There are 2 types of copyrights a band/artist receives when they record a song:
Section 102 of the Copyright Act provides that “Literary Works” and “Sound Recordings” are copyrightable.
Therefore when you look at a CD cover you see two symbols, one will be a circled “C” and one will be a circled “P“. The “C” represents ownership of the copyright in the lyrics, notes, and the musical composition. The “P” represents ownership of the copyright in the master recording or phonorecord. Generally, when you sign a record deal the record label will own the master recording, or the “P“, and the artist/ songwriters/ musicians/ publishing company will jointly own the “C” (before the advent of the 360 Deal).
To illustrate this principle, if a director wants to place “Boom Boom Pow” in her movie, she would have to go to the record label and ask to license the “P” copyright, but she would also have to go to the band or the band’s publishing company to license the “C” copyright. If she does not get clearance from both the record label and the artist/ publisher, she cannot use the song.
Songwriting royalties are about collecting the income from the “C” copyright. Over time, many artists make more money from their songwriting a/k/a “publishing” royalties than the income from their recording contract.
There are 3 major types of songwriting royalties:
Mechanical Royalties
“Mechanical” Royalties are royalties that a record label or manufacturer has to pay to the artist/publishing company for each album/song manufactured. The statutory rate they must pay is 9.1 cents per song for every CD manufactured. The rate is set by law and there is no need to obtain clearance or approval from the artist/publishing company Many times big record labels will place clauses inside the recording contract to limit paying mechanical royalties on all songs on a particular CD.
The “Harry Fox Agency”(link Harry Fox http://www.harryfox.com/index.jsp) is the company that issues mechanical licenses and distributes the income to artists/publishing companies.
Public Performance Royalties
ASCAP, BMI, SESAC (mostly Christian/gospel music), and Sound Exchange (internet royalty collection) (link all orgs to websites). These performance rights societies collect royalties from establishments and companies that play music. (i.e. clubs, bars, restaurants, elevator music in buildings, radio, internet radio, etc.) Many of these societies go around to different establishments that play music and persuade them to legally license the music they play or suffer the legal consequences.
Licensing Royalties
“Licensing Royalties” are royalties received from placing your music in movies, TV shows, video games, and commercials. The can be one of the most lucrative forms of royalties as most companies seeking to license your music are large production companies and studios. The license of the “C” copyright is called a “Synch/Synchronization License” and the license of the “P” copyright is called a “Master Use License”. There is no statutory rate for licensing music in audiovisual works and the price is freely negotiable. (See Synch License and Master Use license.)
There are also 2 major types of Songwriting/Publishing deals:
Co-Publishing Deal
In most co-pub deals, a publishing company will pay the artist/band an advance for a 50% share of the songwriting royalties(Songwriting share 50%, Publisher share 50%). In exchange the publishing company receives the right to issue licenses to prospective licensees and perpetual ownership of 50% in the “C” copyright. Generally, the publishing deal parallels the recording contract and will expire when the recording contract expires. However, the publishing company retains ownership in the songs that were written under the publishing deal. (Below is an example of a co-pub deal)
Publishing Administration Deal
A publishing administration deal differs from a co-pub deal in that it takes a fee for a period of time for licensing your songs and collecting royalties from licensees. A publishing administrator does not take any ownership in the “C” copyright and give lower advances for its services. Generally deals last for 5-7 years and administrators take any where from 10-25% of collected songwriting royalties.
Co-Publishing Agreement (www.defendsound.com) Watermarked
“Ask not what music can do for you, but what you can do for your music”
Sample Publishing Split
DefendSound.com
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