UNDERSTANDING PUBLISHING

by Stacey Friends, Esq.

The word "publishing" has many meanings, depending on the industry and the context. Publishing in the literary world is what most of us think of when we hear the word, but in the music business, publishing refers to the uses and income streams from songwriting. This article will explain how publishing works and why, what a music publisher does, and how songwriters can make money from their songs. This article will not go into great detail about music publishing deals, as this is the topic of a later article.

Copyright Basics: Before we examine how publishing works, you must first understand the basics of copyright law. Copyright law gives the creators of original works of expression, fixed in a tangible medium (songs, writings, fine art, and much more), certain exclusive rights. These rights include the right to reproduce or copy the work (which includes the right to record it), the right to distribute the work, the right to publicly perform the work or publicly display the work, and the right to create derivative works of that work. Only the author or artist of the original work has these rights! Therefore, without copyright law, there would be no music publishing industry. The entire industry rests on the fact that songwriters have the exclusive rights to copy, distribute, perform and create derivative works of their songs. Anyone else wishing to do any of these things must have permission, or a license, from the songwriter.

Another very important thing to know about music copyrights is that when songs are recorded, a separate copyright is created in the sound recording itself. The result of this is that record labels often own the copyrights in the sound recordings of songs, while the songwriters (or their publishers) own the copyrights in the songs themselves (the composition and lyrics). This is why performing artists who do not write their own songs (and therefore have no copyrights in the songs and no publishing income) and who are signed to a label that owns the recordings, often have no income, at least for a very long time, other than any advance they received. In addition, this means that anyone wishing to use not only the song but a particular recording of a song must also have permission from the copyright holder of the sound recording, which is sometimes the performing artist or band who is also the songwriter, is sometimes a different artist from the songwriter, and is often the record label for the performing artist. You must understand all of these concepts in order to understand music publishing and licensing.

Music Publishers: A music publisher has many duties, including finding uses and users for songs, issuing licenses, collecting licensing money, paying the songwriters, paying any co-publishers, and in some cases, connecting artists with songwriters, helping creatively, and helping an artist/songwriter to get a record deal.

A music publisher can play any number of roles. If a music publisher is the sole publisher for a songwriter, the songwriter will assign their copyrights in the songs to the publisher in their entirety. This is so that the publisher has all the rights necessary to do their job. Often a publishing deal will include terms allowing the songwriter to get back their copyrights either upon some event or after some period of time, but while the publisher is responsible for all of the duties described above, that publisher will need to have all of the exclusive rights under copyright law, or they will not be able to properly issue the licenses.

Sometimes a songwriter will instead have a co-publishing deal. This means that the songwriter and the publisher will share the duties of publisher and will co-own the copyrights. Either one may issue licenses unless their contract says otherwise, which is usually the case. This is to avoid conflicts ñ for example, Ford might not be too happy if it licensed a song from the publisher for a commercial and Chevy licensed the same song from the songwriter for its own commercial. The licensing procedures do not work out so well if two people are out there issuing licenses. Co-publishing deals are becoming more common, and are usually done because the songwriter already has some "legs" ñ in other words, there is already a market for the songs, so the publisher will not have to work so hard to get licenses and therefore does not deserve the entire publishing fee.

Another type of publishing deal is not really a publishing deal at all, but instead is an administration deal. This is where the songwriter does not need anyone helping them with finding licenses, but does not want to be bothered with the paperwork. The songwriter hires the publisher to take care of issuing the licenses, collecting the money, etc., and will pay the publisher a set percent, normally around 10%, to do this.

Publishing Fees: In music publishing, the income is divided into the Writer’s Share and the Publisher’s Share, 50/50. So, if a songwriter had a straight publishing deal, she would receive 50% of all publishing income as her Writer’s Share, and the publisher would receive the other 50% of the income as their Publisher’s Share. In a co-publishing deal, remember the writer and the publisher are sharing the publisher’s responsibilities and income. Therefore, the writer would receive her Writer’s Share, plus 50% of the Publisher’s Share, or 75% of the total publishing income. The publisher receives the other 50% of the Publisher’s Share, or 25 % of the total income.

Sources of Publishing Income: Publishing income comes from four basic sources: mechanical licenses, synchronization licenses, public performances, and printed music.

Mechanical Licenses: This is the license issued to someone who wishes to record a song. There are compulsory mechanical licenses and regular mechanical licenses. A compulsory mechanical license is appropriate if someone wishes to re-record an already recorded and released song. A songwriter may not stop a person from re-recording their already recorded and released song, but that person must obtain a compulsory mechanical license either from the Copyright Office or the Harry Fox Agency.

The copyright law sets the royalty rate for such licenses, and that rate is used as the prevailing mechanical license rate for all mechanical licenses. The current statutory mechanical royalty rate is 8 cents per song up to five minutes in length, and 1.55 cents per minute for songs over five minutes in length. The statutory rate goes up every two years, and is due to increase to 8.5 cents on January 1, 2004. The license fee is paid per copy manufactured.

A regular mechanical license is appropriate if someone wishes to record a song not already recorded or released. Such a license is not compulsory and that person must have permission from the songwriter or their publisher. This includes the record label for an artist/songwriter, which is why recording contracts include controlled composition clauses granting the label a license to record the songs at a certain mechanical license rate (which is often lower than the prevailing statutory rate).

Synchronization Licenses: These are the licenses necessary to set a song to an audio-visual image. Anyone wishing to use a song in a film, television program, commercial or any other audio-visual work must obtain a "synch" license from the songwriter or his publisher. Synch license fees vary greatly. New bands often grant such licenses for no fee (or contingent fees that only kick in if the work in which the song is used makes a profit), while major film and television companies will pay several thousand dollars for the use of even a new song, and well-known songs can earn anywhere from $25,000 ñ $150,000, depending on the particular way the song is used. If an existing recording of the song is the one used in the film, the film company must also have a license from the record label or person who owns the recording. Since many new, unsigned artists own the copyrights in both the recordings and the songs, the synch license will include both sets of rights.

Public Performance Licenses: These are the licenses venues, restaurants, clubs, radio stations, television stations, cable, Web sites, airlines, shopping malls and others must have to play songs. The performing rights societies ñ ASCAP, BMI and SESAC ñ issue these licenses. Usually such a licensee will have a "blanket license" to cover any performance of a song covered by that performing rights society. The performing rights societies all have their own way of then dividing up the income from such licenses. They track the songs being performed using various methods, and then determine the value of each performance by examining the license fees collected in that particular medium (television, cable, radio, etc.), the type of performance (background music, visual vocal, theme song, jingle, etc.) and other factors. Once the money is divided up according to all these tracking methods and formulas, the society then pays each writer their share. The Writer’s Share of public performance money is sent directly to the songwriters and does not go through the publisher ñ only the publisher’s share goes through the publisher. Again, the public performance of a particular recording of a song will require a license for the recording also. However, radio stations are exempt from paying public performance fees for sound recordings.

Printed Music: This is money received for the printing and sale of the sheet music of the songs, and includes individual sheet music for songs as well as folios, which are books containing the sheet music for many songs, often also including photos of the artist or songwriter and other information. This income is minor compared to the other income sources, but it is still important. All printed music licenses are granted by the publisher (or songwriter if she does not have a publisher), and all such income goes through the publisher.

A Word About Sampling: Sampling is a special area, because it usually involves not only a license or permission to use the song and the recording of that song, but also requires special permission to use the song and the recording to create a derivative work. Remember that the right to create derivative works is a right exclusive to the copyright holder. Therefore, someone wishing to use a sample of a song in their own song must be very careful to obtain the proper license, directly from the songwriter/publisher and the record label. Those who do not obtain the proper permissions often end up in court, and will usually owe significant money in damages (not to mention legal fees!).

There are many more details and nuances involved in music publishing, but this overview hopefully gave you all a foundation in how music publishing works, the types of licenses necessary and income available, and how to abide by the copyright laws so as not to infringe a songwriter’s rights and their way of earning a living.

Suggested Resources:

Passman, Donald S., All You Need to Know About the Music Business: Revised and Updated for the 21st Century, Simon & Schuster, NY, 2000.

Thall, Peter M., What They’ll Never Tell You About the Music Business: The Myths, the Secrets, the Lies (& a Few Truths), Watson-Guptill Publications, NY, 2002.

U.S. Copyright Office - www.loc.gov/copyright/

The Harry Fox Agency - www.harryfox.com

ASCAP - www.ascap.com

BMI - www.bmi.com

SESAC - www.sesac.com