Getting Started in the Music Business - Publishing

Understanding Music Publishing

What is music publishing?

Music Publishing is the business of exploiting your music through licensing your songs and collecting the royalties.  The owner of copyrighted songs has the exclusive right to perform those songs and to make, sell and distribute copies of the songs. The copyright owner may license others to use any or all of these exclusive rights for a fee. The income generated from granting a license is publishing income, and there are four main types:

• Performance IncomeEvery time your music is played in public, you are owed a fee for the performance of your music. It is impossible for anyone to track every time a song is played in a club or on the radio, so publishers sign up with, or "affiliate with," one of the performance rights societies: BMI (Broadcast Music Incorporated), ASCAP (American Society of Composers, Authors and Publishers) and SESAC. These groups issue performance licenses to radio and television stations, nightclubs, restaurants, and so forth, so that these businesses can play a variety of music. The societies then track and collect the revenues and pay the copyright owners.
• Mechanical RoyaltiesWhen you issue a license to a record company to manufacture and distribute copies of your songs on tapes and CDs, the record company will owe you a fixed price per song on each copy sold. This fixed fee is the "mechanical royalty rate," and it can be either negotiated and set in your recording contract, or based on the current statutory rate as fixed by the Copyright Act. The mechanical royalty rate is set by the Compulsory License Provision found in Section 115 of the U.S. Copyright Act; for the period January 1, 2002 to December 31, 2003 the statutory mechanical rate is 8.50 Cents for songs 5 minutes or less, or 1.65 Cents per minute or fraction thereof per unit sold - whichever is greater (after January 1, 2006, the rates will be 9.1 Cents and 1.75 Cents, respectively. The Harry Fox Agency, a subsidiary of The National Music Publishers' Association, is available to grant mechanical licenses for its almost 28,000 publisher clients. For more information, contact:
  
  Harry Fox Agency711 Third Avenue, Eight Floor, New York, NY 10017
  (212) 834-0100; fax (212) 953-2384
  
  
• Synchronization IncomeA "synch" license is what you grant to film or television productions to allow them to use your song as an accompaniment to film and TV pictures. There is no standard industry fee for synch licenses. The fees are negotiated and depend on the importance of the particular song and how it is used in the production. In a situation where a popular song is used as the basis of a scene, such as the "Old Time Rock and Roll" scene in "Risky Business," the fee can be in the hundreds of thousands of dollars. For local television commercials and low-budget films, the fees are whatever you can negotiate.
• Print IncomeThese royalties are generated by any publication of your songs in written sheet music or a "folio", which is a book of songs. This category is not a big earner for many artists, but "Greatest Hits" print anthologies published for artists like Joni Mitchell and Led Zeppelin are examples of popular printed music. For each book or sheet sold, the copyright owner of those songs receives a percentage of the retail price.
  

What do Music Publishers Do?

A publisher is responsible for "administering the rights" associated with your copyrights, which involves getting your songs played, issuing the appropriate licenses and collecting the money. In the standard arrangement, a songwriter will sign over her copyrights to the publishing company for administration, and in turn the publishing company agrees to pay 50% of all revenues collected to the writer.

The publisher collects mechanical, synchronization, print and foreign release income for the author. The company keeps the "publisher's share" and pays you the "writer's share." The one exception to this arrangement is in the performance income collected by performing rights societies. The societies issue the writer's share directly to you, and issue the publisher its share separately.

What are performing rights societies?

There are three performing rights societies. ASCAP (American Society of Composers, Authors and Publishers) and BMI (Broadcast Music Incorporated) are the biggest, and they are both non-profit organizations. SESAC, Inc. is the oldest and smallest society. It is privately owned and handles about 1% of published music. These groups issue performance licenses and track the use of music in clubs, on radio and television, in elevators, and anytime a song is heard in public.

Every time one of your songs is played in one of these places, you are owed a fee. Since it is impossible for you to negotiate a license and collect fees from every bar and radio station in the country, you affiliate with one of the societies and authorize them to do it for you. The organizations pay writers and publishers separately, so you should affiliate as a writer to receive the writer's share of your performance royalties. If you plan to do your own publishing, you need to affiliate as both a publisher and a writer with the same society.

Businesses that want to play commercially released music benefit in a parallel way from the performing rights societies. A small bar or college radio station cannot negotiate licenses and pay individual artists for every song they play, so they buy a "blanket license" from ASCAP, BMI and SESAC. For a flat fee, businesses buy the right to play the entire catalog of songs handled by each society, which together accounts for almost all commercially released music.

The societies collect all the blanket license fees, which add up to the hundreds of millions of dollars each year. The revenue left over after collection expenses are paid for is divided among the members. The societies determine how much airplay songs are getting by tracking radio and television play lists. They pay each member a share based on how many songs he has being played, and how often the songs are played. In effect, a top-ten hit that is played constantly all over the country will get more royalties than songs that are played occasionally on oldies' stations.

How do I affiliate with ASCAP, BMI and SESAC?

You can affiliate by contacting the societies directly and requesting a writer's packet, a publisher's packet, or both. The packets contain information about the organization, the application kit, a W-9 tax form and the exclusive membership agreement. There are no application fees.

You choose one society and affiliate with it exclusively, so research the societies before you commit yourself. All three have extensive websites for browsing, or contact the organizations and request information. Also ask your friends in the business which group they use, how they are getting paid, and whether they are satisfied with the service. The membership office contact information is as follows:

ASCAP
New York: One Lincoln Plaza, New York, NY 10023, (212) 621-6000
Los Angeles: 7920 West Sunset Boulevard, Third Floor, Los Angeles, CA 90046, (213) 883-1000
Nashville: 2 Music Square West, Nashville, TN 37203 (615) 742-5000
BMI
New York: 320 West 57th Street, New York, NY 10019, (212) 586-2000
Los Angeles: 8730 Sunset Boulevard, 3rd Floor West, Los Angeles, CA 90069, (310) 659-9109
Nashville: 10 Music Square East, Nashville, TN 37203, (615) 401-2000
SESAC, INC.
55 Music Square East, Nashville, TN 37203, (800) 826-9996
http://www.sesac.com

Should I create my own publishing company or go with an established publisher?

Instead of signing away their copyrights, many artists prefer to create their own publishing entity and either administer the rights themselves or hire someone to do the administration work. This way you keep your copyrights and your publishing monies, but you also have to do much of the work and make the contacts yourself. The toughest part of publishing is tracking and collecting the money, but you can let the industry pros do that for a small percentage of the revenues. You can affiliate your publishing company with ASCAP or BMI for collecting the performance income. For the other major source of publishing income, the mechanical royalties, you can engage the Harry Fox Agency to represent your publishing company.

On the other hand, a good publisher can make you a lot of money by exploiting your songs as thoroughly as possible. Publishers don't make money unless you are making money, so they have a financial stake in your success. They have contacts in the industry, and more clout and experience in negotiating the licensing fees. They can increase your performance income by plugging your songs for radio airplay and getting your songs released in other countries. Publishers can also shop your songs to other artists for "cover recordings," which generate more performance and mechanical royalties. In all, a favorable agreement with a good publisher could be a very lucrative path for exploiting your work.                                 

What is the Harry Fox Agency?

HFA issues mechanical licenses for publishers, much like the performing rights societies handle the performance licenses and income. The agency's primary role is issuing mechanical licenses to record companies, online music services, and other licensees, and then collecting and distributing the mechanical royalties. It also performs regular audits on the record labels to make sure the copyright owners are getting paid.

HFA currently charges 6.75% of the gross royalties it collects as its fee for mechanical royalties. The rest is paid to the publisher, who remits your "writer's share" to you. If you have your own publishing company, you can engage HFA to represent you for your mechanical and synch licenses. Contact the Agency at:

The Harry Fox Agency/National Music Publishers Association
National Music Publishers Association101 Constitution Avenue Northwest Suite 705 East, Washington, DC 20001
(202) 742-4375; fax (202) 742-4377

Harry Fox Agency711 Third Avenue, Eighth Floor, New York, NY 10017
(212) 834-0100; fax (212)953.2384

If I am not satisfied with the publisher, can I get my copyrights back?

Possibly. In your publishing agreement, you can ask for a clause called a "reversion" of the rights in your songs if they are not commercially exploited within a specified period of time, such as two years. A "reversion" is a legal term in property law that means you are reserving the right to take your property back if an agreed condition is not met. In this case, if the publisher just sits on your songs for two years and no one is making any money, you can try to get the copyrights back.

If the songs have not been successful, the publisher will probably return the rights to you without argument. Be aware, however, that if the publisher sits on your songs and then you become popular, the publisher may try to keep the songs despite the reversion clause. In this scenario, you'll have to be prepared to sue to get the rights back. The reversion clause in your contract is not an automatic guarantee that you will get your rights back, but it helps prove your case in the event of a dispute.

How do I set up my own publishing company?

1. Choose a name for your publishing entity and file a "request for publisher name clearance" with the same performing rights society with which you affiliated as a writer. You have to clear a name first because music publishing is a crowded field and many names are already in use. The societies do not want any confusion when handing out the money, so they insist that you clear the name of your company first.

2. When you get a name clearance from the performing rights society, file a DBA with the County Clerk just as you do for the band's name. The checks for the performance money will come addressed to your publishing company, so you will need a DBA to open a bank account in the company's name and cash the checks.

3. Get a Tax ID number for the publishing business as well.  Obtain an Employer Identification Number (EIN) if you do not already have one through the IRS.  ASCAP and BMI require that you either include this information when you register with them, or that you are in the process of applying for an EIN because they must keep tax files on all of their members.

4. If you registered the copyrights to your songs in your own name with the Library of Congress, transfer the rights to your new publishing company so that the company will be authorized to administer the rights. The Copyright Office does not take care of the transfer. You transfer your copyrights to the publishing entity by writing out your own contract of transfer and signing it, and then you record the transfer with the Copyright Office. Call the Copyright Office at (202) 707-9100 or check the website at www.loc.gov/copyright/ to request Circular 12, "Recordation of Transfers and Other Documents."

How is music licensed for TV and films?

When a song is used in a television program or on film, it is not only performed, but is also reproduced in film, video, and/or CD digital copies. Because performance and reproduction of copies are among the exclusive rights that come with copyright ownership, the film or television producers must obtain the proper licensing to use a song in an audio-visual production. The licensing of songs for audio-visual formats involves two separate copyrights: (1) the copyright in the underlying musical composition, which is owned by the publisher; and 2) the copyright in the specific recording of the composition, which is owned by the record company. A synchronization license (synch license) covers the right to use the composition and a master recording license covers the use of the recording.

Movies are made to be reproduced (as opposed to performed one time only), so filmmakers must obtain both a synch license and a master recording license to use copyrighted music. Commercials and television shows that will be reproduced in syndication also require both licenses. Certain television programs, such as live sports events and awards shows, may use a song with only a performance license from ASCAP, BMI or SESAC, because these programs are one-time performances that are generally not intended for reproduction.

There is no compulsory license (as in mechanical licensing) for synchronization and master recording licensing in audio-visual reproduction. Permission to use the song and the fee are at the discretion of the copyright owners, so an artist/publisher earns whatever he can negotiate for the use of his music on-screen. In television licensing deals, the negotiation issues include the type of media covered by the license (cable TV, network TV, home video, etc), the territory of the license (the U.S., North America, the world) and the term (length) of the license. Because of the greater permanence of movies, film producers will want to buy the rights to use the song in all types of media, throughout the world and in perpetuity, so the price of licensing music for films can be very substantial.

See ASCAP's Music, Money, Success and the Moviesfor legal info on music in films.

How do I get my music into movies, commercials, computer games, and etc.?

1.  A music supervisor coordinates most of the music used in a film, including music selection, licensing of rights and recording. Many of the choices made concerning music are predetermined because of the relationship between the motion picture studio and a particular record label. For example, if Sony Pictures releases a film, chances are excellent that the soundtrack will be dominated by Sony Music artists. Don't waste valuable time waiting for a major breakthrough. Work on smaller projects first, network in your local area to build up your credits, and in the long run you'll have an easier time attracting major projects interested in your work.

2. Check to see what films are being shot in your state or surrounding states . Mail your promo pack with your CD to the films listed. If you are a composer and interested in scoring a film (as opposed to only providing songs for a soundtrack), please call first. Many times a composer has already been selected. Music is often one of the last decisions made by a director, and although he/she may be filming in your area, these decisions may be deferred until the production company returns to California.

*Many independent films do not have the budget to pay for the use of popular hits, and thus are often interested in working with someone who is trying to build up their film music credits for a smaller fee.

3. Research contacts before you send material. Your chances of success are better if the material is suitable for the film subject and is received by the correct person. Send a cover letter emphasizing two things: who you are and how can you help them. Film crews are very busy; be short and to the point. Your packet should include: samples of your work (both CD and cassette), a bio, and a list of credits. Make sure materials list your contact information. If you have not received a response, you can make a follow-up call within two weeks to make sure the package was received. More than one follow-up call usually moves you from the possible file to the nuisance file. If you are researching a production company and not a particular film, always call before you drop by their office. Make sure they are in pre-production before sending a promo packet, otherwise it will end up in a file cabinet.
4. Services such as Music Report/TuneData deliver information to publishers and record labels regarding the soundtrack needs of Music Supervisors. You may also use TuneData to search for sync and master rights for all types of music. Note that they are a working site for publishers, record labels, music supervisors, advertising executives, producers and directors only. This is not a site for individuals or casual users.

5. Contact the Radio/Television/Film departments in area colleges for information about film students who may need music for their projects. Also consider checking out the Multimedia Department for students that may need video art music. Art Departments may have some performance art majors in need of music for dramatic and/or choreographic works. Most of these programs have bulletin boards posting announcements and services. Call the department office to ask if you can post a flyer that states your desire to work with students.

6. Some local software/game developer companies contract freelancers for background music. Always call the company before sending unsolicited material and talk to the Audio Director.

7. You can check with advertising agencies, jingles/advertising soundtracks businesses, and radio stations in your area. As with multimedia companies, call first to establish their status on freelance work. For radio stations, contact the Sales Manager in the Advertising Department for any inquiries.

Disclaimer: I do not intend for this information to provide or replace professional legal advice in any way. This material is only intended to provide a short-answer reference guide to the basic legal and business practices associated with the music industry. In your own interest, you may want to consult with an attorney before entering any contractual agreement.