Music Publishing for the Independent Artist
Over the past few months I’ve been delving into the deep dark ocean of music publishing, and I’ve come to find just how much of a headache it can be to discern all of the royalty sources and how to set yourself up to receive them. It’s no secret that people aren’t buying CDs anymore. Heck, they aren’t really buying downloads either. The world has moved on to streaming platforms and it doesn’t seem like there will be any turning back, at least anytime soon. This is why it’s crucial to understand music publishing and all the royalty sources you’re entitled to as an artist. Otherwise you’re leaving money on the table. If you eventually want to pay some bills with your music sales and streams, you’ll have to learn how to squeeze every penny out of them
Many bands these days write their own lyrics and music, and they record their material either themselves or at a local studio. If this is the position you’re in, then let this be an outline for getting set up to release your music. First I’ll explain how these royalties work to the best of my understanding, then I’ll discuss how to receive them and the different options you have in doing so. Buckle up because it’s about to get dense.
Composition ownership vs sound recording ownership
As an artist, when you write a song the lyrics and music become your intellectual property. This is known as the composition of which you have ownership. The moment you write down the lyrics you own the copyright to that composition (the moment you record a song you own the copyright to the sound recording). From what I’ve read in Donald Passman’s All You Need to Know About the Music Business, you do not have to register your works with the copyright office to actually own the copyright. There are several benefits of doing so, but unless you find yourself in an infringement lawsuit someday down the road you won’t regret not doing it. If you want to read more about this and develop a migraine you can do so right here (copyright stuff).
Back in the day, it was typical for a songwriter to sign over the rights to their compositions to a publisher who then exploits those compositions in ways that will generate income. The publisher would seek out performing artists to record the material and issue a license to a record label allowing them to produce your music for sale (CD’s, Digital Downloads, Streaming). For the purpose of this article I’m assuming that you (and your band if applicable) have written your own material (hence making you the composition owner) and have recorded the material either yourself or at a studio which you paid for their service in return for the master recordings (hence making you the owner of the sound recording). Sooo you are the songwriter acting as your own publisher AND the performing artist acting as your own record label.
To sum this up there are two separate pieces of property from which royalties can be made, the composition and the sound recording.
You, acting as the writer and publisher, own the composition.
You, acting as the performing artist and operating as your own record label, own the sound recording.
Now onto how each of these types of property can generate royalties and income.
writer/publisher (composition) royalties
There are two main royalty streams you will receive as the owner of the composition; mechanical royalties and public performance royalties. Here I’ll also mention sync royalties.
Mechanical Royalties: In the traditional model, when a record label produced a CD they would owe the writer/publisher mechanical royalties at a defined rate per song (9.1 cents) for every copy produced or every song downloaded. The record label doesn’t directly pay mechanical royalties to the publisher/writer though. Instead, they pay them to a 3rd party agency which then pays the publisher/writer. In the US, this agency is called the Harry Fox Agency.
So here’s what this looks like for you acting as the publisher and the record label. You as the record label owe yourself (the publisher) mechanical royalties for using your composition in a sound recording which has been produced onto a CD or digitally downloaded. At this point, it’s likely that any CD’s you produce will be out of your own pocket and you’ll be selling them yourself. So most of your mechanical royalties will be coming from digital downloads and streaming. What’s to follow is an explanation of mechanical royalties for these three circumstances: downloads in the US, downloads outside of the US, and streams around the globe.
Digital downloads in the US: When a song is downloaded the digital platform pays a mechanical royalty to the sound recording owner (record label) which is you. You then technically owe yourself that money. But instead of paying it directly to the publisher, a record label typically pays the mechanical royalty to a third party entity which is The Harry Fox Agency in the US. HFA then pays the royalty to the publisher. But since you’re the record label, artist, and publisher, you’ll receive this royalty from your distributor through which you release your music.
Digital downloads outside of the US: When a song is downloaded or streamed 8-10% is withheld from the retail price and sent to that countries local collection agency. You as the songwriter/publisher must register with that agency to receive the royalties. There’s an easier way to do this which I will get to in a bit.
Streams around the globe: When your song is streamed on an interactive platform (like on Spotify), the platform will pay a mechanical royalty to the collection agency (Harry Fox Agency is the one in the US). You then have to affiliate with that agency to receive the royalties. Again, there’s an easier way which I’ll get to.
2. Public Performance Royalties: Royalties for the public performance of a composition are owed to the writer/publisher when the song is streamed, played on the radio, TV, Youtube, or when it’s performed live. Services such as Spotify, venues, radio stations, television stations, and Youtube pay Performing Rights Organizations (PRO) for something called a blanket license which allows them to use all of the music that has been registered with that PRO. The PRO then distributes the money proportionately to the writer/publisher whenever their songs are used.
In the United States: To get these royalties, you must affiliate with one (and only one) of these PROs. The PROs in the US are ASCAP, BMI, and SESAC. When the PRO pays out, they pay 50% to the writer and 50% percent to the publisher. So in order to receive all of the royalties owed to you, you’ll have to affiliate as both a writer and publisher which can be done in a single application for $100 (at least for ASCAP). You can only affiliate with one PRO in the US so look into both to determine which one you feel is best for you (SESAC is by invite only).
International: Each country has its own PRO. So when your song is streamed or used in any manner as described above in that country, the royalty is paid to the PRO in said country. In order to receive those royalties, you would have to affiliate with each country’s PRO which would require you filling out an application and paying a fee for each one. It would also require that you know 60+ different languages so you could fill out the applications. At this point, I’m sure you see how this could be a bit of a problem. Luckily for us in the digital age there are easier ways to ensure you receive this money. Again, I’ll get to this in a later section.
3. Synchronization Royalties: These are royalties owed to the writer/publisher when their works are used in conjunction with a visual source. So anytime your music is put to a video you are owed a sync royalty which you will receive via your PRO. These are a bit more complex and something I need to learn more about myself. I will write about these separately in the future.
Artist (sound recording) royalties
There are two main sources of royalties you should receive as the owner of the sound recording; artist/distribution royalties and digital performance royalties.
Artist/Distribution Royalties: These will be the bulk of your royalties, and they’re what most people think of when it comes to making money from music sales or use. When a song is downloaded, let’s say on iTunes, they will take their cut before passing along the money for the sale to the record label which then would pay the artist. Since you’re acting as both you’ll be paid for your music sales via download directly through your distributor (who also may take a cut before it reaches your hands).
Digital Performance Royalties: These royalties are generated from the digital performance of your works on non-interactive platforms such as internet radio (Pandora), Satellite radio, and other platforms where you do not get to select the songs you listen to. These royalties are paid to the sound recording owners and the performing artists on the track, both of which are you. Currently, there are no royalties owed to the sound recording owner or performing artists when a song is played over terrestrial radio.
So what do I gotta do?
Here I’ll walk you through all the steps of setting yourself up to get the money owed to you from the above royalty sources.
Distributor: To release your music and receive money for downloads/streams you’ll need to choose a distributor which will get your music onto digital stores and streaming platforms. They’ll collect the money your songs generate from downloads and streams, possibly take their cut depending on which one you choose, then distribute the money to you. When you use a distributor, know that you retain the rights to and ownership of your songs. The distributor only does what its name says, distribute your music. Some only charge a yearly fee, some charge a fee plus additional fees every time you upload music, and some keep a cut of the money your music generates. Some of the big players are CD Baby, Distrokids, and Tune Core. I’ll discuss these and other distributors in detail in another article.
Publishing Administrator: Registering your works with a publishing administration service will allow you to collect the mechanical and public performance royalties we discussed above. They have relationships with mechanical royalty collection agencies and PROs all over the world and will collect the royalties your music generates around the globe. They eliminate the hassle of filling out the paperwork to affiliate with agencies and PROs all around the world which can be immensely helpful for those whose music is popular overseas. For others, it may not be worth the sign up fee and cut they take from all the royalties they find for you. A few of the big ones are CD Baby and Songtrust. Again, I’ll write another article detailing the different publishing administration services and help you decide whether or not you really need one at the moment.
Performing Rights Organization: If you’re in the US, and you choose to not use a publishing administration service, then you’ll want to affiliate with a PRO (ASCAP or BMI) to collect your writer and publisher royalties (public performance royalties). If you’re acting as your own publisher, be sure to affiliate with your chosen PRO as both a writer and publisher to ensure that you receive all of your royalties. The PRO pays out 50% to the writer and 50% to the publisher.
SoundExchange: SoundExchange collects digital performance royalties you generate when your music is digitally streamed on non-interactive platforms such as internet radio, satellite radio, webcasts, etc. They pay out 50% to the record label, 45% to the performing artists, and 5% to session musicians. To receive the record label and performing artist portion, you’ll need to both register and affiliate with SoundExchange. The process is a bit extensive and requires all members of your band do some paperwork.
These are the basics of music publishing in a nutshell. Music publishing is a dense topic, and I recommend learning more about all the royalty sources mentioned above. But hopefully this article gave you the quick scoop on what you’ll want to do before releasing your music.