John Doe is the founder of the seminal Los Angeles punk group X, a solo artist and actor. John answers questions from our community members in the WWJDD? blog. Photo by Autumn de Wilde.

A Question from Scott in Maine

Hi John, First off I'm a huge fan of X, and your solo albums/CD's.
'Forever Hasn't Happened Yet' is a favorite.
Now, I'm a drummer and have only been included in songwriting
percentages on 2 or 3 occasions by generous and realistic, non
egocentric individuals. The rest of the time I'm told to forget it,
you're just the drummer. I feel the drums add a vital and even
essential part to most songs you hear on the radio, and beyond. Why
has the system been set up to not include drum parts ?
Realistically, the drums are almost always 'Written' by the drummer
with his past experiences that led him to a particular session/gig or
whatever. I have been playing most of my life, gigging and recording
for 25+ years. Now, again, I'm in a dilemma. I was verbally told I
would be cut in on publishing/songwriting for a debut CD, then after
recording is over, I'm out. We mutually parted but no mention of
previous verbal agreement. (with two members). They want to pay me a
small fee for the recording, and that's it. Any suggestions?

Sincerely,

Scott 

What Would John Doe Do?

Hey Scott,

Hmmmm . . . this is somewhat of a moral dilemma.
First, I would suggest that you write words, music & melodies; that way you would be assured your writing & publishing percentage. That's sort of the legal bottom line.
Many bands, early on, split writing & publishing money to keep all the band members afloat. When they're more established, the non-writing members forego their cut because the gig money, recording fund, whatever, is paying their bills. IF, you were told your contribution was important enough that you deserved a credit, then they should keep their word & you have every right to speak up & demand your share.
I'm quite certain that, legally, even if an instrument has the "hook" to a song; they are not considered a writer and do not share that credit or publishing. Unless the writer gives them a share. We all play our instruments & develop the song the best we can. That's why people get paid for recording sessions and if they're great players, the pay reflects that ability or creativity. But if there was no structure (melody, words & music) then there would be no song to contribute your part to. For instance, would Greg Leisz be considered a writer for playing his amazing pedal steel parts on kd lang records? There were X songs that I wrote entirely but included Exene as writer because she either edited or inspired the song. On the other hand if it's a "jam" that turns into a song, I would say that everyone playing that jam deserves a writers' credit & therefore publishing.

Hope this helps. thanks for writing & as always,

best of luck,
JD

If you have questions for John Doe about music, the music business or life feel free to email them to wwjdd@knowthemusicbiz.com.

For more information on John Doe check out theejohndoe.com or YepRoc.com .

 
 

 

 

Laura Williams manages SoundExchange’s communications strategies, including the new, better-than-ever www.SoundExchange.com. She holds degrees in Political Communications and Writing from Susquehanna University.

Imagine you’re at a busy metropolitan airport. The luggage carousel goes around, and people stop by, check the luggage tags, and pick up their belongings. As the day wanes, though, there are still lots of suitcases left on the conveyer belt with no luggage tags and no one to claim them. Now, what if I told you that those suitcases are all filled with cash – stacks of bills totaling millions of dollars – and some of it might be yours.

 

This is the problem created by the music industry’s awful lack of standardized, quality metadata. Before the late 1990s, copyright law offered no compensation to the recording artists or copyright holders of sound recordings – unlike songwriters and publishers, these creators of music didn’t earn a royalty when their work was used by music services. Now, that loophole in the law has been closed (at least for digital services – AM and FM radio are still unfairly exempt from paying their fair share, but that’s another story). As we discussed in a previous post, the Copyright Office appointed SoundExchange to collect those royalties and distribute them to the artists and owners. Before that happened, no one had an incentive to keep a database of contact information on recording artists – who played on which track, and how to reach them now – or copyright information – which label or artist owned the masters on any track. So when music services began sending royalties to SoundExchange for the tracks they’d played, we faced an enormous challenge.

 

There are three major areas of data failure along the path of getting money to artists and copyright holders. One: the failure of artists and copyright holders to register with SoundExchange. Two: the failure of the services which use music to properly report what they’ve used. Three: the failure of copyright holders and artists to provide good metadata with tracks before release, and to claim their repertoires after release. But there’s good news – all of these are problems we can work toward solving, so that artists and copyright holders can get paid faster and more efficiently. Let’s look at each data gap, and what we can all do to help fill in those gaps.

 

Artists and copyright holders fail to provide or update registration information with SoundExchange.

 

Services which use music pay SoundExchange royalties for each recording they play.

 

This happens whether the artist has registered with SoundExchange or not, whether they know about us or not, because it’s required by law. That money is then held in escrow for the artist or copyright holder until they register. An artist who registers today can claim their funds all the way back to the first collection in 1996 – but they MUST register with SoundExchange. SoundExchange can’t absorb or spend the unclaimed money – we’re a non-profit – but without the necessary payment and contact information, the money languishes in a marked account, waiting to be claimed.

 

There have been occasional grumblings in the media about SoundExchange being unable to “find” artists – as though having a website for someone is the same as being able to pay them. As an independently audited non-profit, SoundExchange needs registration paperwork, signed by the payee, a state ID to prove identity, and tax forms to be able to cut a check. Many artists do not register, even after being contacted four, six, or more times. Their money just sits here until they come and register.  After registering, all artists and copyright holders to make sure that they keep their contact information and payment information up to date.

 

2. Services which use music and pay royalties to SoundExchange fail to properly report the tracks they have used.

 

A huge percentage of this responsibility for providing good data falls on the music-using services, who must file the proper reports of use with the royalties they owe to artists.

 

Reports sent to SoundExchange which are supposed to tell us whom to pay often contain entries like “Playlist unavailable” or “Artist Unknown”. Sometimes this is because the services do not have accurate information on the songs they play.  For instance, a recording owned by one rights holder may be licensed to another for use on a soundtrack and the label who released the soundtrack may be incorrectly credited as the owner of that recording.  Sometimes this is negligence on the part of services that use the recordings. Under the law, services are penalized for paying royalties late, but there is no penalty for providing bad data, unusable data, or even no data at all. SoundExchange has millions of dollars which came in with no data at all attached. That means we don’t know who the royalties belong to, and we can’t send them out. Further millions are tied up in sloppy reporting: large sums held for “Various Artists,” “Playlist unavailable,” “Artist Unknown,” and “Station break.” Among our top 25 unpaid artists, you’ll find “Beethoven,” who never created a sound recording, and was reported instead of the orchestra who earned that royalty. Some of these funds will never be able to be sent out - there simply isn’t enough information to find out who earned the royalties. But in cases where the track-level information may be traceable, SoundExchange staff sort through millions of these lines of data to correct them, and get people paid. They correct misspellings, track down bad abbreviations and comb through the myriad other variations we receive. And that doesn’t take into account someone like Texas R&B/Gospel artist Kane West, (who may be earning or losing royalties due to misspellings in reported logs containing Kanye West) or hundreds of other near-duplicates which must be untangled with track-level corrections.

 

SoundExchange processed more than 7 billion performances last year. Even if 93% of the log entries we received last year were perfect, that still means 49 million had to be adjusted by hand by our staff. Incomplete and incompetent reporting continues to be a massive problem, as music services use music without providing the proper information to help get its creators compensated.

 

3. Copyright holders and artists fail to provide good metadata with recordings before release, and fail to claim their repertoires after release.

 

We have very significant sums of money held in escrow for “Promo Only,” “Self-Released,” and “White Label.” When sending your releases to all radio (AM & FM, Internet, satellite, cable), make sure that they contain all the proper data services need to report accurately, so SoundExchange can get you paid. We have developed an innovative system called “PLAYS” (Performance Log Archive of Your Songs) which allows any artist or copyright holder to access the performance logs provided to SoundExchange. If you see an incomplete or incorrect listing in PLAYS for your recordings, you can send a message to SoundExchange’s Customer Care department to make the correction. We’ll verify and adjust the performances accordingly.

 

As the first organization to really confront issues of artist and copyright holder data in its day to day operations, SoundExchange is proud to also be on the forefront of helping to resolve them. We have already had several meetings this year with copyright holders and directors of organizations at the highest levels to work on developing consistent methods of encoding and reporting metadata. We have met with the heads of international groups facing the same problems, and worked toward strategies to improve payments.

 

SoundExchange encourages any label or independent artist (anyone who owns master recordings) to join us in our upcoming webinar, a joint project with A²IM, The American Association of Independent Music, to address these and other concerns in getting independent artists and labels their proper royalties. The live webinar will take place Wednesday, February 10 at 2pm ET, and will include a demonstration of the PLAYS data correction mentioned above. Register to attend here: https://www1.gotomeeting.com/register/915090177, or check out our blog after the event for the rundown.

 

So before those suitcases full of unclaimed money go around the carousel another time, make sure you slap a luggage tag on what’s yours. Register with SoundExchange, and make you’re your friends, colleagues, bandmates and contacts are registered, too. Reach out to your favorite digital music services and ask them to report accurately on what they play. Make sure you send out your tracks with all the data you can, and follow up in our PLAYS database to claim your tracks if they’re misreported. Help SoundExchange help you get paid when you get played.

 

 

 

A graduate of the University of Texas and Harvard Law School, Passman is listed in The Best Lawyers of America. He is the author of the nonfiction bestseller All You Need to Know About the Music Business , which has sold more than 150,000 hardcover copies in print. Passman has lectured extensively on the subject of the music industry, including teaching a course at the University of Southern California Law School's Advanced Professional Program, and lecturing for the UCLA Entertainment Law Symposium, Harvard Law School, the American Bar Association, the Practicing Law Institute, the USC Entertainment Law Institute, and the Los Angeles Copyright Society.

 Question:

Assuming an independent musician has no record label, is the sole songwriter and owns their copyright and has digital distribution for a flat annual fee - How would they earn royalties from the sources below? Who collects and pays the royalties for each?

- Non interactive radio (Pandora) 

Answer: There’s some question whether Pandora is “interactive” but for now, a court has held it is not. Assuming that’s correct, there is a compulsory license under the copyright law for the masters, and the monies are collected by a nonprofit company called Soundexchange.

ASCAP / BMI (performing rights societies) collect for the songwriting.

The artist (who is also the record company and publisher in this example) affiliates with each of these companies for payment.

- Streaming services (Spotify) 

Answer: Interactive streaming requires a license for the master from the company; there is no compulsory license, so they can charge whatever they can get. There are “aggregators” (like Tunecore and Orchard) who put together small companies and re-license the digital rights to masters. That would make sense for an owner/user like this example, because it’s hard to get streaming services to make one-off deals.

Songwriting is collected by ASCAP / BMI.

-  Digital downloads (iTunes) 

Answer: Master rights are also licensed directly, or through aggregators, as above.

Publishing rights are done directly, or through Harry Fox.

- Subscription download service (eMusic) 

Answer: I assume you mean a streaming subscription with a number of downloads included? If so, they need all the licenses above.

- Video streaming (YouTube) 

Answer: The record company makes a deal with the site. Songwriting isn’t totally settled. Mostly, the record company gets paid by the site directly, then pays the songwriter / publisher.

Laura Williams manages SoundExchange’s communications strategies, including overseeing the launch of a new, better-than-ever www.SoundExchange.com in coming weeks. She holds degrees in Political Communications and Writing from Susquehanna University.

You may have heard about SoundExchange lately. We’ve paid out more than $111 million in royalties so far this year, are out in front fighting for fair compensation for artists, and making sure the 43,000+ recording artists and 5,000+ copyright holders we represent are getting paid when they get played.

With all those artists and all that money, it’s surprising how many people don’t know about SoundExchange yet. If you've got questions about what SoundExchange is or does, check out our ‘What Is SoundExchange’ video:

Here's the upshot: when sound recordings are played on certain digital services, satellite radio like SIRIUS-XM, Internet radio like Pandora, those high-numbered cable channels like MusicChoice, or streamed as background music in some restaurants or stores, the artist who performed on that recording earns a royalty. So does the copyright owner, which may be a label, or an independent artist who owns his own masters.

The digital services who owe those royalties either have to make a deal with each and every artist and rights owner directly (a direct licenses) and cut them a check, or they can use the blanket permission set up by the government (a statutory license). If they’re eligible for the statutory license, that service can use any commercially-released track ever made, without asking for permission from the artist. The service writes a check to SoundExchange, and provides a report of use - basically, a playlist of every track they've used, and who the artist and copyright holder are for that track.

SoundExchange is the only service the government allows to collect those royalties. Our job is to sort through the reports, find out what percentage of the money each artist or rights holder is owed, and then send them a check for what all the services together owed them. That's harder than it sounds. We don't always get good data from the services that use your tracks - how are we going to distribute to "various artists" or "label unknown"?

More importantly, SoundExchange collects royalties for EVERYONE whose tracks are played, even if they haven't registered with us, even if they've never heard of us! SoundExchange has only been around since 2001, so we're still getting the word out to artists and rights holders that this royalty stream exists. Unlike our friends at ASCAP, BMI and SESAC (more on them later) we don't just collect for our members. But we need artists to register with us, or we have no way of knowing where to send the money. We have many ways of contacting artists, from social networking to database matches to one-on-one meet-ups at conferences and festivals, but it’s a big job. Our 43,000+ artists and 5,000+ rights holders spread the word to their friends and colleagues, and success stories are our best method of outreach. So get registered, get paid, and tell a friend.

If you're not registered, get registered. Don't worry, though- SoundExchange hasn't given away your royalties. Artists and rights owners who sign up today can collect royalties they earned all the way back to the beginning of collections in 1998. We get a few hundred new registrations every month, and our online registration site has them coming in faster than ever. Remember, it’s always 100 percent FREE. We’re just giving you money that’s already yours. 

Another big difference between SoundExchange and other performance rights societies is that we advocate and expect per-play reporting from services. That means that instead of relying on sampling reports – four weeks a year or a few days a month – to determine what to pay, we ask services to report every track they play, every time they play it. In fact, 95 percent of the money we distribute is accompanied by ‘census data’ – that is, every track played, every time it’s played. We strongly believe this is the fairest way to distribute, and to make sure royalties get to the people who’ve earned them. We still accept sampling data from a few webcasters as a special accommodation, but we believe that census data is the way of the future, and SoundExchange is on the cutting edge of that movement. 

SoundExchange is a nonprofit. None of our staff of forty-five music lovers is in this for the money. We come to work every day excited about helping the people who create music get paid for their work. A lot of us are musicians ourselves, and some are recording artists. Our Board of Directors, who set our organization’s course and priorities, is evenly split between the representatives of recording artists and of rights holders. We're run by the people we pay, and staffed by people who believe in what we do.

When we’re out on the road spreading the word about SoundExchange and digital performance rights, we hear and answer the same questions over and over. So in case you’re wondering, too, here are a few of our top FAQs.

Q: You have money for me? And it’s free? What’s the catch?

A: There isn’t one. Zero, zip, nada. We were set up by the Library of Congress and the Copyright Royalty Board to collect money you’ve already earned. It’s your money, waiting here for you. You just have to tell us where to send it. That’s all there is to it. No registration fee. No Nigerian email addresses. Promise.

Q: I’m already a member of ASCAP, BMI or SESAC. Can I be a member of SoundExchange, too?

A: YES! We collect for a different royalty, for a different copyright than our friends at these organizations. They pay songwriters and publishers, the creators of music and lyrics written down on paper, and we pay recording artists and copyright holders, the creators of the master sound recordings. We encourage you to be a member of one of these organizations, AND of SoundExchange. They’re in no way in conflict.

Q: How does SoundExchange make money?

A: As an organization, we don’t. We’re a non-profit. We do retain a small percentage of the royalties we collect to pay our staff and keep the lights on. Although all performance rights organizations are funded this way, we have the lowest rate in the industry.

Q: Who does SoundExchange pay?

Of the royalties earned on a track, we pay 50% to the copyright holder and 45% directly to the featured recording artist. 5% goes into a fund which compensates backup musicians and session players. Independent artists who own their own masters keep 95%! 

Q: If I register, will I get paid right away?

A: Although we’re improving efficiency every day, SoundExchange can take up to 180 days to fully process a registration, including tax information, and compare it to our database of 7 BILLION performances. If those searches show you’ve accrued more than $10 in royalties, you’re eligible to be paid right away by Direct Deposit. Our average annual payout per registrant is about $3,000.

Q: What don’t you collect royalties for?

A: SoundExchange DOES NOT collect for digital downloads (like iTunes or “podcasting”) or “on-demand” plays like YouTube or MySpace, where a user can select and immediately play the song she wants to hear. SoundExchange also does not collect for the streaming of any audiovisual work, including music videos.

We also don’t collect royalties for AM and FM radio plays. Why? Because artists and copyright holders don’t get paid for radio plays. When you hear “Respect” on the radio, Otis Redding, who wrote the song, gets paid. Aretha Franklin, who sang the song and made it famous, doesn’t see a penny. Surprised? Most people are. Sound unfair? We agree. That’s why when our members authorize us to use a little bit of their money to protect and promote their rights, SoundExchange uses some of that to help out a group called musicFIRST (Fairness in Radio Starting Today). Our allies at musicFIRST are trying to close the loophole in copyright law which lets over-the-air radio stations to use your music without compensating you. Check out their website at www.musicfirstcoalition.org, and get in touch with your representatives in Congress, and let them know you support a full performance right for artists.

So if you hadn’t heard about SoundExchange, or you thought digital performance rights were just too good to be true, now you know. Get registered, get a friend registered, and let us help you get paid when you get played.

Laura Williams

The goal of the Indie Artist X Project is to develop a basic, actionable music marketing plan designed around simple strategy, prioritization of tactics, easy to use tools, and a reasonable budget that can be implemented by any artist who has the inclination to follow it. About.com Music Careers, Artists House Music, Hypebot, KnowTheMusicBiz.com, MusicianWages.com and Revolution Number 3 have banded together to create this community based music marketing plan.  We will be working with one anonymous artist to design and implement this music marketing plan then track and report the actual results over a four month period. To keep up with the latest news on the IAXP follow the project on Twitter and Facebook.

Below are the Indie Artist X Project statistics for the month of July. Since July is the first month of the project we plan to use these numbers as our baseline. Now the goal is to see if we can implement marketing strategy and tactics that will move all these metrics in a positive direction through the remainder of the project and beyond.

July Stats:

Band Metrics Score:            183 / Bronze

Website Unique Visitors:    355* (10 days only)

Website Total Visitors:        628* (10 days only)

Website Sales – CD’s:        Waiting on Report

Website Sales – MP3’s:      Waiting on Report

Website Sales – Merch:      Waiting on Report

Fan List:                              739

Live Show Attendance:      1120

Live Show Net Sales:          $1650.00

Live Show CD Sales:          $510.00

Live Show Merch Sales:     $460.00

Distribution Sales:               Waiting on Report

Licensing Royalties:             $0.00

BMI Royalties:                      $0.00

Soundexchange Royalties:  $0.00

MySpace Royalties:             $0.00

 

Some notes about July’s IXAP reporting:

• Band Metrics is a relatively new service so it’s not yet entirely clear how to interpret the score of 183. It’s assumed that if the IAXP marketing efforts are successful that the Band Metrics score will increase accordingly.

 

• Indie Artist X launched a new website on July 21^st so we only had 10 days of website traffic data to report during July. The indie label that released IAX’s two previous records hosted and managed the original website and didn’t provide site traffic details to the artist.

 

• The Artist’s indie label also handled direct e-commerce transactions and fulfillment from the artist website and only provided semi-annual reporting so we don’t have any data to report for website sales during July. The label is winding up their operations and has agreed to let IAX handle direct website sales and fulfillment moving forward. Since IAX is now using the Audiolife for ecommerce sales and fulfillment on their website we will have monthly sales figures to report in the upcoming months.

 

• Distribution for the indie label is handled through InGrooves. Again, since the label only provides semi-annual reporting we don’t have distribution sales for report for July. The label has agreed to allow Indie Artist X to work directly with the distributor moving forward so we expect to have more frequent and better distribution sales reporting available in the months ahead.

 

Where are the streaming and online radio royalties?

Many indie artists have long complained about not receiving PRO royalties for terrestrial radio airplay. The census taking methodology the Performance Royalty Organizations (ASCAP, BMI and SEASAC in the US) have traditionally used to track terrestrial radio airplay falls well short of capturing actual plays for individual songs.  In defense of the PRO’s, trying to track actual terrestrial radio airplay for every individual song from every single radio station is no easy task since up until the last few years terrestrial radio stations traditionally used manual, hand written logs to track what songs were played. Given that compiling aggregate terrestrial radio airplay data from hand written logs is all but impossible the census methodology did seem somewhat reasonable, even if it was bound to exclude plays and ultimately royalties for many indie artists.

I am a big fan of the opportunity Internet radio provides for indie artists. However, after reviewing the Indie Artist X statistics from July it’s hard to comprehend why there are simply no royalties from BMI or Soundexchange at all. A quick check of IAX’s profile on Last.fm shows the artist is approaching 4000 plays. I personally hear Indie Artist X’s music daily on my Pandora station. Despite clearly receiving Internet radio airplay, being registered with BMI and Soundexchange and having their most recent record posted on multiple Internet radio stations for the last two years, Indie Artist X has never been paid any royalties for Internet radio airplay or on-demand streaming. Yes, IAX did write the songs and owns the copyright to all their music.

So where are the Internet radio and streaming royalties for Indie Artist X?

Is the problem that Last.fm, Pandora, Imeem, etc. are simply not reporting all their plays to BMI and Soundexchange? Are BMI and Soundexchange collecting royalties from the Internet radio stations but not paying royalties to Indie Artist X? Are the royalty organizations applying the same dated and flawed terrestrial radio census methodology to calculate Internet radio royalties even though the play data for each song is captured electronically and stored in databases by the providers?

These are all troubling questions. Admittedly, I don’t know where the breakdown in this process is occurring.  I’m no copyright attorney or topic expert but I’m operating under the assumption that the copyright law and court rulings that have set current royalty rates are supposed to apply to all artists receiving Internet radio airplay, not just those in the Billboard Top 200.

All of the above mentioned organizations and companies owe their very existence to the songwriters and musicians that create music.  It’s time they figure out how to calculate and pay royalties on a per play basis for all artists. Even a few thousands Internet radio plays deserve compensation.

Despite the very public debate and the tremendous amounts of time and money spent lobbying Congress and the Copyright Royalty Board over Internet radio royalties it appears the Internet radio providers and royalty collection organizations have left Indie Artist X out of the equation.

Garry Velletri is Senior Vice President of Bug Music. He has been with Bug since 1985 and is based in New York.

Music Publishing Terminology

The ownership and management of exploited music copyrights by licensing and registering certain rights and the collection of the resulting royalties and fees including mechanical royalties, performance royalties and synch fees.

Huh?

The world of music publishing is littered with obscure, misleading, and archaic terms; some of which have more than one meaning depending on the context. No wonder it all sounds confusing if not downright intimidating. Understanding the meaning of these terms and phrases will provide a useful base for understanding music publishing in general.

Copyright

Is it copyright or “copywrite”? Yes you wrote a song; but a copyright is never, ever referred to as a copywrite. There are two general rights covered in a music copyright: the authorship of a song and the ownership of a song. According to Copyright Law, you are the natural owner of every song you write until you assign the ownership to someone else. Every song is made up of two equal parts; not the lyrics and the melody but the writer share and the publisher share.

The writer share is semi-sacred. It represents the authorship of the song. While a copyright can change hands many times; the writer share remains the property of the author.

The other fifty percent, the publisher share, is the equitable share. It is what you can sell or buy. In this context it is known as the “copyright”. When a publisher acquires a copyright, it is acquiring the publisher share.

Control

The Publisher controls the writers share. The publisher licenses mechanical , print and synch rights on behalf of itself and the writer. These royalties and fees are collected by the publisher (the owner of the copyright) for both the publisher share and the writer share. It is the publisher’s responsibility to pay the writer. Performance royalties are the only royalty type where the writer can collect his writer royalties directly from the performing rights organization. Control means the publisher has the right to negotiate and execute all licenses.

Royalties

Ongoing earnings of licensed songs from each sale or broadcast.

Exploitation

In music publishing, exploitation is a good term. You want your songs to be exploited. Landing a song in a film or television show is an exploitation; somebody recording your song is an exploitation; releasing a record is an exploitation. When one of those songs from your record becomes part of a greatest hits package down the line - that's an exploitation. An exploited song that is licensed and registered opens revenue streams.

Royalties don’t just magically show up in your mailbox; It is the result of the publisher executing licenses and filing the proper registrations.

Registration

You or your music publisher registers your songs with a performing rights organization (ASCAP, BMI or SESAC) to get the song details in their database so the correct percentages of performance royalties can be attributed and paid to the correct party.

Your music publisher registers your songs with a ‘local’ publisher in a foreign territory so they can, in turn, register the songs with their local mechanical and performing rights societies (society being a fancy term for foreign mechanical and performing rights organizations) so the correct percentages of foreign mechanical royalties and the publishers side of performance royalties are attributed and paid to the correct party.

Licensing

The music publisher doesn’t sell songs to another artist to record or to be used on a TV show or film- they license it. There are four primary rights to license:

Mechanical rights — Back in the early twentieth century, there were two methods of distributing music: sheet music and player piano rolls. To differentiate between the two, early copyright law defined the royalties generated by the sale of these player-piano rolls a “mechanical” royalty for which you needed a mechanical license; after all, piano rolls were a mechanical contraption. The definition of Mechanicals through time went on to include Edison rolls, 78 rpm vinyl records,45 rpm records, 33 1/3 rpm long play records, cassettes, 8track tapes, cds and now digital downloads. It’s like calling your iPod a Victrola but the term stuck. A good way to think of it is mechanical royalties are for the sale of music.

Performing rights — Think broadcast. There are three performing rights organizations in the United States: BMI, ASCAP and SESAC. They are not music publishers or administrators. These “PRO”s have blanket licenses with radio stations, television stations, clubs, restaurants, stores, digital streaming services like Napster and so on. You should belong to one if you have any exploited songs. For the price of these blanket licenses (which vary depending on the size of the broadcaster) the broadcaster can play all the BMI, ASCAP or SESAC songs ‘til their heart’s content for a measured period of time. These ‘plays’ are tracked and the pool of blanket license money is divvied up proportionate to the number of plays and the value of plays. In other words, for example, a play on a major radio station is worth more than a play on a college radio station. Another example: a featured play on a television program is worth more than a background play on the same program. Performance royalties are generated from the broadcast of music.

Synch rights — short for synchronization this is the licensed right for a film or other audiovisual medium to use your song, to synchronize your music to recorded visuals, in an audio-visual product. It can be a commercial, a videogame, a film, a TV show or a website. A synch license usually produces a negotiated fee for certain rights depending on the usage. Yes, we are talking about rights within rights. For example, say it’s your lucky day and Mitsubishi wants to use your song in their new car commercial. With your approval your music publisher negotiates a synch fee with the music supervisor for the Mitsubishi spot which will allow them to use your song for, say, one year for national television plays for one flat fee. If they still want to use it after the one year or if they want to run it internationally or stream it on their website or put it on a promotional DVD for give-away, all of these uses are rights within the basic right and should most likely carry additional fees. (Since the Mitsubishi spot is broadcast it also produces a performance royalty)

Print rights — Sheet music, song folios: it’s pretty self-explanatory — but be careful-the term ‘publish’ has a few different meanings depending on how it’s used. Once a song is released or exploited in some way it is considered ‘published.' Once a song is filed with the Library of Congress for copyright it is considered published, it does not necessarily mean the song‘s notation and lyrics are published in print form. However, if the song’s written notation and lyrics are published in print or digital form for purchase, it will earn print royalties from the print license your publisher negotiated.

Functions of a Music Publisher

So now that you are armed with a basic understanding of these terms, you will see that a Music Publisher performs the following:

Administration

Secures copyrights, controls copyrights, executes a variety of licenses, causes songs to be registered with a variety of organizations and societies world-wide, collects royalties, disburses royalties, and more.

Creative Services

The Creative exploitation of copyrights or causing songs to be exploited by pitching songs to other artists and securing placements in Film, TV and commercials; networking and promoting its writers (further explanation invites a whole blog topic in itself)

Publishers are often able to provide critical funding in the form of advances against your future royalties and by covering the costs of recording demos of your songs.

John Doe is the founder of the seminal Los Angeles punk group X, a solo artist and actor. John answers questions from our community members in the WWJDD? blog. Photo by Autumn de Wilde. Click here to check out John Doe's new release with The Sadies, Country Club.

A Question from Michael in Brooklyn:

Mr. Doe,

I stopped in to ask a familiar question. I was in a contract agreement with a manager and he said he didn’t want to be my manager because we had an argument over him canceling a show because he didn’t trust the producer’s ear (mixing). The manager didn’t come to the studio for a month and didn’t hear the music we recorded. See the manager did hear the music before he cancelled the show. But now he’s not my manager and all the music I recorded is on his computer.  The producer made the majority of the beats, does he only get the producers fee of 2%? He didn’t write but one verse on one song. Does he get publishing or writer’s rights besides that one song?

Peace,

Michael

What Would John Doe Do?

Hey Michael,

Give all the songs new titles & re-record them w/ someone that you trust (maybe leave out the one w/ the verse written by the "producer").  Never sign manager agreements before you actually have something to manage.  Those "managers" are just trying to take advantage of you & yr art.  In this ridiculously litigious society people need to keep their music on their own hard drives, a very sad but true situation.
onwards & upwards
 thanks for writing,
Jd  

If you have questions for John Doe about music, the music business or life feel free to email them to wwjdd@knowthemusicbiz.com.

For more information on John Doe check out theejohndoe.com or YepRoc.com .

 

Kristin Thomson is Education Director of the nonprofit Future of Music
Coalition and co-owner of Simple Machines, an independent record label, which released over seventy records and CDs from 1991-1998. She also played guitar in the band Tsunami, which released four albums from 1991-1997 and toured extensively. She currently lives near Philadelphia with her husband Bryan Dilworth, a concert promoter, and their son, where she also plays guitar in the lady-powered band, Ken.

 

You don’t have to be a super-genius to notice that the music economy isn’t exactly stable at the moment. (Then again, neither is the rest of the economy). One thing is certain — sales of compact discs continue to plummet, and it’s tough to predict which of the new music services will thrive — or even survive — in this period of transition.

Check out this article in Digital Music News for a thoughtful look at the state of digital music in 2009, and a few salient predictions of where things might end up a little further down the road.

Launching a music site or service that’s simultaneously affordable, appealing to music fans and fair to rightsholders is clearly difficult, especially in today’s economy. It’s a tough time for many of these new sites and services, but articles like the one above always get us thinking about those who create the music itself. From the beginning, FMC has stood for the right of musicians to be paid for their work, so we want make sure that artists aren’t overlooked in the ongoing experimentation with new music business models.

This is why today we’re releasing “Principles for Musician Compensation in New Business Models” (or “Artist Principles”) — a set of guidelines for ensuring creator compensation in an evolving music landscape. Crafted by Ann Chaitovitz with input from over a dozen industry experts, the Principles represent an important first step in ongoing discussions about musicians’ revenue streams.

We’re called the Future of Music Coalition, so we like to look ahead. In fact, the Principles are primarily meant to apply to music services that have yet to be brought to market. But, FMC also knows it’s important to learn from the past. The majority of the Principles are based on what we’ve observed from the launch of existing services. For example, you might recall our earlier post about the launch of MySpace Music, which saw the major labels enter a joint venture with the social network that reportedly included a cut of the advertising and equity stakes in the enterprise. Yet it remains unclear if or how the labels plan to share that equity or ad dollars with their artists.

And that’s just one example. With music moving beyond the physical (and even download) model, it becomes increasingly important to make sure that musicians are fairly compensated. Regardless of the system, artists deserve to be paid for their work — especially considering it’s their music that’s attracting listeners (and hopefully, dollars) to that service.

But without reasonable guidelines, creators could be excluded from any revenues generated by these new models. Hence, the Artist Principles. We’ve even drafted a point-by-point explanation of each principle, offering examples and what we think are possible ways forward, which you can read here. Just trying to be helpful.

Clearly, there’s no silver bullet solution to the challenges currently faced by artists, musicians and entrepreneurs. Yet, as always, we think the best thing to get a conversation going. And the Artist Principles surely will.

 

Like almost everything else in the music business, it seems the ways artists earn royalties and actually get paid is confusing and a bit of a mystery. Below is an overview of how the typical royalty streams for musicians are earned, collected and paid in the music business.

Before we get into the specifics of royalties it’s important to understand the difference between a songwriter and a recording artist since royalties for each are often times different.

A Songwriter is typically the person (or people) who write a song’s lyrics and melody. A catchy guitar rift doesn’t entitle the guitar player to any songwriter royalties unless that person is also credited with contributing lyrics or melody to the song. Ultimately, the people who receive songwriter royalties are the ones that are listed as a songwriter when the song is registered with the US Copyright Office . The majority of royalties in the music business are paid to songwriters. It’s much more viable for a songwriter to build a long-term career in music than it is for a drummer or guitar player who doesn’t write lyrics or melodies.

The Recording  Artist  is the entity collectively considered “The Band”. This usually includes all members of the band. For example, all the members a band like The Arcade Fire would be considered the “recording artist” for royalty calculations purposes. Recording artist can also mean a solo artist.  Even though an artist like Pete Yorn is backed by session musicians in the studio during a recording session, the session players are not usually entitled to recording artist royalties. In this example, Pete Yorn would be considered the “recording artist” for royalty calculations.

Now, let’s take a look at the different types of music business royalties.

Royalties from Sales - Royalties from sales are royalties paid by the record company to the recording artist based on sales from their music. These royalties are typically based on a percentage of sales, 10% for example. The calculations used for determining royalties from sales can be quite complex and are a negotiated as part of the artist’s overall recording contract with the record company. Payments of royalties from sales to the recording artists do not start until the record company has recouped all the expenses they incurred for making, promoting and marketing the record. Recoupable expenses can include the costs of recording, producing, mastering, manufacturing, promoting and marketing the record, tour support, video production and any other related expenses the label includes as part of the recording contract.

It is quite common for a recording artist to never receive royalties from sales (unless, of course, their record is a huge hit) due to the way royalties from sales are structured and the high costs for the record label of getting a new record to market.

Mechanical Royalties - Mechanical Royalties are paid to the songwriter by the record company for the right to reproduce songs for public distribution. Mechanical royalties are paid on a per song basis for physical sales (CD’s, Albums) and permanent digital downloads (iTunes). Mechanical royalties are determined by multiplying the mechanical rate by the number of tracks on each record or CD that is sold. As of January 1, 2006 the statutory rate is 9.10 cents for a composition five minutes or less in length. For example, a record with 12 tracks on it that sells 50,000 copies would generate $54,600.00 in mechanical royalties (12 tracks X $.0910 X 50,000 sold copies) that the record company would have pay to the songwriter. In the US mechanical royalties are collected and distributed by The Harry Fox Agency .

Earlier this year an agreement was reached for limited download and interactive streaming services to pay a mechanical royalty of 10.5 percent of their revenue, less any amounts owed for performance royalties. It is currently unclear how the calculation for paying songwriters from these revenues will be calculated.

Mechanical royalty payments are typically not reliant on the record label recouping their expenses from recording, producing or marketing the record like royalties from sales.

Public Performance Royalties – Public performance royalties are paid to songwriters for use of their songs by radio stations, restaurants, bars, TV / cable networks, retailers, online services or any other establishment that plays / streams licensed music heard by the general public. These royalties are collected and distributed in the US by the major performing rights organizations, ASCAP , BMI or SESAC . Public performance royalties are calculated using several variables and not on a per play basis. Songwriters should register their works online with one of the performing rights organizations in order to receive royalties for their work. However, it’s common for songwriters to not receive any public performance royalties until their song is publicly performed heavily.

Digital Performance Royalties – Digital Performance Royalties are paid to recording artists and copyright holders (usually the record label if there is one involved) when their sound recordings are performed on digital cable and satellite television, music, internet and satellite radio providers. SoundExchange collects and distributes digital performance royalties on a pay per play basis. Recording artists and copyright holders should register their work online with SoundExchange to receive royalties for their work.

Synchronization Royalties – Synchronization Royalties must be paid for a song to be used or “synchronized” with a movie, TV show, commercial or video. Synchronization royalties are usually paid in two parts. First, the copyright holder (usually the record label if there is one involved) is paid a fee for use of the song. Second, since the song will be publicly performed as part of a movie, TV show, commercial or video a public performance royalty must be paid to the songwriter through their performance royalty organization of record. Fees for synchronization range widely and are usually negotiated with the producer of the movie or TV show.

Print Music Royalties - Print Music royalties are paid to songwriters based on sales of printed sheet music. Royalties are typically 10% of the retail price of the sheet music.

Please keep in mind that royalty calculations can be very complex and for the sake of brevity this is only a broad brush overview of how royalties are generally structured without getting into the nuances of copyrights or music publishing . For more information on royalties be sure to check out our wiki section on the topic .

 

 

 

Artists no longer have to wait for a record label deal to get their music recorded or distributed. Self releasing one’s own material is now a very viable option. However, if you are self releasing there are a few business items that will need to be tended to before making the music available for streaming or purchase. Please note that this information is for USA based releases.

Determine Songwriter Ownership Percentages

Anyone who contributes lyrics or melodies is technically entitled to an ownership percentage of the song. It’s always best to work out the ownership percentages in each song before making any of the work commercially available. The best way to avoid any misunderstandings or disagreements is to fill out a simple Collaboration Agreement that spells out the authors and ownership percentage of each song in writing. See a sample Collaboration Agreement here: DOC or PDF

Register Your Work with the Copyright Office

The only real way to protect your work is to register it with the US Copyright Office. Artists have been telling each other for years all that’s required to copyright a song is to mail a copy to yourself and keep the date stamp on the envelope as proof of the date the song was written. If you don’t want anyone else to exploit or misuse your work fill out the required paperwork and pay the fees. It’s well worth the effort to protect your songs. To register Musical Compositions fill out Form PA and for Sound Recordings fill out Form SR. There is a lot of helpful information on how to fill out these forms online and even several YouTube videos on the topic. To learn more about music copyright check out our wiki on music publishing.

Obtain a Mechanical License for any Cover Songs

Any cover songs that have been recorded and will be included in the new release must be licensed. A mechanical license can usually be obtained from the Harry Fox Agency . If you plan to manufacture and distribute less than 2,500 copies, HFA now offers an online licensing option called Songfile which can simplify the licensing process. Any reputable CD manufacturer, distributor or online music retailer will require you to have these licenses before they duplicate your recording or offer it for sale.

Order a UPC Code for any CD’s or Vinyl that will be pressed

A UPC Code , commonly referred to as a bar code, uniquely identifies the manufacturer, label, artist, catalog number and format of a particular release. A UPC code must be obtained and attached to the packaging if the release will ever be sold through retailers. UPC codes can be obtained directly from the Uniform Code Council but it can be much easier to just obtain them through the manufacturer or distributor.

Have an ISRC Code Created for Each Track

ISRC or International Standard Recording Codes are unique identifiers or digital footprints for each track on a release and are used by digital retailers to track and report digital sales. ISRC codes are typically either encoded into the recording during the mastering process or on the physical products during manufacturing and can also be provided by distributors. Digital retailers will require that each track has an associated ISRC before they make the track available for purchase or streaming.

Submit the Metadata

Metadata is all the collective information associated with a particular track, release or band, summarized and available in a digital format. Metadata typically includes track titles, track lengths, ISRC codes, album art, genre, band bio’s and publishing information. Digital retailers, MP3 players, computer based media players, radio (online, satellite & terrestrial) and mobile phones all use metadata to provide their users with information about the songs and artists that are playing. It’s very important that the metadata information for any new release be readily available. Not having the track titles of your CD show up when it’s being ripped to a computer certainly gives an amateurish impression. Be sure to register the metadata information with the three primary companies that manage metadata databases for the industry: Gracenote, All Music Guide and Muze. All three companies have different procedures for accepting metadata from directly from artists. Check out each of their websites for details.

Register with SoundExchange

SoundExchange collects and distributes digital performance royalties from satellite, cable and online radio stations on behalf of recording artists and sound recording copyright holders in the United States (the artist typically controls the sound recording copyright when they are self releasing so they will need to register for both ownership parts). Each time a song is played on stations from XM, Sirius, Pandora, Last.fm and the like SoundExchange collects royalties and pays out directly to the recording artists and sound recording copyright holder. Satellite, cable and internet radio continue to grow at a rapid pace and these royalties are an important way artists can actually get paid for their work.

Sign up with a Performing Rights Organization

Performing Rights Organizations collect royalties from terrestrial radio stations, restaurants, bars, TV / cable networks, retailers, online services or any other establishment that plays / streams licensed music heard by the general public. These PRO Royalties are collected by the major performing rights companies ASCAP, BMI or SESAC and paid out to the songwriter or their publishing company. If you are a songwriter be sure to sign up with one of these three organizations. Please note that PRO royalties are paid out on “estimates” instead of actual plays and it’s fairly common for artists without regular airplay to not receive PRO royalties.