Let’s start with some basic definitions:
The first thing to know is that there is a difference between an “artist” and a “songwriter.” You can be one, or the other, or both, but the important thing to know is that even if you are both, the royalties for “artists” and those for “songwriters” are completely different.
Artists record sound recordings. A band is an artist. A rapper is an artist. A singer is an artist. Typically, whatever name is on the album, belongs to the artist. If the artist has not written any of their material, they are not a songwriter.
Songwriters write the compositions. You do not need to be an artist to be a songwriter.
This is commonly called the “master.” It’s the actual recording. The mastered track. Sound recordings are not to be confused with compositions. Artists record sound recordings, whether they wrote the song or not. From now on in this primer, when we use the word “master” we mean an individual sound recording.
This is the song, the melody and lyrics, not the sound recording/master. One composition can be recorded over and over again by different artists. From now on in this primer, when we use the word “song” we mean a single composition.
The legal copyright owner who has the right to license and administer the song and collect royalties is the publisher. Unless you have entered into a publishing deal, YOU are inherently the publisher of your songs.q
This stands for performance rights organizations which collect income from public performances of songs (ie. radio, TV, concerts, etc.) The major PROs in the US are ASCAP, BMI, and SESAC. You can only be a writer member of ONE PRO, and you must have your writer account AND your publisher account at the same one.
Because SONA is a songwriter’s organization, we will focus here on information concerning songwriters and compositions.
Every song’s revenue is divided into two separate parts:
the writer’s share
2. the publisher’s share
Let’s look at a few examples:
You sit down and write a song by yourself. The minute you do you are now both a songwriter AND A PUBLISHER. You own both the writer’s share AND the publisher’s share. The songwriter (you) is the author/writer, and the publisher (you) controls the publishing rights, commonly called “the publishing.”
You sit down and write a song with your best friend Molly. Typically, each of you now owns an equal share of the rights to the song, 50% of the writer’s share and 50% the publishers share. This is commonly called the “song splits.”
We can apply this basic concept to any writing situations that occur in which there are multiple writers. Maybe you are one of several “topliners” who came in and wrote over a producer’s track. You, the producer, and all the other writers have to agree on the song “splits”: the percentage of the song that each of you owns and controls, as a writer
AND as a publisher..
Take a look at this chart below. If we use an example of $100 of income, it would be split as follows;
When a physical copy of a recording is sold, the owner of the master (usually the record company) pays the publisher of the song a mechanical royalty. Physical (i.e. mechanical) copies used to be just record albums and 45’s, and then came to include CDs, downloads. The publisher keeps 50% of this income (the publisher’s share) and pays the remaining 50% (the writer’s share) to the songwriter.
***If you are self-published, you the publisher would keep the 50% publisher’s share and pay you the writer your 50% writer’s share.***
Thanks to the Music Modernization Act, there is now a digital mechanical payment for every interactive stream of a song (ie. Spotify, Apple, Amazon). For more on this see the next tab called “Streaming.”
Performance royalties are paid by radio stations, TV networks and stations, digital radio, bars, restaurants i.e. any entity that publicly broadcasts music. These royalties are collected by the PROs.
***Unlike mechanical royalties, where the publisher keeps 50% of this income (the publisher’s share) and pays the remaining 50% (the writer’s share) to the songwriter, the PROs pay 50% of the performance royalties (the writer’s share) to the songwriters directly, and the publisher’s share to publishers directly.***
When a sound recording/master is used in a film, TV show, commercial, or other audio/visual media, it must be licensed from both the owner of the master and the owner of the song. These are separate licenses, but they are typically issued for an identical fee (most favored nations basis.) On the master side, the master owner (ie. record company) makes the deal. On the publishing or “synch” side (which stands for synchronization with picture), the publisher makes the deal (on behalf of themselves and the songwriter).
The fees are then paid directly to the record company for the right to use the master, and directly to the publisher for the right to use the song (composition). The publisher will keep its share and pay the remainder to the songwriter depending upon the terms of their publishing deal.
***It is important to note that the owner of the master and the owner of the song must both agree to the usage and to a licensing fee for the audio/visual project to use the recording.***
These are the basic concepts and three basic sources of revenue that every songwriter should know.
There are many different kinds of publishing deals and you should never sell or give away your publishing without careful consideration of the terms and without having an attorney look at the deal. Realize that if you make a publishing deal, you are selling a percentage of the publisher’s share of your song. Your publisher will now collect all the income your song earns (with the exception of the writer’s share of public performance through your PRO, you will always collect that directly.) Your publisher will keep its share and they will pay you (the writer and the publisher) according the specifics of your deal.
It should be clear to you by now that publishing is a separate thing from authorship. You can sell it if you choose to. And then someone else will own the publishing portion of your song, even though you are still the writer. But until you do, it belongs to you and in order to collect your earnings you must choose and join a PRO, both as a songwriter member and, separately, as a publisher member.
There are basically 3 types of publishing deals:
----Administration Deal: you retain full ownership in your copyrights and enable a publisher to administer your catalogue on your behalf to issue license, collect royalties, and in some cases to also pitch your songs for uses that don’t already exist yet. The publisher collects all your royalties (except the writer’s share of performance money) and keeps a small percentage as their administration fee, unless they pay you an advance in which case they will keep a larger percentage until you are recouped.
----Co-Publishing Deal: you usually will assign 50% of your publishing/ownership over to a publisher and retain your writer’s share AND the remaining 50% of your publisher’s share. Often you are paid an advance as an incentive to enter into this type of a deal. So you receive 75% of every dollar and the publisher will receive 25% of every dollar (i.e. 50% of the publisher’s share.) But, if you get an advance, your advance will be recouped from the 75% that is your share (i.e. your writer’s share and your 25% of the publisher’s share). The publisher keeps their 25% of the pie whether you recoup or not.
---Exclusive Songwriting Deal: these generally only exist in Nashville but could still happen anywhere. If you have ever heard the term “staff writer” then this is where that came from. A publisher provides you with some sort of salary or “draw” and in return they are the 100% publisher of anything you write during the term that you are signed to them. So this is a 50/50 split of all income (i.e. you keep your writer’s share.)
MAJOR PUBLISHERS VS. INDIE PUBLISHERS:
---As in the world of record labels, there are the major companies and the indie companies. In publishing, the “majors” generally are considered to be 4 companies: Sony/ATV Music Publishing, Universal Music Publishing Group, Warner/Chappell Music, and BMG Music.
---The world of indie publishers is much more diverse. It ranges from large indies like peermusic, Kobalt Music, Round Hill Music, Spirit Music Group, Reservoir Media, and ole, among others; then middle tier indies like PEN Music Group, Inc., Reach Music, Angry Mob Music, and many others; and then one-person companies of which there are countless options.
---Generally when you are looking for a deal, you should take the view that you are looking for a partner and someone or a company that believes in what you do. Find your champion. Different situations have different advantages and disadvantages. In theory, the bigger the company the bigger the advance you might be able to negotiate. But then you are one of potentially hundreds of writers and if no one is paying attention to you and your songs, then you might have a difficult time recouping your large advance. Also, the bigger the company you might sign to, the likelier it is that your champion might be fired or leave the company, and then you may no longer receive the same amount of attention. So you must choose carefully and weigh lots of considerations.
---Then there is the issue of whether you should take an advance or not. Advances are great of course, but they are just giving you your own money up front as you have to recoup the advance from your own earnings before you receive any additional money from them. So it might be worth not taking an advance at all and living off your earnings or take a minimal advance that you know for sure you can recoup. There are lots of stories of people who have been in deals for years that are stuck and can’t leave as they owe an outstanding advance OR they have what’s called a “cut and release” clause in their deal, which means they have to get a certain number of songs recorded and released before the can get their next advance or make another deal. Find your champion, but have a good lawyer who can negotiate for you and talk you through the pros and cons that are in any deal you are considering. DO YOUR HOMEWORK!
---The new media in the digital world are combining various income types and it can get confusing.
---There are two types of audio only streaming:
---Non interactive streaming (SiriusXM, Pandora, and internet radio) This means that someone else is controlling what the consumer listens to and in what order. This type of streaming only involves performance rights and you will be paid your writer’s share (and your publisher’s share if you are self-published) via your PRO.
---Interactive Streaming (Spotify, Apple Music, Deezer, Amazon Music, etc.) This means that the listener controls what they listen to, when, and in what order. This type of streaming combines both performance rights AND mechanical rights. The performance rights will be paid via your PRO just like non-interactive performance royalties. But the mechanical royalties will be paid separately. The new Music Modernization Act (MMA) which SONA was instrumental in getting passed through Congress will govern how these mechanicals are tracked and paid in the future through the Mechanical Licensing Collective (MLC).
Once the MLC is up and running, you will need to make sure your songs are registered in the MLC database in order to receive your mechanical royalties. You should do this whether you have a publishing deal or not.
---The mechanical rate that is paid for streaming has historically been 10.5%of a music service’s revenue and this is then split between the performance and mechanical pieces. But earlier in 2018 in the U.S., the Copyright Royalty Board (CRB) approved an increase in this base rate so it will increase by 40% in increments over the next 5 years. Sadly, Spotify, Amazon, Pandora, and Google have appealed this ruling. SONA is fighting along with other writer groups and publishers to get these services to drop their appeal and allow songwriters to receive the raise that we so desperately need and deserve. Notably, Apple Music declined to join the appeal.
---YouTube is its own unique beast as it involves a video component as well as an audio component. The industry made a deal with YouTube years ago where in exchange for not suing them for rampant copyright infringement for encouraging unlicensed synch uses YouTube now shares their ad revenue with the music rights holders and though it is a complex calculation, generally, YouTube keeps 50% of the ad revenue and then the remaining 50% is split 15% to songwriters and publishers and 35% to master recordings and artists. Over time we will work to get this to be closer to a 50/50 split.
The “Consent Decrees” that affect songwriters are court-approved federal agreements between the Department of Justice and ASCAP & BMI. When these agreements were originally put in place in 1941, the intent was to regulate ASCAP & BMI’s business practices so that neither company could operate as a monopoly and to keep a fair and balanced marketplace for the burgeoning radio industry, which had no choice but to deal with only those two PROs in order to obtain a license for musical work performances. Most consent decrees are in place for a limited number of years and have a “sunset clause" once they have achieved their purpose of leveling the playing field. In this instance these consent decrees remain in force and largely unchanged since they were written in 1941. Meanwhile as the music industry and technology have evolved, these outdated regulations have ended up denying songwriters the ability to negotiate a fair market price for their work.