Music Publishing
Music publishing is often times the most
misunderstood aspect to starting, marketing, managing, and profiting your own independent record label. Many folks just ignore music publishing thinking they will learn it better
later and deal with it down the road. This is a BIG mistake. Music publishing is where
the big money can be earned owning an independent record label. What
is music publishing? Music publishing is a term used for the management of copyrights. A music publishing company collects money due to a copyright owner for use of their musical work. There are 5 areas of music publishing:
Mechanical
A
mechanical license is granted, in most cases, from a copyright owner to
a record label. The mechanical license grants the licensee the right to
make reproductions of a copyrighted work. Basically, a mechanical
license grants a record label permission to duplicate and sell your
record. The royalty rate is 9.1 cents per song, per record under five
minutes in length; and 1.75 cents per minute for songs over five minutes
long per record.
To break it down even further, let's look at it from another angle.
You
own an independent record label, right? You sign an artist and
make a record. The Artist owns the copyrights to his/her songs. You
release that record and sell a lot of copies. Now, you owe your artist
9.1 cents for every song on the album (music publishing money), lets make it simple math and say
there are 10 songs on the CD. You owe your artist $.91 per CD sold.
This is not what you owe the artist for sales royalties plus the
percentage you negotiated when signing his/her contract.
You
owe this money no matter what. It's protected by the government. Your
recoupment clause in your contract cannot touch this money. That means
if you spent $100,000 for CD duplication and music marketing and your artist owes you that as recoupable costs, you do not get a penny of
his/her mechanical royalty. If your artist is using an outside
publisher instead of your publishing company, that means you are writing
a check to an outside company every time you sell a CD. Actually it’s
done quarterly, but you get the point.
Performance Rights License
A
Performance Rights License is issued from the copyright owner for use
of his/her musical work in a public performance. This includes live
shows, radio, video, or any other broadcasts to the public of the
copyrighted song. Most folks grant one of the performance rights
agencies; ASCAP, BMI, or SESAC the right to collect this money.
Let’s
break this down in terms you as an independent record label
owner can fully understand. Are you sitting? You will want to.
As
an independent record label you have recorded a CD and paid a lot
of money for CD duplication and the music marketing of this artist to the world. Your
marketing efforts have paid off and your artist is getting radio play,
a lot actually - they made it to the top 20. Wow - you are moving some
units now! That’s a good thing because you are not getting a dime of
the publishing money, in particular the performance rights license.
The
only person who gets paid when a song is played on the radio is the
copyright owner. Period. If you, as an independent Record Label, are not
the publishing company or co-owner of the copyright you do not make a
dime. Folks, copyright holders make a lot of money off radio play. I
have heard rumors of up to $100,000.00 or more per quarter. You paid for the recording, music marketing of the CD to
get radio play and music video play, but you don’t get a dime for your
efforts? I think you are beginning to see where I am going.
Synchronization Licenses
Movies, t.v., video, and anything else that you will synchronize a copyright owners musical work to - images is what a synchronization license
grants. A copyright holder can get a lot of money - around $75,000 -
$200,000 - for inclusion in a major motion release and up to about
$5000 for a weekly TV show through music publishing. We are talking about a lot of money.
Again, only the copyright owner gets this money. You, as a label, have no
right to it what-so-ever. Unless... you have a split or co-own the
copyright and are intitled to collect a portion of the music publishing money.
Again, you as a label owner did all the legwork to
get the song enough momentum to have Hollywood call and you get nothing
for your efforts. Many labels have gone bankrupt with an album that has
weak sales while the artist eats good from his/her copyright ownership.
Print License
The print license grants the
printing and sale of sheet music for a copyrighted song.
Digital Print Rights
This
is a new one in the world of music publishing. It has only been around since about 2000. It gives the
right for digital representations of a copyright owner's work. PDF files
containing lyrics, midi files for use as ring tones, and midi files for
use with music for websites would fall into this category. Although,
there is a fierce fight going on about ring tones and where they
exactly fit in. For now, this is an important right for a copyright
owner. Ring tones are getting huge and the use of unlicensed music as a
ring tone is huge... lawsuits a plenty!!
As you can see, as an independent record label owner you want your part of the
music publishing pie. It can add up to a lot of money on just one hit song
that makes top 20 rotation across the country. So how do you get your
piece of the music publishing pie?
Contract negotiations. Your contract to your
artist must include a clause that grants you a percentage of music publishing
rights. Typical contracts are for 50%. This is a fair and equitable
settlement to most artists. They are making the song and you are
exploiting it to make money from it. It’s a win-win situation for all.
If and when
your potential artist cries fowl, make sure you ask them how they
intend on exploiting their music? You have got to make them realize if
they had the money, means, connections, and labor force to put their
own music out, they wouldn’t be sitting across the table talking to
you. But, right here, right now, they are sitting across from you and
expecting you to put thousands of dollars into making them money. Like
it or not, they will not find a deal without giving up a percentage of the music publishing rights… or
at least they will have to look long and hard and in most cases, will
not like the deal if they get one.
Ok, so now we know we want a piece of the music publishing pie. But what do we do with it? How do we collect those royalties?
You
have exactly two choices. Start your own music publishing company or
negotiate with an outside music publishing company. If you
are like most folks you would say hire a company, I don’t know anything
about it. And in some cases this might be the answer. However, starting
your own music publishing company is not as hard as it seems.
Starting your own
music publishing company is little more than filing 2 forms and signing up
with performance rights organizations. That's the easy part. The hard
part is actually having the time to act as a music publishing company. By
that I mean having the time to exploit your music for more money like
getting it in films, commercials, and on the internet as background
music.
On the other hand, you could just farm out the exploitation duties of your music publishing company to an
established firm to handle it for you. They are going
to take 50% to
handle the exploitation of your copyright, collecting money on behalf
of your copyright, and registering your copyright as you produce new
songs, but it may be worth it. Let's break it down. You now own 50% of your artist’s
copyright. If you hire a publisher to handle your publishing duties
out-of-house you have to pay 50% to them. You now will only realize 25%
of the royalties made from being a co-owner of the copyright - not bad
to do nothing. And maybe this is your option. It is at least better
than where you were before only getting 0% of the money.
You still have one more option.
I
know most labels don't have time or the training and full
understanding of how to properly exploit a song to the world. It is a
massive job, requires a staff of folks to do it, and you really have to
be connected to get it done. As you are starting, marketing, managing, and profiting your independent record label, this might not be the time to undertake music publishing.
But you might want to in a year or so once you are established and have
a better understanding of the business involved with running an independent record label.
Here is what I suggest.
Start
your own music publishing company. Once you do the
steps, then you will hand off your music publishing duties to the Harry Fox Agency. The Harry Fox Agency is the largest organization in the world
to handle the collection of copyright royalties.
By handing
your music publishing work to Harry Fox you ensure that you and your artist's
and you are indeed collecting all monies due. You are only giving away 4.5% of
the royalty rate to Harry Fox since the company only collects fees due.
You can’t beat that. It is that simple to start and collect on your
copyrighted music. However, Harry Fox is not going to exploit your
music for 4.5%. They are only collecting what is due from your efforts. Lets
face it, you are a new independent record label. The first year
you will be gaining experience. You will be learning and growing. Your artists might hit radio, and if they do you might get a movie deal and
be asked to include your music in the movie. If Hollywood calls, you
can negotiate the deal. By the time you have a track record, know the
music business a little better, and have some money in the bank, you can hire
a full time employee to handle your music publishing company and he/she can
start exploiting your music.
As an independent record label you need to worry about your core function... manufacturing CDs and
selling them to the public. You will learn the rest on the way. I am
not saying you shouldn’t start exploiting your artists at every turn.
What I am saying is that right now, concentrate on your core business.
I will end this by giving you one more alternative.
You
can start your own music publishing company and then sign a deal with an
outside company to handle the exploitation, collecting, and managing of copyrights for you. Most will want 50% but you can
negotiate a lower fee. Why would you want to loose 50% after starting
your own music publishing company? Because you are small. You don’t have resources and
the exploitation of your copyrighted music might equal more record
sales. If your song gets featured in a movie or tv show
millions of folks will learn about your artist. They will want to go
buy the CD if it’s good. It’s kind of a win-win with a loss. In true
music marketing terms this is called a loss leader. You give something away
to get them to buy the bigger item - the CD. This doesn’t always work,
but it can and it has.
By setting up your own music publishing company but handing off it's daily duties to an outside firm, you are
establishing your Independent Record Label as having a
music publishing wing. This is good if your desire is to sign with a major
and be under their umbrella. It will value your company higher when you
go into negotiations. By doing it this way it will also give you time to see what
an established music publishing company does and learn from their work as you watch how they manage your copyrighted music. Sure,
you are paying to learn, but aren’t you doing that now? What better way
to learn than to watch your own copyrights go through an
established music publishing company and watch the wheels turn.
Good luck and stay tuned. I will write future articles detailing how to exploit your artist's music with your music publishing company.
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