Manage Your Money - The Business of Music

By Paul Zollo

Paying Musicians

While there is no obligation to pay musicians for playing on your music in recording sessions or in live performances, professional musicians are professional because they earn money by playing. So if you want the best, it’s good to pay. How much you pay them has to do with whatever agreements you make. Often $100 per performance, including one or two rehearsals, is acceptable, but some will play for less and some will require more. $100 for a recording session of not more than two songs is fair — again, this is negotiable. In either case, it’s a good idea to send the musician a demo of the song — if possible — in advance, as well as any transcription of the song or chord chart, as well as lyrics, so that they can be familiar with the material prior to a rehearsal or recording session. It’s paramount that the songwriter and/or performer be completely prepared, and know the kind of part you want from the musician. This is not to say you will know note by note a bass player’s part, for example, or the exact rhythm of a drummer’s part. But you should have a fairly clear vision of what you want so that you can easily communicate this to the musician. And one of the positive aspects of hiring professionals is that they have a lot of experience in translating an artist’s musical vision into recorded or performed music. A good drummer will quickly be able to offer you a workable groove that will fit your song — if this is not what you want, he can shift it. The same thing applies with a bassist, guitarist, keyboardist, etc. But you want to do your homework and know in advance what you want from them. It’s true that communicating your ideas for production is not always easy for a songwriter/artists — which is why producers often come in to produce recordings. But if you’re doing it yourself, it’s wise to listen to other records and bring in examples for the kind of part you are trying to realize, so as to minimize both rehearsal time and recording time. Often – before recording — you might want to meet first with a musician to work out parts. This will save you the cost of extra recording studio time, if you are renting a studio, and save the musician time in the studio.

Also, if you are going to try to get your song/recording used in a TV show or a movie, it’s necessary that you pay your musicians and have them sign a single-pay contract, which specifies that they have been paid in total for their work on that song, so that if any profit is realized from a placement of the song, the musician will not seek a percentage of it. They will have been paid in full, and there will be a signed contract as evidence of this. Many publishers who work to place songs will require this kind of contract to be signed by all musicians involved.

Royalties

There are essentially two kinds of royalties a songwriter and/or performer can earn from music. There are Performance Royalties, which are those royalties paid every time your music is performed — this includes when your music is broadcast in any media — be it radio, TV — when it is downloaded, and even when it’s performed on a club. Performance Rights are the rights granted under the U.S. Copyright Act to owners of musical works to perform the song in public. The Performance Royalties are those royalties collected by a performing rights organization when a song is performed in live performance, or via the various broadcast media.

Performance Rights organizations exist to ensure that songwriters and publishers of songs receive all the money they have earned from performance royalties. There are three of these organizations in America: ASCAP, BMI and SESAC. A professional songwriter or publisher must belong to one of these to earn performance royalties. Publishers of songs do not pay songwriters performance rights money. That money is only paid to writers by one of the three performing rights organizations.

A songwriter cannot belong to more than one of these organizations. You have to choose. It is not permitted for a writer or publisher to collect fees on a song from more than one performance rights organization. However, if you write a song with another writer, it is allowed for each writer to belong to a different organization, and each collect royalties from that organization.

All three organizations serve the same purpose, although the ways in which they tally performances, pay royalties and their membership differs. All three, however, perform the same role for a songwriter or publisher of a song. To determine which one to join, a songwriter or publisher is advised to talk to other professionals for their recommendations, and to do a little research into the membership of each, and see which aligns best with your artistic trajectory. There are differences between them. ASCAP, formed in 1914 as a non-profit organization owned by its members, is the oldest of the three, and presently has the most members and largest repertory. BMI was founded as an alternative to ASCAP by broadcasters in 1940. SESAC was formed in 1931 originally as an organization only for publishers, although in 1973 it allowed writers to join. It is the smallest of the three organizations. You can get more information about them on their respective websites:

ASCAP

BMI

SESAC

A Mechanical Right is a right to reproduce a piece of music onto a record (can be a disc, tape or digital file). These are the rights that allow a record company to use your song and they will pay the mechanical royalties. Mechanical Royalties are those royalties generated by record sales or by downloads of a record. They are paid by record companies to the publisher of the song, who pays a share to the songwriter.

Publishing

Songwriters who are starting out are often confused or unclear about the meaning of having a song published, and the role of a music publisher. To clarify: A songwriter is the creator of a song. He has every right to serve as his own publisher, and there is no obligation to have a song published by an outside publisher (though there are potential benefits). It requires no license to become a publisher.

The publisher owns and controls the copyright of the song. If your song is published by a publisher other than yourself, you as the songwriter relinquish your control over the use of a copyright. This means that the publisher will make decisions as to who the song is pitched to — in terms of getting artists other than yourself to record the song – and how it can be used.

Unlike a publisher of literature who can publish a book or magazine and distribute that product, a music publisher’s job is not only to find suitable product but also of placing that product, finding use of it that will generate income. The music publisher’s main service for the songwriter is in placing the song (on a record, in a movie or some other usage). Once a song is recorded and distributed, then there is sometimes a market for sheet music, though this market is nowhere as large as it was back in the day when people would join at a piano to sing the hits of the day.

Publishers also serve as administrators for a songwriter. Besides placing the song, they can do the paperwork, the administration involved with the collection of royalties for the song, as well as serving as the representative for the songwriter in regard to any potential uses of the song.

Once a song is recorded and sold commercially, it must be published in order for the songwriter to earn performance royalties. The rights to a song get split in half. Half of the rights — and the royalties generated by the song — are the songwriter’s and half are the publisher’s. If you self-publish, you would own both halves. Some of the most successful songwriters in American history have self-published, including Irving Berlin and Paul Simon. But an established publisher has an advantage over a beginning songwriter in publishing a song because he’s entrenched in the business and has the connections necessary to get songs recorded.

To self-publish, a songwriter must start his own publishing company. This is easily done — you choose a name for your company that is not in use by any other, and you join either ASCAP, BMI or SESAC as a publisher. That organization will run a name-search on the name to ensure no other company is using it. Naturally, if you already belong to one of these organizations as a writer member, that is the one to join as a publisher.

Contracts

There are a variety of contracts that musicians will encounter. There are record contracts, of course, the contracts offered from record companies to artists in regard to recording for their company. These are contracts between an artist and a label, of which there are essentially three kinds: — the artist contract, which signs an artist to a company; the licensing contract, which licenses use of an artists’ music by a company; and the distribution contract, which entails distribution of an artist’s music by a company

There are publishing contracts — the contracts that music publishers offer to songwriters for the publication of one or more songs.

There are seven types of these:

• Single Song Agreement
  
  A single song deal is an agreement between the writer and the music publisher in which the writer grants certain rights to a publisher for one or more songs. In single song deals, the writer is paid a one-time recoupable advance.

• Exclusive Song Writer Agreement ("ESWA")
  
  Under the ESWA or “staff writer” contract, the songwriter generally grants the publisher’s entire share of the income to the music publisher. The writer’s services are exclusive to the music publishers for a specified period of time. Thus, any compositions written within that period belong to the music publisher. These deals are usually offered to writers with some degree of success. Because the writer has a track record of writing hits, the publisher feels confident that it will recoup its investment. In return for signing away exclusive rights to some or all the writer’s songs, the writer gets paid by the publisher a negotiated advance against future royalties. The advance amount naturally depends on the writer’s bargaining power and on the competition in marketplace, if any. Under a staff writer deal, the writer is paid on a weekly or quarterly basis. An ESWA can be either tied to a record contract, or independent of a record contract.

• Co-publishing Agreement (“Co-pub”)
  
  The co-publishing (“co-pub”) deal is perhaps the most common publishing agreement. Under this deal, the songwriter and the music publisher are “co-owners” of the copyrights in the musical compositions. The writer becomes the “co-publisher” (i.e. co-owner) with the music publisher based on an agreed split of the royalties. The songwriter assigns an agreed percentage to the publisher, usually (but not always), a 50/50 split. Thus, the writer conveys Ω of the publisher’s share to the publisher, but retains all of writer’s share. In a typical “75/25 co-pub deal,” the writer gets 100% of the songwriter’s share, and 50% of the publisher’s share, or 75% of the entire copyrights, with the remaining 25% going to the publisher. Thus, when royalties are due and payable, the writer/co-publisher will receive 75% of the income, while the publisher will retain 25%.

• Administration Agreement ("Admin")
  
  An administrative agreement takes place between a songwriter/publisher and an independent administrator, or between a writer/publisher and another music publisher. In an “admin deal,” the songwriter self-publishes and merely licenses songs to the music publisher for a term of years and for an agreed royalty split. Under this agreement, the music publisher simply administers and exploits the copyrights for another publisher/copyright owner. Only the most popular songwriters can even consider asking for an admin deal. Under this coveted arrangement, ownership of the copyright is usually not transferred to the administrator. Instead, the music publisher gets 10-20% of the gross royalties received from administering and exploiting the songs for a certain period of time and for a certain territory.

• Collection Agreement
  
  A collection agreement is like an admin deal where the writer retains the copyrights, except that the publisher does not perform exploitation functions; like an accountant or business manager, it merely collects and disburses available royalty income.

• Sub-publishing Agreement
  
  These are basically music publishing deals in foreign territories between a US publisher and a publisher in a foreign territory. They are like admin or collection deals (with no ownership of the copyrights being transferred to the subpublisher), but limited to one or more countries outside the US. Under this publishing deal, the publisher allows the subpublisher to act on its behalf in certain foreign territories. Often, they are limited to a group of countries, such as European Union (EU), GAS (Germany, Austria, Switzerland), Latin America, etc.

• Purchase Agreement
  
  Under this agreement, one music publisher acquires in whole or in part the catalogue of another music publisher, sort of like a merger of companies. In this case, a “due diligence” investigation is done to determine the value of the catalogue.

Intellectual Property

People often speak about the nature of the ownership of songs with language such as “Who can really own a song? A song is ethereal, ephemeral. It belongs to nobody.”

Wrong. A professional songwriter makes his living by writing songs, and the ownership of that song is directly defined by proof of authorship. Without authenticated authorship of the song, the songwriter cannot have the song published or performed and earn performance royalties from it. A song — like any artistic work — is considered an intellectual property. And fortunately for us in America, there is protection under law that governs the authorship and ownership of Intellectual Property.

The entire concept of intellectual property and the rights thereof is one that has emerged in recent years, though the product of intellectual properties have been with mankind for centuries. Intellectual properties are creations of the mind, and are often non-physical in nature. An idea is an intellectual property, as is the plot of a book or movie, and certainly a song. A song is non-physical — it exists in the mind of the creator, the songwriter, until that songwriter or another performer performs the song and that performance is recorded. The record of that performance is then physical, and exists in our material world, but the song itself — the creative fusion of words and melody — are non-physical. A song can also be made physical by a transcription of the music with the words. But it’s precisely the song’s non-material nature that has led many to believe that it belongs to no one — how can somebody own something, which exists only as an idea — something which is mental but not physical? This is where the law of intellectual properties comes in, to offer legal protection for those properties, so that creators can secure their rights of ownership and authorship of those intellectual properties.

So technically intellectual property is a legal field that refers to creations of the mind — this includes songs and all forms of music, as well as literary and artistic works and also inventions, symbols, names, images and designs used in commerce. These include copyrights, trademarks and patents. Under intellectual property law, the holder of one of these properties has designated exclusive rights to that property.

For our purposes here, we are dealing mainly with songs as intellectual properties — and the authorship and ownership of songs as they are exploited commercially is a copyright. A band’s name, however, is protected as a trademark. Let’s first look at copyright protection for songs, and how it works in the American legal system.

The official registration of a song — the definition of its ownership — is a copyright. Copyright protection is the means by which a songwriter can protect and preserve his ownership/authorship of the song. We will explain what that is, and how you get one, later. But it’s important to understand that while you can get copyright protection for the song itself (and a song is defined legally as the combination of two elements — lyrics and melody), you cannot register a copyright for a song title. And for this reason, there can be hundreds of songs with the same title.

Officially, according to Copyright Law, a copyright for a song goes into effect the instant a song is put into a fixed form. The fixed form can be a musical transcription of the song with lyrics, or a recording of the song. However, if authorship of your song is challenged, you must prove that you are the holder of the copyright, and to protect your ability to do this, it’s advised to register your copyright. Registration of a copyright does not offer added protection for a song; it’s a way of establishing a public record of your claim of authorship and the date of creation. Though registration is not required, it is encouraged. Registration will establish solid evidence of ownership and validity of your copyright if it is made within five years of the creation of the song. Registration will ensure the receipt of any licensing fees pertaining to your songs. This means that if your song gets used in a movie or a TV show, you will be insured, as the registered writer, to receive any money that is generated.

To register a copyright, you must first fill out Form PA from the Copyright Office, – you can attain this directly from the Library of Congress via mail or download a PDF file of it from their website. Then you fill it out, and send it with your fee (which is presently $45 per song) and a recording or transcription of your song to the Library Of Congress, the address of which is:

Library of Congress

Copyright Office

101 Independence Avenue, S.E.

Washington, D.C. 20559-6000

For more information, you can go to their website, which answers all these questions clearly, or call 202-707-3000.

Trademark

A trademark is a word, phrase, symbol or design, or a combination of words, phrases, symbols or designs, that identifies and distinguishes the source of the goods of one party from those of others. To protect the name of a band, you would need trademark protection. A service mark is the same as a trademark, except that it identifies and distinguishes the source of a service rather than a product. Like a copyright, the ownership and registration of a trademark are distinct. You can claim a trademark, but to prove ownership, you must register it with the United States Patent and Trademark Office (the USPTO.) All of this is explained clearly at their website

Copyright

A copyright is the protection of an intellectual property (SEE LINK) and this covers the protection of song authorship. To fully protect your right to your song, you must register its copyright with the Copyright Office of the Library of Congress. For more information, go to their website

Protecting Your Band Name

A trademark is a word, phrase, symbol or design, or a combination of words, phrases, symbols or designs, that identifies and distinguishes the source of the goods of one party from those of others. To protect the name of a band, you would need trademark protection.

A service mark is the same as a trademark, except that it identifies and distinguishes the source of a service rather than a product. Like a copyright, the ownership and registration of a trademark are distinct. You can claim a trademark, but to prove ownership, you must register it with the United States Patent and Trademark Office (the USPTO.) All of this is explained clearly at their website

Song Protection

The only official way to protect your song is by registering a copyright. There used to be other methods to use prior to the registration of copyrights, but since the recent developments in intellectual property law which designates that a songwriter owns a song as soon as it is put into a fixed form — which means a recording or transcription — the eventual registration of a copyright is the best and most viable means of song protection. (SEE LINK)