performance royalties generated by the song, but can help in other ways with your songwriting career.

Synchronization

This source of income is the synching of music to an audiovisual work  (FILM / TV). From a live appearance of your band performing your song on The Tonight Show to a song being used on a program as a background use (background music in a scene) and everything in between.
How does it work?
The negotiations are handled directly between the music publisher & the clearance person on behalf of the movie company or production company.  Sometimes it may be a music supervisor or a person assigned the role of negotiating the fee & signing the license (SYNCH License).
What about the fee?
It’s negotiated.  it can be “promotional use” (meaning no charge of the actual synch of music to audiovisual work) or $, or $$, or $$$$, or $$$$, or $$$$ depending on the use or uses of the song in the Film / TV project.

A common synch scenario:

Suppose a popular band is performing live on a network show (like The Tonight Show).  The producer(s) of the show will have a music clearance person contact the music publisher(s) of the song weeks in advance of the artists scheduled performance to negotiate the fee and secure the license for the use of the song on the particular program.  There have been instances where a group had to perform another song other than the album’s promotional single because a fee between the parties could not be settled on.

Another common synch scenario:

Suppose a song placed in film or tv program as a back ground use (or other similar type of use).  Once the license has been secured and synch fee agreed upon, a music cue sheet should be acquired by the music publisher to confirm the use of the song in the program.  cue sheets are submitted to the PROs for performance royalty collection from the networks.  YES,  thats the great news about synchronization royalties....the use of our song in a sync situation can create two incomes for the artist.
  • 1st income - the actual sync Fee
  • 2nd income - Performance royalty from the film or tv program being broadcasted on network or cable channel.
What's a cue sheet?
A cue sheet lists all music used, how it was used, and how long it was used in a program.  More on cue sheets:  ASCAP cuesheets 2005 feature   Besides the obvious, in making money from this unique source of income...a singer-songwriter will also benefit in the promotion of their material (recording) will receive from being placed in a synch scenario.  Also, other potential uses of the song used in the film which create more synch income such as:
  • song used in the trailer
  • soundtrack
  • DVD release
You might think that its an impossible task in trying to secure Film / TV placement for your material, but there are many song placements companies based in the major markets that often look for material to pitch for film & TV projects on a constant basis.  Some resources where you can look for more info are: