Artists want to know WHERE IS THE MONEY?  Part I

Part of earning a living from art requires knowledge.  Every artist wants to earn a living from their music.  So where is the Money?  Learning and understanding the business of music can make the difference between music being a hobby or generating income. 

Every artist starts this journey and wants to be successful.  They quickly learn that there are currently 40,000 tracks being uploaded daily to Spotify and music is plentiful since the birth of home recording.  This means the competition is fierce and only the “A” listers seem to be living the good life.  However, you are probably missing out on monies due to you.  Read on to learn what you need to do to collect your royalties.

Understanding How the MONEY is generated is a core element to getting PAID. 

To begin you MUST understand music copyright and publishing.  This subject is not glamorous and most artists gloss over it.  Artists need to understand that they lose it is to their detriment if they do not grasp a basic understanding,  if only to know, how to best go about collecting these monies or engaging a third party to help administer your catalogue such as Songtrust. 

What is publishing income?

Publishing is commercial use of music created by composers (a.k.a. producers) and writers who compose melodies and lyrics, collectively known as Songwriters.   Publishing gets you paid!  How?   Publishing can be done by the songwriters themselves or by an assigned representative which is a publisher.

To begin to understand how you get paid you must first have a basic understanding of music copyright.    

Copyright

As an artist you create music, whether you are a composer (producer) write melodies or lyrics or perform these songs.  Once these creations are in a tangible form recorded or written on paper they are automatically copyrighted. The person who owns the copyrights gets to commercially exploit them for payment.

A musical composition is a piece of music, in part or in whole.  The authors are typically the composer (producer), the artist who creates the melody and the person who writes the lyrics (usually the same person). The act of creating this work of art (music) is considered a form of intellectual property and is covered by Copyright law.  The songwriters that create these works become the legal owners of the copyright.   Typically, the producer gets 50% and the writers of the melody and lyrics get the other 50%.  However, the songwriters may agree to a different split which is memorialized in a writing called a “split sheet”. 

What rights does ownership give you?

Copyright ownership allows you the right to say who can reproduce, distribute, perform publicly, display and create derivatives of your music.  These ownership rights can be fully transferred and assigned to others, and also allow licenses to be granted for the use of your music in exchange for royalties and/or upfront payments. 

The 2 types of Music Copyrights are:

Performing Rights (PA) Copyright

The PA copyright belongs to the underlying composition consisting of the music production, melody and lyrics.  This can be owned by multiple people, including but not limited to, the songwriters and /or publisher.  The owners of this copyright are PAID mechanical royalties, performance royalties, and for licenses the music generates.

The Sound Recording (SR) Copyright

The SR copyright is for the particular performance of the song, which is fixed in a recording.  The SR owner only has rights to that particular recording of the song and not the underlying composition.  This is typically called the “master” and owned by the Label.  Income for the “master” is generated from distribution, licensing and the use of samples or remixes.

If you own the PA copyright how do you get paid?

Mechanical Royalties:

Mechanical royalties are generated by the reproduction of a song, such as on physical copies, or in digital downloads like MP3s or streams. This permission is issued via a mechanical license, and the mechanical royalties are then paid out to the owner of the PA copyright. The statutory rate is set by the Copyright Royalty Board (CRB), a panel of three judges in DC who meet every few years to set the rate.  The statutory rate is currently 9.1 cents for every song less than 5 minutes in length and 1.75 cents per minute over five minutes. 

Mechanical licenses can be issued directly by the writers (or their publishers) to the requesting party, or from a ‘mechanical rights society (MRS)‘ such as Harry Fox or Music Reports.   These companies issue and administer the mechanical licenses, collect the owed funds and account back to the right holders. In exchange, they take a percentage of gross revenues. Each type of mechanical reproduction comes with its own process of collecting and payouts, as well as pay rates.  Registration, administration and diligent accounting is critical.  Currently, the most significant source of mechanical royalties is generated from streaming platforms such as Apple Music and Spotify. 

Mechanical royalties are generated by: Record sales (vinyl, CDs), Digital downloads, Online interactive streaming (e.g., Spotify and Apple), Ringtones, Recorded cover songs, and Film soundtracks In the U.S. However, the most significant source of mechanical royalties currently is generated from streaming platforms such as Apple Music and Spotify.  So if you are not set up to collect your mechanicals you are leaving money on the table.

Performance Income:

Whenever a composition is ‘broadcasted‘ or ‘used in public‘ or a “public performance” the songwriters are owed a royalty.  What does this mean?  This means that any time your song is played  over terrestrial radio (AM/FM radio), network and cable TV, Internet radio/non-interactive streaming (e.g., Pandora), Online interactive streaming services (e.g., Apple Music or Spotify), played over the speaker system at a live venue, in a restaurant, bar, any type of store, fitness clubs, jutebox, at a sports game, or in an elevator, or performed at a concert by you, the songwriter, or as a cover by another person you are owed performance royalties.

These royalties are paid by establishments and businesses and are collected by the Performing Rights Organizations (PROs).   The PRO’s’ issue licenses to the users by offering them a ‘blanket license’, which is basically a free pass to use all the material in the PRO’s catalog, for a fee. They then divide these fees and send the writers / publishers their deserved share. These societies administer, police income and issue licenses for the public usage of repertoire that’s signed up with them. In the USA there are three major PROS’s: ASCAP, BMI and SESAC. 

To maximize public performance royalty income, it is highly recommendable to sign up with a Performing Rights Organizations (PROs) directly as a writer, and also as a Publisher account if you are not currently represented by a Publishing Company. 

Synchronization:

A music synchronization license, or "sync" for short, is a music license granted by the holder of the copyright of a particular composition, allowing the licensee to synchronize ("sync") music with some kind of visual media output (film, television shows, advertisements, video games, accompanying website music, movies, trailers and more. Most sync placements are instrumentals so make sure you have this readily available as time is of the essence when trying to get a sync placement.  While the owners of the copyright can look for these opportunities it is labor intensive and takes a lot of time. You may be better served having a publisher, sync representative company, or sync library help you monetize your catalogue. 

Sync representative companies such as “Terror Bird” typically sign exclusive contracts with artists in order to pitch specific songs and the split rate for these types of contracts can range from 35%-50%.

Music libraries on the other hand are platforms that make your tracks available for licensing to potential customers like ad agencies, YouTubers, videographers, indie filmmakers, music supervisors on TV shows. The library typically charges a 50% rate of the revenue earned from sales of licenses on their platform. Music libraries main clients are the licensees and not the artist. Assuming you’re not exclusively signed, you should upload your catalog to a number of non-exclusive synch libraries.  Most of these companies have online platforms where they showcase the repertoire they represent, and label it according to style and mood. Their clients can then browse their libraries in search for that specific track they need.

Up-front fee is ONLY one part of Sync Performance Royalties In addition to a sync fee every time the production is broadcast there are performance royalties payable to songwriters and publishers via their collection society. The royalties generated for audiovisual performances originate from the license fees paid to your collection society from the broadcaster or music user, and are calculated by measuring how the song is used in the production, for how long, the time of day or night the production airs, and on what network, for example.

Note:  If you are a composer (producer) and signing an exclusive publishing agreement with a company (such as Kolbalt, Warner Chapell etc.), make sure to find out if they have an active synch department.

Micro Sync:

A less frequently discussed form of royalty comes from micro-sync. These royalties refer to the revenue earned from the use of your music synchronized with a moving image in smaller or bulk uses in user-generated content (UGC), such as on platforms like YouTube, Vimeo, and TikTok and more. You can generate some monies if you allow your music to be shared on a video platform in a music video, instrumental version, lyric video, dance video etc.  Each platform pays out differently for the use of the music so you need to do your research. 

Theoretically, the person who uploads a video that uses music that he does not own needs to get permission from both the PA and SR copyright owners if it is shared online. It would be impossible for a publisher or label to keep up with the large number of requests for all the videos being uploaded to Social media, and would carry a very low price point for use.

Instead, many social media platforms such as YouTube, TikTok, Facebook, IG and Vimeo sign agreements with publishers, labels, and distributors which then grant the platform the right to host videos using their entire catalogue.  In return, rights holders can collect microsync royalties generated by the videos that use their music.

How is this tracked?  One example you might be familiar with is You Tube.  To find out where copyrighted content has been used, YouTube has introduced the Content ID system to find out where copyrighted material has been used. Once your music has been matched up, the video uploader will get an inquiry by YouTube asking whether they have received permission to use your content.  If they haven’t, You as the copyright owner can either allow monetization and allow the video to remain up, or tell the platform to take the video down.

Remember

Performance royalties are tracked, collected, and paid through your affiliated collection society such as a PRO like ASCAP or BMI in the US or a CMO outside the U.S. You will need a writers account and a publishing account if you are an in

Mechanical royalties are tracked, collected and paid by organizations that administer mechanical licenses, such as Mechanical Rights Organizations (MRO) like the Harry Fox Agency (HFA) or Music Reports in the US, and paid out by your publisher or publishing administrator such as "Songtrust". 

These concepts are very important as most people leave ½ their revenue on the table and never understand they are losing money that is owed them!!!!

Please feel free to contact me with any questions at [email protected].  And, for those trying to navigate the tough Indie music business, please check out my book, For the Record book and course to get a deeper understanding of the music biz in order to SAVE TIME and MAKE MONEY.    Thanks, Debbie