Lesson #12 Let’s talk about Royalties (pt2)……………

In the last post I started to introduce the topic of Song Publishing. I explained a little history and I outlined the three basic kinds of publishing royalties. I hope that it made the topic a little clearer. If you don’t follow any of the last post or this post PLEASE POST QUESTIONS IN THE COMMENTS SECTION. It took me a long time to understand all the crazy terms that the music business uses. I was in the middle of negotiating a publishing contract for an artist when I finally convinced one of my lawyers into explaining it to me. So don’t feel foolish if you don’t follow it all on first reading. Just remember publishing is important.

In the last post I mentioned that people pay royalties for the USE OF THE SONG. The song itself is the property. This is not to be confused with the recording of the song. The recording is a different piece of property. Think of it this way. You buy a dvd of terminator 2. Does that mean you control the use of the movie Terminator 2. Of course not. You just have a copy of it. The company that paid for the movie owns the rights. Well behind those Hollywood dudes is a writer, the guy that wrote the script. He may still own the script. That writer is like the songwriter.

Here’s another way to look at it. You sit down and write a song. You decide to call it “Yesterday” . You look in the mirror and are happy to discover that you are now Paul McCartney of the Beatles. Lucky you. So your band, The Beatles, records the song. Then along comes two hundred other musicians and they record the song. They are not you, Paul McCartney. They don’t own the song. They own the recordings of the song. They then make CDs with their horrible versions of your lovely song on them. These CD’s sell to morons with no taste. For each one they sell they owe you a royalty since you, Paul McCartney, wrote the song. They pay this royalty to your Publishing Company and to you – 50%/50%. That’s the way the law says it’s done. This kind of publishing royalty is called a mechanical royalty.

Now one of these covers (versions) by one of these other guys gets put into a film. It’s used in the overly nostalgic scene where Julia Roberts remembers her childhood of abuse. The film pays the band for the use of their recording. But wait, what about you Sir Paul McCartney? Don’t you get some? (Hey your one of the Beatles you ALWAYS GET SOME!) Yes, you get some because the film company must work out a deal with you, paying for the right to USE YOUR SONG. This deal is called a SYNC license and the royalty they pay you is called a sync royalty.

So now let’s go back to your band The Beatles. You guys recorded the song right? Yes, you did and your record company turns it into a CD and download. Of course you guys are rock stars and when your record sells you get paid royalties. So that’s where you make your money right? NO! Well I actually mean yes but I’ll cover that in another blog covering band royalties. Yes the label pays The Beatles but they must also pay you, Sir Paul McCartney, the Cute Beatle, for the USE OF YOUR SONG. Cool huh? You get paid for being in the band that makes the record and you get paid for writing the song.

Now the recording you made and all of the recordings that all of those other lousy bands made of your song “Yesterday” get played on lots of radio stations. These radio stations have to pay royalties for all the songs they play. So your Publishing company gets paid money for that. These payments are called Performance royalties. But wait, we’re not done. All over the world bands begin playing your song live. Some of these clubs pay for music licenses. This makes more money. Some of that gets paid to you. Also restaurants play various versions of your song, your recorded version and also the versions recorded by all those lousy bands as background music as mindless people chew their food. To make the situation even better stores at the mall start playing recordings of your music as background as people shop for useless consumer items. Both the restaurants and the stores also have to pay money to play music so some of that money gets sent to your publishing company. Holy Shit! You’re Rich!!! No surprise since you are Paul McCartney.

Since the song is so damn popular they even put out a songbook with guitar and piano music for the song. This too means money paid to your publisher.

These are they ways that a SONG makes money. Not the recording of a song, the SONG ITSELF. This is important to understand. If you are the one that writes all the hits in your band then you are in a great position as far as money goes. That means you get the biggest Mercedes.

Since you’re Paul McCartney I’ll tell you a little story about you.

Paul McCartney was working with Michael Jackson on a collaboration, a song called Say, Say, Say. During the session McCartney explained to Jackson that the way to make money was to own the publishing rights to songs. McCartney told Jackson that he was about to try to buy the company that owned the publishing rights to lots of Beatles songs. Jackson listened very carefully to McCartney. He then quietly outbid McCartney and bought the company that owned the Beatles songs thereby screwing McCartney out of some of the publishing money on his songs. Poor Paul huh? Don’t feel too bad. This is why………

The law says that ALL publishing royalties get split 50%/50% between the songwriter and the publishing company. That means that the payment goes directly to you the writer. Now, you can be a complete idiot and actually sell the rights to the song to someone and then they will get that money.

Most bands that get signed to the majors get offered a publishing deal. That means that a publishing company will offer to give you some money right now, like 100,000 in return to the publishing rights to your song. A standard deal will say that you must write at least 12 songs a year and that they will pay you 50,000 each year. This money is an ADVANCE against money you might make. The deal will go on to say that you will receive 60% of all publishing money that the company receives. (don’t forget that advance, that gets paid off first) The company keeps 40% of the publishing money. In return for their cut the company will try to promote your songs. They will try to get other musicians to record it. They will try to get film makers to use the song in a movie. They will try to get commercial advertisers to use the song.

Of course, there is another option. You become your own publishing company. That way you get all the publishing money. It’s easy to do. You just set up a business name. Register it. Open a bank account under that name and then inform the Publishing Rights Societies that you “are administering the publishing of all material written by _____________.” Fill you name in there. What are the Publishing Rights Societies? What do they do? Well that will appear in a future blog………

Copyright BradMorrison/Billiken Media 2010


4 thoughts on “Lesson #12 Let’s talk about Royalties (pt2)……………

  1. Glad I stumbled across this Brad. Made concrete out of alot of things I’ve picked up.

    Sorry if I’ve missed this somewhere but in keeping with the non-democratic approach you described, whats the best way to go about song rights/royalties? How do I avoid this situation:

    i) Write every note and syllable and take all the royalties but gradually lose my band (but buy one eventually) (Dylan-esque)

    ii) Write every note and syllable, split the money with band members to keep the band, drive myself crazy giving away money to the non-writing band, potentially lose the band anyway (Dandy Warhols-esque?)

    iii) Agree to play/record anything good that any member writes and allow the rights/royalties go to the contributing member, run the risk of losing direction/ internal power struggles/ control over band. (Stones-esque)

    None of these options seem good to me, and although I’m not greedy I’d hate to see a disgruntled band member in 30 years cruising on a yacht he bought with my songs (fanciful I know). I assume there’s no right answer, but you’ve been there and there must be a slightly better option of the three. I feel I’ve got to get this right early.

    Regards and many thanks for publishing knowledge you can’t buy.

    • Oliver,
      Excellent question. I hinted at these problems in lesson #12 and I beleive I promised to address them later. Your question brings them up for tonight’s blog…stay tuned as I will include your question in tonight’s blog……………………

  2. Thank you, Thank you very much for this blog (said in an Elvis voice)… I’ve read it all i think twice… Anyways can you bestow upon me any knowledge about copyrights? I have about 16 songs that I will call my album but I’m kind of nervous of my “property” of being stolen like what happened to the bass line to “Under Pressure.” So I’m planning on recording another copy, including lyrics and some tablature and having that copyrighted with the U.S. copyright office. Then I will really start performing live with no fears of being ripped off.

    • Hi John,
      Thanks for the praise and the question. Have no fear. I will explain copyrights and you should sleep better tonight. I’ll assume that you are in the USA. If this is not the case let me know and I will update my reply. US law states that a copyright is created at the moment of artistic creation. The moment you wrote the song you created the copyright and your subsequent rights to exploit said copyright. If a copyright comes up for legal challenge, that is to say, someone sues someone else over it the court looks at the “preponderance of evidence”. What the hell does that mean?!! It’s easy. The court looks at all possible evidence in an effort to determine who created the work and when it was created. It then weighs all the evidence and decides who owns it.
      Let’s look at this issue from a practical angle. You write these sixteen songs. You then join a band and the band plays these songs. Later, you record the songs with the band. A year after that you record them as part of a German Synth Pop duo. Your partner, Dieter Gunter Schmidt, then records one of the songs and has a hit in Hungary and Israel. He registers the copyright with a publisher and collects a shitload of Shekels and Forints for airplay. You sue his Kraut ass. What happens?

      Well, when you get to court you present all kinds of evidence. You have your notebook with the lyrics and chord changes. The cover of the notebook says 2009 Songs By John Delbertose Doe. You have an affidavit from your ex-girlfriend stating that she remembers you writing the song. (this is a miracle since, like all ex girlfriends, she has never forgiven you), you have a tape of your earlier band playing the song. You have a tape of a rehearsal of Brandenberg Gate (the synth pop duo) playing the song. It turns out that you also have a completed BMI song registry form with that song along with three others and it’s dated June 2010. The evil German Pop singer only has the fact that he sold the publishing in 2011. The court looks at all of these things and rules that you have been ripped off.
      In short, registering your songs with the US copyright office is helpful if there is a legal battle. It is not the ultimate truth when it comes to copyright ownership. There seems to be a myth amongst musicians that whoever registers the song with the US copyright office owns the song hands down. This isn’t true. If there is a legal battle the court views US copyright office registry as one piece of the puzzle. Like I have just explained if you wrote it you own it. The trick is to prove it. Registering the song is helpful and vaguely official. It is only one piece of evidence in your favor.
      So, by all means register your song. Also keep notes, demos, recordings, diaries etc that show that you wrote it. The moment you write a song the law is on your side…… So stop worrying and keep writing…. Best of luck…

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