May 19, 2012

42 Different Ways That Artists Can Earn Money

FMC[1]

42 Different Ways That Artists Can Earn Money

By Paul Resnikoff

Songwriter & Composer Revenue

  1. Publisher advance
    Bulk payment to songwriter/composer as part of a publishing deal.
    Paid to: songwriter composer by publishing company.
    Rate: varies according to deal.
  2. Mechanical Royalties
    Royalties generated through the licensed reproduction of recordings of your songs — either physical or digital.
    Paid to: songwriter/composer by publisher, label, Harry Fox, or digital aggregator like CD Baby. Rate: 9.1 cents per manufactured copy of song/composition.
  3. Commissions
    Typically a request from an ensemble, presenter, orchestra or other entity for a composer to create an original work for them.
  4. Public Performance (PRO) Royalties
    Revenue generated when your songs are played on radio, TV, in clubs and restaurants. Paid to songwriter/composer/publisher by ASCAP/BMI/SESAC.
  5. Composing Original Works for Broadcast
    Typically a commercial request to compose an original jingle, soundtrack, score, or other musical work for a film, TV or cable show, or an ad agency.
  6. Synch Licenses
    Typically involves licensing an existing work for use in a movie, documentary, TV, video games, internet, or a commercial. Paid to songwriters/composers either via publisher or record label, or via a direct licensing deal with the licensee (movie studio, ad agency, etc) if you are self-published..
  7. Sheet Music Sales
    Revenue generated by the sale of songs/compositions as sheet music. Paid to songwriter/composer by publisher, or directly from purchasers if you are selling it on your website or at performances..
  8. Ringtones Revenue
    Generated from licensing your songs/compositions for use as ringtones. Paid to songwriter/composer via your publisher, your label or Harry Fox..
  9. ASCAPlus Awards Program
    Awarded by ASCAP to writer members of any genre whose performances are primarily in venues outside of broadcast media.
  10. Publisher Settlement
    Payment from publishers to writers for litigation settlements.

Performer & Recording Artist Revenue

  1. Salary as Member of Orchestra or Ensemble
    Income earned as a salaried member of an orchestra or ensemble.
  2. Shows/Performance Fees
    Revenue generated from playing in a live setting (for non-salaried players).
  3. Record Label Advance
    Paid to artist as part of signing a deal.
  4. Record Label Support
    Money from label for recording or tour support.
  5. Retail Sales
    Revenue generated from selling physical music in retail stores or via mailorder. Paid to artist/performer by your label, or digital aggregator like CD Baby.
  6. Digital Sales
    Revenue generated from selling music digitally/online. Paid to artist/performer by your label, or digital aggregator like CD Baby or Tunecore.
  7. Sales at Shows
    Revenue generated from selling recordings of music at shows/live performances. Paid to artist/performer directly by fans.
  8. Interactive Service Payments
    Revenue generated when your music is streamed on on-demand services (Rhapsody, Spotify, Rdio). Paid to artist/performer by your label, or digital aggregator like CD Baby or Tunecore.
  9. Digital Performance Royalties
    Revenue generated when your sound recordings are played on internet radio, Sirius XM, Pandora. Paid to performers by SoundExchange.
  10. AARC Royalties
    Collected for digital recording of your songs, foreign private copying levies, and foreign record rental royalties, distributed to US artists by AARC.
  11. Neighboring Rights Royalties
    Collected for the foreign performance of your recordings.
  12. AFM/Secondary Markets Fund
    Paid to performers on recordings used in TV and other secondary uses.
  13. AFM/Sound Recording Special Payments
    Paid to performers for the sales of recorded music.
  14. AFTRA Contingent Scale
    Payments paid to performers when a recording hits certain sales plateaus.
  15. Label Settlements
    Payments from labels to recording artists for litigation settlements (MP3.com, Limewire).

Session Musician Revenue

  1. Session Musician/Sideman Fees for Studio Work
    Revenue paid to you for playing in a studio. Paid by label, producer or artist, depending on situation.
  2. Session Musician/Sideman Fees for Live Work
    Revenue paid to you for playing in a live setting. Paid by label, producer or artist, depending on situation..
  3. AFM/AFTRA Payments
    Payments from the AFM/AFTRA Intellectual Property Rights Distribution Fund, which distributes recording and performance royalties to non-featured artists.

Knowledge of Craft: Teaching & Producing

  1. Music Teacher
    Revenue generated from teaching your musical craft.
  2. Producer
    Money from producing another artists’ work in the studio or in a live setting.
  3. Honoraria or Speakers Fees

Brand-Related Revenue

  1. Merchandise Sales
    Revenue generated from selling branded merchandise (t-shirts, hoodies, posters, etc.). Paid to artist/performer by fans.
  2. Fan Club
    Money directly from fans who are subscribing to your fan club
  3. YouTube Partner Program
    Shared advertising revenue, paid to partners by YouTube
  4. Ad Revenue
    Or other miscellaneous income from your website properties (click-thrus, commissions on Amazon sales, etc.)
  5. Persona Licensing
    Payments from a brand that is licensing your name or likeness (video games, comic books, etc)
  6. Product Endorsements
    Payments from a brand for you endorsing or using their product
  7. Acting
    In television, movies, commercials

Fan, Corporate, & Foundation Funding

  1. Fan Funding
    Money directly from fans to support an upcoming recording project or tour (Kickstarter, Pledge Music)
  2. Sponsorship
    Corporate support for a tour, or for your band/ensemble
  3. Grants
    From foundations, state or federal agencies

Other Sources of Revenue

  1. Arts Administrator Money paid to you specifically for managing the administrative aspects of a group that you are a member of.

Rhythm J’s ASCAP Guru Session #4 – The 9 “What If’s” of Title Registration

iStandard Team

iStandard Team

What’s up to the seekers of knowledge (Guru Gong here)!

It’s been a while what I’m back with more ASCAP info.  I noticed some of the questions on the comments of past articles and tried to answer some here.

Before reading this particular ASCAP Guru session, I recommend reading Guru Session #3 “The 9 Commandments of Title Registration”… Plus if you want to learn more read my other 2 Guru Sessions that have already been posted please check them out:

Guru Session 1  http://coast2coastmixtapes.com/newindustrytips/index.php/2010/01/rhythm-js-ascap-publishing-guru-session/

Guru Session 2

http://coast2coastmixtapes.com/newindustrytips/index.php/2010/02/rhythm-js-ascap-performing-rights-society-guru-session-2/

Guru Session #3 The 9 Commandments of Title Registration http://coast2coastmixtapes.com/newindustrytips/index.php/2010/04/rhythm-js-ascap-guru-session-3-9-commandments-of-title-registration/

Now that we covered the basics of title registration (see ASCAP Guru session #3) we can dive further into detail on the “what if” scenarios when you are registering your titles.

Again to be clear:  Writing = 50% / Publishing = 50%.

IMPORTANT:  Title Registration is completely separate from the newer Member Access System (members.ascap.com) that is in place.  Your Member Access user name and password won’t work on Title Registration, it’s a whole other section.

For Title Registration you must go to:  http://www.ascap.com/cwrreg/login.asp

The What If’s

1.   “What if I have a co writer for the song who’s not part of ASCAP,BMI, or SESAC, at all and he/she just started writing music”.

You have 2 choices with this.  Choice A, the most ideal choice would be, “do the right thing” and wait for this person to join a PRO (Performing Rights Organization), and once their accounts are ready, THEN register the work.  Or choice B – “I don’t want to wait for that fool!”. Ok.  Put the member’s name down with their percentage and mark him/her as NS (no society).  Once this person joins it will then be their responsibility to notify ASCAP or to contact their PRO.

2.  “What if a co writer or producer is from another PRO (Performing Rights Organization)?”.

This is fine, you both can still co-exist on a song even though you are from different PROs.  Just mark what PRO they’re from.  However!  Make sure the work is registered with BOTH PROs involved with the work and the percentages are consistent!  The last thing you want is a percentage share conflict between 2 different PROs.

3.  “What if samples were used?”

Ha Ha Haaaaaaaa (big sinister echos).  Make sure it’s cleared before registering it unless you want a letter from an attourney.  Once a sample is cleared… That’s only half the battle.  Usually the original songwriter(s) from the original record gets a piece of the writing and publishing… YES, they get a piece of your royalties for sitting at home chillin while you program their song into your MPC or software you use!

4.  “What if the sample wasn’t cleared yet?”

Don’t register it.  Put it on your mixtape / demo/ etc. For promotional use, fine… But if you go and sell it, and register it for potential royalties, that may not be a good look for you.

5.  “What if the song isn’t copywritten yet?”

That’s up to you… ASCAP doesn’t require you to copyright but does recommend it since that is the ONLY means to legally copyright anything… And NO, mailing music to yourself doesn’t always work.  To copyright go to www.copyright.gov.

6. “What if the song isn’t on a major album?”

So what… You can still get tons of radio or tv play without being signed.

7.  “How does ASCAP want me to split the royalties?”

Any way you want, however you need to follow the 50/50 rule of thumb (see ASCAP Guru Session #1)

8. “What if my music is playing outside the US?”

Register it with ASCAP anyway if you are a member.  ASCAP has reciprocal agreements in virtually every other Foreign Society.  What this agreement means is that the PRO in that country, let’s use PRS the “ASCAP” of the UK as an example.  PRS gathers all of the music data in their own country.  If any ASCAP members happen to be writers of any songs they pick up, they send that money over to ASCAP.  ASCAP then pays out during the international distribution 4 times a year.  Therefore, ASCAP members are taken care of for the whole world, no extra work on your part.  Just register the title and make life easy for ASCAP employees like myself.

9.  What if I have a BMI publisher but I’m an ASCAP writer, can I be a member of both?

Make sure you understand this answer and read it again if you have to…  A BMI publisher can’t collect on an ASCAP writer’s behalf, or vice versa..  Example:  If you are a songwriter with ASCAP, and your indy publishing company (whether its your own company or someone elses), is with BMI, there’s a problem.  The solution here would be for the publisher to pay the 1 time 35 fee and join ASCAP.  A publisher can be a member of multiple PROs if they are collecting on behalf of several writers from different societies.  If you are a writer, avoid switching societies at all costs, it’s a headache and takes a very long time.  Make the publisher join as opposed to them forcing you to switch to another society.  It takes a few weeks for a publisher to join, it takes months for a writer to switch, even longer if you are a BMI member.

Expo

Oh, I need to share this… In other news…  I recently got back from the ASCAP Expo the other week and had the pleasure of meeting the Godfather, Quicey Jones.  Q had a wealth of wisdom between the lines of priceless verbal scat and legendary stories of music’s biggest names… Ever.  He dropped some jewels – here’s a clip from his interview here:

http://wecreatemusic.ascap.com/expo/post/Watch-Video-Highlights-of-Quincy-Joness-Interview-with-Ludacris-at-the-ASCAP-EXPO.aspx

If you haven’t caught the videos from the Expo I suggest you stop by:

http://wecreatemusic.ascap.com/expo/
The veiws and opinions in this article are soley expressed by ASCAP employee Rhythm J

Twitter me – @RhythmJ is you have any questions about this blog, if you ask a question on the blog comments I may not get back to you right away.

Until next time

Producers:  Don’t forget to check iStandardproducers.com for all of your producer needs and submission opportinities.

A&R UNCUT – F*@k the Majors! Really?

labelmarketshareusa

labelmarketshareusa

I have never been a shy person when it comes to educating those that choose to ignore the obvious.  Therefore, I will begin my blog by being as candid and straight up as I can.  So don’t blame Nick for letting me loose on this site.

Your browser may not support display of this image.I read countless blogs and articles and listen to so many aspiring and not-so aspiring artists say the same thing, Fuck the Majors!   Those with an opinion are quick to downplay the importance of the machine responsible for the catalogs of music that we have cherished since the introduction of the ADAT recorder and 45s.  We are under some impression that the lack of major label monopolies will somehow save our beloved ears from the consistent garbage that we are exposed to playlist after playlist.  Others feel that if it was not for the major labels opinion on their music they would out sell Jay Z.  Not likely.   But let us really entertain the idea of “No More Major Labels”.

Major means more than Minor and anybody past a grade school education should understand that being considered a”major anything” just means you are bigger than anything smaller than you, simple mathematics.  So a major label just means they have a larger market share due to having more capital which allows for more resources and a wider range of exposure.   A free market may sound like a gift to those who find it hard to get noticed or have not had luck with their major label relationships.  But a free market means anyone with a little extra money can be a Star.  I think most of us can agree that most fans are aspiring artists and the average artist can’t sign an autograph without being solicited a demo.  Therefore, there would be no more mass market and smaller territories would be flooded with people releasing their self proclaimed “Hits” on and offline with no attention to quality or direction. It would be absolute chaos, like a city with no police or like living in the internet.

Furthermore, if we realistically absorb the idea of a free market where all artists have equal opportunity to promote to a consumer market; there are resources that “said” artists will need to provide for themselves to even compete with the least successful artist.   Because as long as you are trying to sell yourself you are in fact as much of a product as that last box of Tide.  A) Development (Producers, Studio, Songwriters, etc.)  B) Distribution (i.e. ITunes, Retail Stores) C)Advertising/Promotion (Agencies, Online and print publications, etc.) D) Most importantly, unless you can be in a thousand places at once, you need a solid team (and not just your High school homeboys), people who actually know what organization, planning and consumer behavior means.

With that said, advertising and promotion agencies would reign supreme, freely charging whatever they want to promote just your single to your mere region or neighborhood.  Distributors like iTunes would increase their percentage of sale to account for the increased server space and become more selective in who they allow to sell through their portal. Record stores would charge what ever they want to charge fans for your record and you would be negotiating shelf space because they would have even more options.  There would be no more sweet-ass royalty checks. You would have to pay broadcast and online radio for just a hint of radio play because you desperately need more exposure than your neighbor.  Independent artists would be completely reliant upon banks to obtain enough capital to outdo the exposure of the 5000 songs released in that one day.

Your browser may not support display of this image. So what! the label does not sign YOU.  Stop taking it personal.  Major labels are lenient banks.  They loan you a set amount of money to pursue a dream that would otherwise be difficult to pursue in exchange for a percentage of your successful or unsuccessful business.   With no guaranteed and less likely chance of recouping if you are not as good as they bet on.  Now ask yourself, would Citibank give you a loan to be the next “Kanye West”.  And even if that was an option, I hope you considered your lifetime goals long before that first Macy’s and/or Visa credit card that you were dooped into maxing out during your ONE semester in the technical college that has federal and state garnishing your taxes for the debt you never paid a few years back.  Or perhaps you or your parents own a house or an expensive car that you can put up for collateral because the loan officer is void of artistic vision and secretly wishes music would revert back to the days of vinyl.

Or maybe you can hope for an increase in private investors who will throw all of their available funds into a few talented acts.   These talented acts can go on to sell millions of records and this investor will decide to become an indie label.  Then this indie label will have enough capital and resources to take market share from the majors and then you can submit your demo to them, it can land on top of the thousands of demos the free market has provoked,  they can sign you, criticize and change you, make bad marketing decisions, release a few budding artist that keep the lights on, wait for more records to sell from the two priority artist that sell less records than their last record, in an effort to finance your underdeveloped project and then drop you for not meeting expectations.   Oh, right… that’s a major.

Ok class… I repeat.  Anything that is bigger than the smallest thing is major.  So if you were one of those people thinking “fuck the majors!” Save yourself the agony of over-thinking the obvious scientific fact that it would only lead toEVOLUTION, another Major Label.  And if you think it’s hard to catch a break now, imagine multiplying the pain of exposure to the worst artist simply because they have more money or having to negotiate an overseas distribution agreement with a foreign government who does not see you as important or profitable as your friends and family brag about.  So instead of wishing for the demise of the Major Labels, let’s all get together and pray for the layoffs of all A&Rs who lack the drive to innovate and/or seek talent outside of their friends and family.  Pray for the firing of executives who don’t understand the importance of creative vision and variety, and ANYONE who bases what is hot on what was hot last year.  Even more, let’s throw rocks at ANYONE whose only idea of a great record is any record produced, written and recorded by (insert artist/producer name of choice) instead of becoming, finding and exposing outstanding new talent.

So now that we are on the same page, let’s talk about how to get a deal… when I wake up.

A&R Uncut

Email me at: aruncut@newindustrytips.com

Rhythm J’s ASCAP Performing Rights Society Guru Session #2

iStandard

What’s up music self educators?  You are making this industry better each day you learn something.  Previously on my last ASCAP Guru Session, we touched upon the importance of publishing and why EVERY songwriter, whether they are signed or not signed to a publishing deal, should have both a writing and publishing account with ASCAP.  Knowing that, the first question that needs to be answered is:  (and you would be surprised how much I’m asked this). What is writing and publishing as far as ASCAP is concerned? After you read below…I shouldn’t get any more calls like this:

WRITING AND PUBLISHING DEFINED – FINALLY

Writer – The person/people who create the music… this includes songwriters, producers, instrumentation, hooks, verses, the dude in the background who came up with that funny ass phrase in the second verse, etc.

Publisher - The person or party that takes the creative material (songs or instrumentals) and works to get that music placed on radio, tv, film etc.  If YOU are that person or party that is pushing the material then YOU are the publisher.  Therefore, YOU must make up a publishing name and register it with ASCAP

“Do I have to start an LLC or Corporation?” No.

“Do I need a tax ID?” No.

“How much?” 35?

“That’s it?” Yup.

“What’s the catch?”. Make sure the name on the check says YOUR name, not your publishing name and you’re good – this change can be made any time…. Preferably before you receive any money.

“Where do I go to do this?” http://www.ascap.com/about/howjoin.asp

“Thanks Rhythm J” That’s why I’m here…

DO IT ON YOUR OWN PUBLISHING VS. GETTING SIGNED WITH ONE

For those of you that have an agreement with a major/independent label, management or publishing company, be sure that you fully understand the terms of your contract.  A company you have an agreement with that did not write any part of the music should NEVER receive writing royalties.  EVER.  If they suggest that… they are robbing you.  This doesn’t mean avoid all publishing deals at all costs. Depending on how effective your company is on getting your music placed on radio stations, TV shows, or  films, it may not hurt you so much to have a deal with that company.

50% of something – a 50/50 publishing deal for example…is better than…

100% of nothing – working on your own unsuccessfully with your own publishing account and placing 0 songs.

One common mistake I always see is when people call and say “yea I’m getting 50% percent of my publishing,” when in reality they are getting just their writing (50% of total royalties) and NO publishing (the other 50%).  See Guru Session 1 for more details on this.  Songwriters need to clearly know if the split of the agreed “publishing” percentage is based on either ALL of their performance royalties (writing + publishing) or based on publishing only (essentially half the total royalty). Read that part again if you need to… it’s important.

Bottom line: If you have a publisher getting placements for you – it may worth it to give them a piece of the publishing half if they are working connects you don’t have and are putting the time in to make placements happen for you. It’s really a judgment call.  Just be sure to read your contracts carefully.

That just about does it for this Guru Session, catch me next week as I’ll be breaking down the all important details to letting ASCAP know what songs you have written so you can earn the money for your placements.

The ASCAP Expo is right around the corner, Quincy Jones, Just Blaze, Bill Withers, Dre and Vidal, plus 100s more will be in the building.  Get to know your fellow ASCAP members!

ASCAP I Create Music Expo in LA April 22.-24 http://www.ascap.com/eventsawards/events/expo/

iStandard

Producers, you can also submit for the iStandard Producer Showcase at the ASCAP Expo http://www.ascap.com/eventsawards/events/expo/2010/istandard.aspx

Can’t make it to LA?  Submit beats to be in the iStandard Producer Showcase in NYC, PHI, CHI, LA, MIA, Boston or the city near you.

http://www.istandardproducers.com/index.php?t=show_submit

Hit me on twitter @RhythmJ for any ASCAP Guru questions you may have.

Rhythm J

www.rhythmj.blogspot.com

Rhythm J

ASK AN EXPERT – STARTING YOUR MUSIC PUBLISHING COMPANY

Billboard Charts

Billboard ChartsStarting your own publishing company is actually not that hard.  You as a songwriter may truly benefit from setting up your “own” publishing company because not only will you be able show off your own catalog of songs you’ve written – but also you may exploit songs of other writers that you acquire material from.  You will also be able to collect your money from mechanical and performance licenses direct. (Opposed to getting your money through another publisher).

Step 1

First of all – you will need to think up a few really ‘you-neek’ names for your company.  I suggest trying as many combinations of words & “new” words as you can possibly think of (that you like).  BMI, ASCAP and SESAC, including local government business databanks already have many of the most common names taken. So like I said – be unique.  Many big name artists sometimes can’t use their established artist names because they are too close to other names that already exist. So with this being a reality – many recording artists spell their “known” names backwards. For example: ECAF Music for Babyface or ECNIRP Music for Prince.

Step 2

You will need to join a performance rights organization such as BMI, ASCAP or SESAC.  Get in touch with these organizations to request the necessary information and application to join as a writer and publisher.  Your company can only be an “active” member of one. There is a fee.

ASCAP (American Society of Composers, Authors and Publishers)

www.ascap.com

BMI (Broadcast Music, Inc)

www.bmi.com

SESAC

www.sesac.com

Step 3

Now you must get your company set up with the local city / county / state government to get a business license / permit to do business as a music publisher.  You will need to decide in which business manner to file your company – Sole Proprietor – General Partnership – Corporation – D.B.A. (Doing Business As), etc.  You will also need a Federal Tax ID to complete your applications to BMI, ASCAP or SESAC.

Step 4

Open up a Business Bank Account (read about manager loans and limits).  If you’ve followed the steps above, and your credit is not TOTALLY ruined with bad checks, etc. – you should have no problem opening an account.  And even if your credit is bad… there are still ways to do this.

Step 5

Contact The Harry Fox Agency to request information and an application to join. This is so they can issue mechanical & digital licenses to collect money in your behalf – from the sales of your songs.  They also can perform audits when considered necessary.

THE HARRY FOX AGENCY, INC

711 THIRD AVENUE

NEW YORK, NY 10017

(212) 370-5330

AMERICA’S MECHANICAL RIGHTS SOCIETY

www.amermechrights.com

Marc Smilow

If you have any questions or comments please feel free to contact me anytime at expert@newindustrytips.com

ASK AN EXPERT – Publishing 101 Part 3 – Performance Royalties

ASCAP - We Create Music

ASCAP - We Create Music

In the United States, “performance royalties” are paid out mainly by three performance rights societies, BMI, ASCAP and SESAC. (Most foreign countries also have their own societies.) Under the copyright law, a songwriter controls the public performance of that songwriter’s songs. In essence, a songwriter designates either BMI, ASCAP or SESAC as his or her agent for the public performance rights of that songwriter’s songs. A songwriter can only affiliate with one society at a time. BMI, ASCAP or SESAC have arrangements with the parties – such as radio, television, concert venues, restaurants, etc. (essentially any user who performs music publicly) – who want to use the songs in the societies respective catalogs. For a licensing fee, BMI, ASCAP or SESAC will grant to that user what is called a “blanket license”, which means that the user can play any song, by any songwriter or publisher affiliated with that society, any number of times. It must be stressed that fees are collected from the entity or venue user, not from any actual performer.

For years radio airplay was the primary method for marketing almost all genres of music. Although that’s no longer strictly the case, what’s remarkable is that recording artists and record labels have never received any form of payment for this usage — not a single penny! Yes, publishers, songwriters and composers receive compensation via annual fees paid to ASCAP, BMI, and SESAC by radio stations. These fees are then apportioned to publishers based on the number of times songs are played as logged by the stations and monitored by the performing arts societies.

The money earned by a songwriter from the societies (i.e., the performance royalty) is proportionate to the volume of airplay of the songwriter’s songs. Performance royalties are based on extremely complicated formulas. Basically, however, the societies monitor radio and television airplay to determine how often a song is heard and by how many people. The larger the audience and the more times a song is played, the more the income. Since it is impossible to cover all media outlets, BMI, ASCAP or SESAC rely on estimates based upon samples. BMI obtains its samples from radio station logs and television cue sheets (lists of compositions used on television). ASCAP gets its samples from taping radio stations and from television cue sheets. After deducting operating expenses, the societies divide the fees up and pay it to their affiliated writers and publishers.   Whereas ASCAP and BMI operate on a not-for-profit basis, SESAC retains some income as profit. While ASCAP and BMI distribute all income from performance royalties to their composer and publisher affiliates (less an administrative fee), SESAC retains an undisclosed amount of performance royalty income. All three societies pay quarterly.

BMI, ASCAP or SESAC represent both songwriters and publishers. It should be noted that even where a songwriter is represented by a third party publisher, that songwriter needs to also join a society because songwriters and publishers are paid separately by the societies. To join ASCAP, a songwriter must have at least one song either published, recorded, or publicly performed. To join BMI is a bit easier. The writer must have a song either published, recorded, or likely to be performed publicly.  SESAC is also unique among the US performing rights organizations in that it does not offer open membership – one must be approved to join.  As for which organization is best, each songwriter will have to decide that for themselves because it is difficult to say with certainty which society pays more.

ASCAP (American Society of Composers, Authors and Publishers)

www.ascap.com

BMI (Broadcast Music, Inc)

www.bmi.com

SESAC

www.sesac.com

Thanks for taking a minute to read my Blog and I hope you found it helpful.  If you have any questions or comments please feel free to contact me anytime at expert@newindustrytips.com

ASK AN EXPERT – Publishing 101 Part 2 Mechanical Royalties

music-and-money

music-and-money

Mechanical Royalties refers to the mechanical license and has its origins in the ‘piano rolls’ on which music was recorded in the early part of the 20th Century. Although its concept is now primarily oriented to royalty income from sale of CDs, its scope is wider and covers any copyrighted audio composition that is rendered mechanically; that is, without human performers:

*tape recordings

*music videos

*ringtones

*MIDI files

*downloaded tracks

*DVDs, VHS, UMDs

*computer games

*musical toys etc.

The United States treatment of mechanical royalties is in sharp contrast to international practice.

In the United States, while the right to use copyrighted music for making records for public distribution (for private use) is an exclusive right of the composer, the Copyright Act provides that once the music is so recorded, anyone else can record the composition/song without a negotiated license but on the payment of the statutory compulsory royalty. Thus, its use by different artists could lead to several separately-owned copyrighted ‘sound recordings’.

The royalty rates in the table comprise of two elements: (i) a minimum rate applies for a duration equivalent to 5 minutes, or less, of a musical composition/song and/or a per-minute rate if the composition exceeds it, whichever is greater.

Compulsory Mechanical Royalty Rates – United States

Period     Royalty Rate

01-01-1998 – 12-31-1999   7.10 cents or 1.35 cents/min

01-01-2000 – 12-31-2001   7.55 cents or 1.43 cents/min

01-01-2002 – 12-31-2003   8.00 cents or 1.55 cents/min

01-01-2004 – 12-31-2005   8.50 cents or 1.65 cents/min

01-01-2006 – 12-31-2007   9.10 cents or 1.75 cents/min

In a fair publishing agreement, every 100 units of currency that flows to the publisher gets divided as follows: 50 units go to the songwriter and 50 units to the publisher minus operating and administrative fees and applicable taxes. However, the music writer obtains a further 25 units from the publisher’s share, if the music writer retains a portion of the music publishing rights (as a co-publisher). In effect, the co-publishing agreement is a 50/50 share of royalties in favor of the songwriter if administrative costs of publishing are disregarded. This is near international practice.

When a company (recording label) records the composed music, say, on a CD master, it obtains a distinctly separate copyright to the sound recording, with all the exclusivities that flow to such copyright. The main obligation of the recording label to the songwriter and her publisher is to pay the contracted royalties on the license received.

While the compulsory rates remain unaffected, recording companies, in the US, will, typically, negotiate to pay not more than 75% of the compulsory rate where the songwriter is also the recording artist and will further (in the US) extend that to a maximum of 10 songs, even though the marketed recording may carry more than that number. This ‘reduced rate’ results from the incorporation of a “controlled composition” clause in the licensing contract since the composer as recording artist is seen to control the content of the recording.

Mechanical royalties for music produced outside of the United States are negotiated – there being no compulsory licensing – and royalty payments to the composer and her publisher for recordings are based on the wholesale, retail, or ‘suggested retail value’ of the marketed CDs.

In the US, the Harry Fox Agency, HFA, is the predominant licensor, collector and distributor for mechanical royalties, although there are several small competing organizations. For its operations, it charges about 6% as commission.

Record companies are responsible for paying royalties to those artists who have performed for a recording based on the sale of CDs by retailers.

Thank you for taking the time out of your day.  I hope the information I have posted is helpful.  If you have any questions or comments please feel free to contact me anytime at expert@newindustrytips.com

Marc Smilow

Contacts you might find useful regarding Mechanical Publishing.

HARRY FOX AGENCY

www.harryfox.com

AMERICA’S MECHANICAL RIGHTS SOCIETY

www.amermechrights.com

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