Understanding music publishing can be daunting; between the different types of licenses, royalty rates and deals an artist can enter, it is sometimes difficult to know where to start.
In this post, we’ll break down the basics of music publishing to help creators understand where to begin. Read on to learn the key terms, types of licenses and about the pros and cons of entering a publishing deal.
Every song consists of two basic components: the sound recording and the composition (melody and lyrics). Music publishing allows you to generate money from that composition component.
Before we get started, here are some basic terms to know:
Composition: The melody and lyrics of a song
Copyright: Your ownership over anything you write, record or create. As soon as you put pen to paper, your in-effect copyrighted work has been created.
Harry Fox Agency (HFA) and Loudr: These two companies help independent artists easily obtain mechanical licenses so that they may release cover songs. Stem has integrated with Loudr to enable our users to distribute cover songs.
Performance Rights Organization (PRO): A PRO licenses and collects royalties for your performance income. There are three PROs in the U.S.: BMI, ASCAP and SESAC. Typically you want to choose one PRO and stick with it. Also, if you self-publish, you can register as both a songwriter and a publishing company.
Royalties: A sum of money paid to a composer for each usage of a work.
Sound recording: The mechanical or electronic fixation of a series of musical sounds. Also referred to as a “Master.”
Statutory rate: A rate fixed by law. The U.S. government declared that the mechanical royalty is fixed at 9.1 cents for songs under 5 minutes. The mechanical rate for songs over 5 minutes is 1.75 cents per minute of playing time.
Types of Licenses & Royalties
Earning money from your composition means granting licenses and receiving royalties.
Whenever your song is played in public, you are entitled to royalties via a performance license. Some examples of public performance include:
- Radio airplay
- Song plays in venues or restaurants
A Performance Rights Organization (or PRO) both issues licenses on your behalf and works to collect your performance royalties. When a PRO detects that one of its registered songs has been used, they collect the performance royalties and pay the publisher or songwriter. Each PRO has a unique way of calculating exactly what is owed to their publishers and songwriters.
When a song is sold in digital or physical format it is considered a reproduction and you receive a mechanical royalty. Also, if someone wants to do a cover version of your song, they must obtain a mechanical license and pay you a mechanical royalty for each copy they distribute.
Mechanical Royalty Rate
The mechanical royalty rate is determined by the government and is currently 9.1 cents per copy distributed for songs under 5 minutes. This means every copy created — from an iTunes download from one of your fans to a physical single.
Compulsory Mechanical License
This is the most basic mechanical license.
As a songwriter, you can utilize a compulsory license in order to cover a song as well as receive a compulsory license notice if someone wants to cover your song.
Once a song is publicly released, another artist can re-record their version of that song without prior approval provided they follow the provisions outlined by copyright law.
- Find the copyright owner
- Send the copyright owner a notice of intention (NOI) to obtain a compulsory license prior to distributing the song
- Pay the statutory rate of 9.1 cents per copy
- Send the copyright owner monthly statements and don’t be late with payment!
There are even more provisions outlined by the government, which is why many avoid the compulsory mechanical license route and use services such as Harry Fox or Loudr. Direct negotiations with the publisher regarding terms to cover a song are also an option.
Stem users can obtain mechanical licenses directly through our web dashboard thanks to our integration with Loudr. Here is what you need to know about doing so:
- No Up-Front Costs – Instead of requiring you to pay the $10 fee-per-cover up front, the cost will instead be split between the royalties that you and your collaborators earn on that song.
- Auto-Renewing Licenses – No need to keep track of how many downloads you have left on your license. Once you hit the limit, Stem will automatically renew your license for you.
To get started on distributing a cover song via Stem, simply log in to your account and upload content.
If you register your songs with the Harry Fox Agency (HFA) or Loudr, they will manage issuing mechanical licenses to anyone who may want to cover your composition as well as collecting the royalties.
Synchronization occurs when your song is synced up with visual images such as film, television, commercials, video games, etc. Each time this happens, you receive a fee for the usage of your song.
There is no set rate for this kind of license so the one-time fee is negotiated between the publisher and the party requesting to use your song. Many factors go into this negotiation including the popularity of the song, how the song will be used, the duration of the track.
Self-Publishing vs. Publishing Deal
It is possible for songwriters to act as their own publisher. As your catalog grows, you participate in co-writes or you have a single that is an instant hit, you may want to consider entering a publishing deal. With Stem, creators are empowered to collect their own mechanical royalties on YouTube in the United States.
Publishing companies can help you with the administration of your compositions from registering your songs with your PRO to making sure you are collecting all the revenue you have earned.
There are two types of publishing deals:
- What it is: This deal allows songwriter to retain full ownership of his or her catalog.
- What it costs: An administration fee paid to the publishing company to manage your compositions.
- What it is: A deal where the songwriter splits ownership of his or her compositions with the publishing company.
- What it costs: You relinquish some or all ownership of your compositions, so you can miss out on reaping the rewards if a song you’ve written is extremely successful. However, giving up catalogue ownership is often done in exchange for a large advance or support incentives.
There are advantages and disadvantages to self-publishing and entering a publishing deal. When managing your own publishing, you have the most power and flexibility as to how your compositions are used, but you are also responsible for all the leg work. Working with a publisher that believes in your catalog can reap rewards as well. Publishers not only handle the paper pushing, but can also get involved creatively, helping to pitch your songs to music supervisors.
In future posts, we will break this down further and explore how music publishing directly relates to the world of digital distribution. For help understanding the flow of royalty earnings until then, check out this great infographic from The Current:
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