Covering the Bases
Taking Advantage of the Benefits of the PROs

by Chip Cox

The three Performing Rights Organizations, or PROs (ASCAP, BMI, and SESAC), are usually seen as the organizations that collect your royalties for public airplay. Also, before you can sign up your publishing company with Harry Fox, you’ll need to have already registered with one of the three PROs. It’s a necessary step for any band that has a release.

I’m not about to suggest one of the three over the other two. Not only would that instantly fill my email with annoyed letters from the other two organizations, I also don’t think there’s any consensus among those I’ve talked to regarding which of the three is the preferred choice. What there is a consensus about is how a band should proceed when it’s time to sign.

First, each band member should sign up individually as an individual songwriter. The prevailing consensus is that some members should sign with BMI and some should sign with ASCAP. You can also have one or more sign with SESAC although some people will suggest that you can get by without SESAC, just having the members sign with either BMI or ASCAP. There’s absolutely no problem with some members signing with one PRO and the rest signing with another - even employees of the PROs will suggest this step to musicians.

Doing this accomplishes several goals. First, if and when a band member leaves, that individual will receive their royalties directly from the PRO for the songs they co-wrote. It’s one of those actions that can make the breakup process less painful. Second, it gives your band the opportunity to use the various strengths of the PROs in tandem. Third, if the bandmember writes songs solo, those works can be registered by that person.

By signing up, each songwriter is essentially creating their own royalty-receiving company. You can, if you wish, set up your own corporation, but at the beginning, you can just as easily exist as a sole proprietor and include your income on your federal tax return as Schedule C income.(By the way, you should do this even if you’ve signed a record contract where you’ve agreed to some sort of co-publishing deal with the label or some third party.)

Now, you should also have another company - the publishing company - that will own the songwriting royalties to those songs written by the members as a group. (Yes, it gets more complicated for a band that doesn’t split up songwriting credits equally.) By definition, this company has to be either a corporation or a partnership or the hybrid of both, the LLC. If your band has already made a choice of business form for itself, there’s no reason that it can’t use that same entity as the publishing company (unless, of course, some other publisher is already using that name). It will be this entity that you’ll name in your Harry Fox application should you do this.

Signing up with the PRO is something you need to do when you have your first release. If you do it right, it’ll save time and trouble later, especially when that inevitable line-up change takes place.

Chip Cox is a former professor at the University of Missouri Law School and currently practices entertainment law in his hometown of Kansas City, MO. He can be reached via email at chip@inspiratron2100.com