FREQUENTLY ASKED QUESTIONS
WHAT IS MUSIC PUBLISHING?
Music publishing is the business of promotion and monetization of musical compositions: music publishers ensure that songwriters receive royalties for their compositions, and also work to generate opportunities for those compositions to be performed and reproduced.
Publishing is the oldest vertical of the music business. It was there long before the first recording mediums came around, and in the early 20th century, sheet music publishing pretty much ran the music business. Publishers were in charge of putting compositions to paper, producing songbooks, distributing them to the stores, and compensating authors for the commercial use of their works.
Fast forward through early recording days, the birth of radio, vinyl, cassette tapes, CDs, digital piracy, download-to-own services, and, finally, streaming. A lot has changed since the songbook days, and nowadays, music publishers earn money in a very different way — but their role, in its core, stayed the same throughout the years. Publishers are responsible for representing composers, songwriters, and lyricists — the authors of the musical works — making sure that they get compensated for the commercial use of their intellectual property. Back in the day, that meant paying them a percentage of songbook sales — today, it involves collecting royalties across the industry on their behalf. More on that in the following sections, but first, let's establish the key terms of the publishing business.
WHAT IS THE DIFFERENCE BETWEEN COMPOSITION AND MASTER?
The difference between the composition and the master is a common music industry knowledge at this point, but in case you’ve missed it, don’t worry — we’ve got you covered. If you want to take a deep dive into the topic of music copyright law, check out our recent blog post on music copyrights, but in short, music copyright is split into two distinct parts: the master recording and the underlying composition.
The composition is a musical work (harmony, melody, etc.) that may or may not include accompanying lyrics. Think of sheet music and words in a notebook.The sound recording (AKA Master) is a particular expression of the underlying composition, produced and recorded by the recording artist(s). Think of music you stream on Spotify (or wherever you get your soundtracks)
Accordingly, there are two separate sets of copyrights that come with every song: the composition rights and the master recording rights. In the most basic scenario, these two sets belong to the same person — if, for example, you’ve both written and recorded a song from scratch.
However, that’s not always the case: think of cover versions, for instance. If you decide to record a Beatles cover, you will only get the master recording copyright — the composition rights will still belong to whoever owns the Beatles catalog these days. And that is still a simple example — imagine a song featuring twelve songwriters, two lyricists, a hand-full of samples, and a re-sung Smooth Criminal line. The structure of music rights can get incredibly complex — and quick.
At the same time, making (and monetizing) a successful composition requires a very different skill set compared to the one on the master. We’ve covered the recording pipeline in detail over at our Mechanics of Recording (and Distribution) — so head on there if you want to find out more about it. Today, however, we will focus solely on composition rights owned by songwriters and worked by their publishers.
WHAT IS MECHANICAL ROYALTIES?
Mechanical Royalties
Mechanical royalties compensate the songwriters for the reproduction of the composition, paid by third-parties that want to record, manufacture, and distribute the musical work. Back in the day, that meant mechanically producing the physical medium carrying the composition — hence the name. In today’s streaming music economy, however, mechanicals are primarily generated whenever the user chooses to play a specific song on a streaming service, thus reproducing (or, if you will, rebroadcasting) the composition. The “choose to play” part also means that non-interactive streaming, like Pandora’s ad-supported radio, doesn’t generate mechanicals.
There are a few ways in which mechanical royalties are paid out, depending on the type of the medium. For interactive streams of Spotify, Apple Music, and alike, the mechanicals are paid out to publishers directly by DSPs. For on-demand downloads and physical sales, the mechanicals will flow to the owner of the sound recording first — in that case, labels have to distribute the royalties due to the publisher. In both cases, the DSP/record label will pay fees to the mechanical rights organization (HFA in the US, MCPS in the UK), that will, in its turn, distribute them to the composition owners and their publishers. In most of continental Europe, PROs (more on those later) claim both public performance and mechanical royalties.
In the US, the mechanical royalty rates are set by CRB, depending on the recorded medium used to host the composition. For digital downloads and physical mediums, mechanical royalties have a flat rate of 9,1 cents per copy (for songs that are less than 5 minutes long). For the longer tracks, mechanical rate of 1,75 cents per minute applies. For interactive streaming, CRB first sets the "All-In Royalty Pool", calculated as the greater of:
All-In Royalty Rate, applied to the service's total revenue (currently, 11,8% of the service's revenue, with a plan in place to increase the rate to 15,1% by 2022)Minimum All-In Royalty Rate, calculated as a percentage of what service's pay the record labels (currently, 21-22% of the payment to labels — with a planned increase to 26% by 2022)
Subscriber-based Floor of 50 cents per subscriber.
Under the CRB regulations, streaming service has to apply all three formulas and then choose whatever is greater. The resulting figure is an All-In Royalty Pool — basically everything that streaming services need to pay the songwriters (both mechanical and public performance royalties). Then, streaming service will deduct the public performance royalties (set through negotiation with PROs) from the All-In Pool. What's left is the mechanical royalties due (distributed between the songwriters on the per-rata basis, same as payouts the master owners).
WHAT ARE PUBLIC PERFORMANCE ROYALTIES
Public Performance Royalties
Then, we have public performance royalties, compensating composition owners for the “perform or display the musical work publically” subset of their copyright. Performance royalties are a bit easier to grasp. Every time a composition is publicly performed, the rights owners get paid — whether it’s a radio broadcast, a background playlist at a restaurant, or a digital stream. Yes, if you’re streaming a song into your headphones, that’s considered a public performance too.
Public performance royalties are managed, collected and distributed by performance rights organizations, or PROs (ASCAP, BMI, and SESAC in the US, PRS in the UK, etc.). The entire landscape of public performance can be separated into two parts: royalties paid by streaming services, and royalties paid by conventional public “broadcasters”. In the first case, the DSPs will pay out a share of their revenue to the PROs, split between all right owners on the platform — in the same manner as streaming royalties on the sound recording side are calculated. As we've mentioned in the previous section, that share is a subject of negotiation (and re-negotiated) between streaming services and PROs. Based on the quotes available, it should fall somewhere close to 6-7% of the service’s total revenue, deducted from the All-In Royalty Pool.
Then, there are all the public performance users: venues, clubs, restaurants, TV channels, radio stations and so on. To get a right to publicly perform music, broadcasters acquire what is known as a blanket license from PROs. The blanket license allows broadcasters to play any music they want, with the overall cost depending on the potential audience of the platform. Users regularly report their playlists to the PROs through cue sheets, broadcast logs and so forth. You’d be surprised, but even buskers, playing in the designated areas on the subway, have to provide records of all the songs they’ve performed. Put simply, if you hear music playing in a public space, 99,99% of the time, there’s a blanket license behind it.
The PROs then use that data to calculate royalties due to rights owners, factoring in an extremely wide range of variables, unique to the public performance medium. Going through all the details of public performance royalty calculation would take an article of its own, but at the end of the day, every calculation system aims to link the royalties due to the scope of the performance. So, a song played in primetime on national TV will earn much more than a song played in the middle of the night on a non-commercial college radio station — makes sense, right?
WHAT IS SYNCHRONIZATION LICENSE FEES?
Synchronization License Fees
This last type of publishing cash flow is linked to the last part of the copyright — creating a derivative work based on the composition. In essence, every time someone wants to use the composition as a part of any other type of content, whether it’s a TV show, a movie, an ad or a radio show, they need to get permission from the copyright owners. That process is generally known as sync licensing.
There are two main conceptual points of difference between sync licensing and mechanicals and public performance royalties. First, sync agreements always target a specific piece of music. Unlike performance royalties, covered by blanket licenses and predetermined mechanical fees, syncs are always directly negotiated by music users and copyright owners (or their corresponding representatives). In other words, it costs the same to play Drake vs. unknown artists on the radio. If you’d want to sync those songs to an ad, however, Drake will cost you about a million times more.
Second, syncs have to be negotiated with both composition and sound recording owners — which means that licensors have to go through both songwriters’ and recording artists’ representatives. Synchronization cash flow is shared between the recording and publishing sides of the music business, turning it into a unique subset of the music business. That’s why we’ve covered the sync industry in detail in a separate article on the Mechanics of Sync Licensing — so check it out if you want to know more about ins and outs of sync industry.
Those are the three primary cash flows of the publishing business. Theoretically, this list can be broadened by adding “print royalties” — due when someone publishes the song’s lyrics — but those are really “small potatoes” compared to sync, mechanical, and public performance cash. With that out of the way, let’s get real. What do music publishers do?
WHAT IS THE ROLE OF MUSIC PUBLISHERS?
The Role of Music Publishers.
On paper, a music publisher is a person or an organization that is authorized to license the copyrighted use of a particular musical work. Publishers sign contracts with songwriters to manage their composition rights and maximize the cash flows mentioned above — and the first step is registering the copyright with CMOs.
1. Publishing Administration: Registration, Collection and Audit.
It’s not that hard to register your composition with your local PRO and MRO — just go to ASCAP/BMI and the HFA (or your country’s equivalent), sign up, or sign up with us (Perfect Note Music Publishing) and wait for the paycheck. That should cover both mechanical and performance royalties, leaving only sync licensing fees on the table — but those are a direct deal type of thing. So, you should be good to go, right?
Well, not really. There are a couple of reasons why songwriters actually need a dedicated publishing representative to manage, collect, and claim their royalties. You see, collective management organizations like ASCAP or the HFA are not incentivized to distribute the money to a particular songwriter. Their primary job is to collect royalties from music users, and that’s what they focus on — but they won’t go over their head to make sure that the songwriters get ALL the royalties due.
So, without proper control from the songwriter’s representative side, a sizable portion of royalties gets lost in the publishing “black box” — a pile of unclaimed or wrongly attributed payments. There are a bunch of reasons for that, from music metadata issues and human errors to disorganization, disputed claims, and straight-up fraudulently assumed royalties. In our time working directly with artists, we’ve stumbled upon thousands of examples of publishing chaos — something like four companies trying to claim 35% of the song on a streaming service each. Well, guess what a streaming platform is going to answer if you try to claim 140% of the song. Correct — no one gets paid.
Then, there are international royalties generated outside of your domestic market. On paper, CMOs across the globe work together and exchange royalties — but in reality (due to the same publishing chaos), this process doesn’t work that great. That means that songwriters have to register with all the CMOs across the globe to get 100% of their royalties.
Unfortunately, that’s the state of the business. Songwriters need a dedicated publishing administration rep to get anywhere near claiming 100% of the royalties due. They need someone who will register, audit, claim, and dispute other’s claims on their behalf. In other words, someone who will fight for their money. That is the essence of publishing administration.
Due to the intricacies of international royalty collection, the publisher needs to cover all the markets across the globe to claim effectively. That means that the publishing administration is done best by massive global companies. Oftentimes, smaller publishing will delegate their catalog to international players for worldwide representation. That is generally known as sub-publishing. Usually, an independent publishing company will claim and audit royalties in its domestic market, while "outsourcing" the rest of the world to huge players, like Sony ATV, Warner Chappell, BMG, UMG, Peermusic, Downtown Music Publishing (the company behind Songtrust) or Kobalt in exchange for a small share of the royalties.
2. Publishing A&R: Scouting for Talent and Developing Songwriters’ Careers
The degree of the publisher’s involvement in the artist’s career depends on the type of artist we’re talking about. For some acts, publishing is just a side revenue stream — think of a band that both writes and records their own music. Most of their revenue will be made on records, merch, ticket sales, and everything in between. Sure, the publishing royalties are a nice additional revenue source for recording artists — but it won’t ever be a priority. For recording-first artists, 99% of the time, publishers will play a purely administrative role.
However, that’s not always the case. A lot of the artists out there have two lives — both recording their own music and writing music for other recording artists (or TV shows, movies, and video games). Take Ed Sheeran, for example. Everyone knows him for “Shape of You” and “Perfect”. However, even some of his most dedicated fans don't know that Sheeran also writes songs for the biggest names in the business, from Justin Bieber to Major Lazor.
Furthermore, there are songwriters who don’t perform their own music at all, focusing entirely on writing for other people and making publishing their bread and butter. Those are the writers and composers at the backline of the music industry — and while they are a lot less visible, compared to the people they write for, they have a huge impact on the music industry.
Take Max Martin, for instance. Chances are the general public will never know his name — yet almost everyone knows the songs that he’s written and produced, from Katty Perry “I Kissed a Girl” to Backstreet Boys’ “Everybody” and back (alright!). Top songwriters generate millions in royalties every month — but how do you go from writing for your local band to writing for the Drakes of the world? Here’s where publishing A&R comes in. For songwriters and producers who focus on writing for other artists, publishes becomes an instrumental partner — and not because of the administration services they offer.
From a certain perspective, publishing and recording A&R are not that different. Along both of the verticals, the role of an A&R rep is to find and sign music talent, and develop the artist’s career by putting them in touch with music professionals across the industry. However, there’s one crucial distinction.
The goal of the A&R is to maximize the long-term revenue generated by talents. Now, when Ed Sheeran wrote “Love Yourself” for Justin Bieber, his label hasn’t made a single penny. His publisher, on the other hand, made millions in royalties and sync fees.
So, if the recording A&R cares about the monetary success of the sound recording featuring the artist, their publishing peers are solely concerned with the success of the underlying composition. While publishing and recording A&Rs have similar roles, their priorities (and, accordingly, their day-to-day work) end up being very different.
To illustrate, let’s compare the jobs of two A&Rs: one is working with a beatmaker/producer (songwriter of the rap world), the other — with a rapper (performing artist). Now, imagine that these two artists work together. Here’s how the splits are going to be structured:
Beatmaker/producer’s share:
The beat, or the instrumental part of the composition, 50% of the publishing copyright
The producer’s share of sound recording, usually about 2-3% of the master rights
Rapper’s share:
The lyrics, making up another 50% of the publishing copyright
The lion’s share of the master (split between the rapper and his label)
Rapper Producer Splits
Rapper/Producer Splits for Master and Composition copyrights.
Rapper/Producer Splits for Master and Composition copyrights
Accordingly, for those two artists, the scales are tipped in different directions. Beatmaker will make money mainly on publishing royalties, while the rapper will rely on recording revenues. So, the goal of the rapper and, by extension, his A&R rep is to make the most successful sound recording. The rapper’s A&R will oversee the recording process, build their image, “lay the ground” for the future release promotion, and so on — more on this in the Mechanics of Recording.
The role of the beatmaker’s A&R, on the other hand, is to make the most successful composition — which basically means getting the hottest rapper on the beat. The bigger the performing artist, the better, and if you manage to get Drake — consider your work done. It’s now the label’s job to promote the song.
That makes publishing A&R perhaps the most connection-dependent job across the music industry. Songwriters have to collaborate — and the only way to grow the songwriter’s career is to build their name across the music industry and write for the most prominent recording artists.
3. Negotiating the Music Rights
The third key function of the music publisher is to defend the interest of the songwriters and maximize their share of the rights whenever they participate in the creation of music. Let me explain.
The easy example is when multiple songwriters are working on the same song — whether it’s a couple of “guest songwriters” or a 4-piece band coming up with a composition. So, who owns which portion of the copyright for the resulting songs? Well, the commonly accepted practice is for all songwriters to get the same share of the copyright in equal parts — regardless of their respective contributions. However, that is not always the case. Sometimes, publishers will enter the negotiation on behalf of songwriters to establish the final splits.
The songwriting process behind some of the pop-hits can get very complicated. Songwriters are sometimes contracted to work on a specific part of the song, like chorus melody or guitar solo (I know, those are not that widespread anymore, but you get the point). A specific producer might be dedicated to programming the drums — but what happens if he also comes up with the line that makes it to the song’s hook. So, who owns what? Songwriters representatives will often have to enter fierce negotiation and fight over those percentages, especially if we're talking about a song that is an unexpected success. You've probably heard about the "Truth Hurts" copyright drama — that's precisely the type of thing I'm talking about.
Then there’s also a sort of “indirect collaboration”. You see, we live in an age where music (and musical ideas) or continuously repurposed and re-recorded. Sampling is a widespread technique nowadays — spreading far beyond electronic music and hip-hop. Well, from the copyright standpoint, if the composition features a sample, the author of the original song, in a way, becomes one of the songwriters for the new composition. Besides, it doesn’t even have to be an actual sample of the recording — just adopting a famous line from another song will do the trick.
As you might’ve guessed, the “let’s split everything equally” rule doesn’t really apply here. Instead, sample users will negotiate the license with the publisher of the original catalog, defining the share of copyright due to the sample's author. In some cases, the author won’t actually ask for anything and authorise the sample pro-bono. But be sure, if your sampling Notorious BIG, you’ll have to part with a portion of copyright. Depending on the scope of the sample’s use in the new composition, the publisher can end up claiming anywhere from 5 to 100 percent of the copyright.
The sampling negotiations can get extremely messy — but in any case, if you want to monetize the music that utilizes other composition, you have to go through the corresponding publisher — or risk losing 100% of your copyright.
4. Promoting the Compositions
That’s another integral part of the publisher’s job is to make sure that the catalog it represents lives on through the cover versions, samples, and interpretations. The publisher, maximizing the revenues of the composition, will continuously work to ensure that the composition continues to be performed, or used as a basis for other compositions. That’s not just about processing incoming sampling requests but actively reaching out to music professionals and artists to encourage them to create adaptations of the composition.
All this makes publishing an integral partner in any songwriter’s career — but not all of the songwriters need the same from their publisher. Accordingly, there are few types of common publishing deals that have become industry standards throughout the years. Here’s what you need to know:
Music Publishing Deals Explained
Generally speaking, any publishing deal involves transferring a part of your copyright to a publisher (allowing them to license the use of the composition). In exchange, you will get a share of royalties collected by the publisher. Wait, though — it gets more complicated:
Writer’s Share vs. Publisher’s Share
Whenever the song is created, there are two equal shares of royalties attached to it. So, even if there’s just a single writer working on a song, the composition will be split into two parts: the writer’s share and the publisher’s share, each worth 50% of the composition. So, If you’re credited as a writer on a song (i.e. it wasn’t a work-for-hire situation), whatever you do, you will always own the writer’s share of your copyright. The ownership of the writer’s share can’t be assigned to a publisher — it’s paid directly to the songwriter by PROs.
Writer's Share / Publisher's Share Splits
Contractually, the role of a publisher is to collect and maximize the publisher’s share on behalf of the songwriter in exchange for a percentage of those royalties. That also means that without a publisher (or a self-established publishing company) songwriters get only the writer’s share — 50% of their royalties. Thankfully, it’s relatively easy to get your micro-publishing company started, as both the PROs (collecting public performance royalties) and MROs (collecting mechanicals) have developed solutions that allow songwriters to self-publish their work. Besides, as a songwriter, you will have to establish your publishing micro-company anyway — unless you want to give out 100% of your publisher’s share and go for a full-publishing deal.
3 TYPES OF MUSIC PUBLISHING DEALS
The split between the publisher and the songwriter — and the nature of the work the publisher will do on the author's behalf — depends on the type of publishing deal. There are few common publishing scenarios that became industry standards throughout the years — so let's through them one by one.
1. FULL-PUBLISHING DEALS
The full-publishing deals used to be the standard of the industry back in the day. A fully published songwriter assigns 100% of their rights to the publisher. The full-publishing deal covers all the material songwriters will create during the duration of the contract — usually with some kind of contractual obligation for a minimum of number of songs written. For all the compositions written, the songwriter will assign lifetime copyright to the publisher — the publisher will own his share forever.
In exchange, the publisher will provide full-circle services to the songwriters, proactively promoting the published material, pitching the songwriter across the industry and so on. In addition, the publisher will put forward an advance, recouped by the writer's share until made whole.
Revenue Splits Under a Full-Publishing Deal
Even though full-publishing deals are less common than they were 20 years ago, they still have a place in today’s industry. As it usually is in the music industry, the share of revenue assigned to the company is a function of the total investment into the artist’s career and the risk taken on by the partner.
Accordingly, full-publishing deals are more common if the publisher sign with a perspective, yet unknown songwriter, implying that the company will dedicate a lot of resources into developing the artist’s career, while the songwriter doesn’t have a sufficient track record. Risky investment = more return for the publisher. That’s the essence of the deal.
2. CO-PUBLISHING DEALS
Co-Publishing deal is the most common contract in the publishing industry nowadays. Under the co-publishing, the songwriter’s micro company and the publishing company put the composition out together — hence the “co-” part — divvying up the publisher’s share 50/50. So, the songwriter ends up getting 75% of the royalties: the writer’s 50% and half of the publishing share, or the other 25% of the overall copyright, owned by songwriter's micro-company.
Revenue Splits Under a Co-Publishing Deal
Co-Publishing deals are commonplace for the mid-level songwriters, that are still in need of the promotional support from the publisher but have enough negotiating power to skew the deal in their favor (compared to the full-publishing agreement). The co-publishing deals also have some “duration of rights” to them, meaning that eventually, the songwriter will get the entirety of their rights back. It might take a while, though — the duration of rights is set up on a case by case basis, ranging from 2 years to 20 and more.
Otherwise, the co-publishing deals are a lot like traditional full-publishing. Publisher will provide an advance (recouped by the songwriter’s share until made whole) and actively work the writer’s career — pitching the compositions, maximizing sync opportunities, financing the recording of demo material, setting the songwriter up to write for prominent recording artists and so forth. The songwriters, in their turn, will commit to the minimum number of songs deliverable under the contract duration.
For both co-pub and full-pub deals, the sync fees splits will be defined on a case by case basis. Essentially, the publisher will maximise and collect all the sync revenues, and distribute it according to whatever the individual deal is — once again, it will come down to the negotiating power of the songwriter.
3. ADMINISTRATION DEALS
Administration deals are a whole other breed of publishing services. Essentially, under the admin deal, the publisher has only one role — collecting and auditing the royalties on behalf of the artist. In that case, the songwriter keeps full control over the copyright, paying the publisher 10-25% of the publisher’s share in the form of an “administration fee”. Accordingly, the publisher earns a percentage of the revenue only while the deal is still in place, without any sort of “duration of rights”. For that reason, the admin deals are usually longer than the co-publishing once, stretching up to 5 years.
Revenue Splits Under a Publishing Administration Deal
Administration deals are commonplace for the well-established songwriters and recording artists writing their own compositions. Put simply, Jake Gosling and Max Martin don’t need the publisher to promote their compositions and get them in touch with performing artists. They’re already big enough to get all the representation they need from their publishing “already-not-so-micro-company”. They do, however, need someone to register their work with all the CMOs around the globe, audit and claim their royalties, look over (and renew) countless sync, and so on.
So, the triple-A songwriters usually go for administration deals — keeping full control over their music, while maximizing the incoming royalties. The same generally goes for the artists that write music for themselves, focusing entirely on the recording side of the business. If the only person you’re writing for is yourself, and plan for it to stay that way, there’s no point in getting a full-blown publishing representation. That is precisely why most of the distribution aggregators, like TuneCore and CDBaby, offer publishing administration deals in addition to distributing their music to the likes of Spotify.
Source: Soundcharts.com