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The contractual relationship between a songwriter or music composer
and a music publisher, whereby the writer assigns part or all
of his or her music copyrights to the publisher in exchange for
the publisher's commercial exploitation of the music.
Music publishing has been an important
part of the U.S. entertainment industry since the early twentieth
century. Songwriters contract with music publishing companies
to exploit their songs, with both parties sharing the income generated
from the songs. Before the introduction of musical recordings,
songwriters and publishers earned their income primarily from
the sale of sheet music. In the modern era, songs can be commercially
exploited in many types of media, including recordings, radio,
television, film, and video. Music publishing is governed by U.S.
copyright law, but much of the law of music publishing is negotiated
through private contractual agreements.
Music publishers are powerful intermediaries
between songwriters and recording companies. Typically, a music
publisher demands copyright ownership from the songwriter, along
with half of the royalties. A publisher may make a large cash
advance to a popular or promising songwriter, but often the advance
is minimal. In return, the publisher seeks to place the songwriter's
compositions with performers who will make a recording. In addition,
a publisher will try to place songs in films, television shows,
and advertisements. If the songwriter is also a performer, the
publisher will assist the artist in obtaining a recording contract.
The publisher also assumes the responsibility of collecting royalties
and giving the songwriter his share.
Publishing income comes from various sources,
but it is separate from income derived from retail sales of recordings.
Income from recording sales flows to the owner of the recording
(usually the record company), which then pays a contractually
negotiated recording royalty to the performer. The owner of the
recording separately pays the publisher of the recorded compositions
a mechanical royalty for the right to record, copy, and distribute
copies of the composition. These royalties are called mechanical
royalties because the license is for mechanical recording and
reproduction of the composition.
Under U.S. copyright law, a publisher is
required to grant a mechanical license to anyone wishing to record
a composition that has previously been recorded and released commercially.
This is called a compulsory license, and the minimum rate that
must be paid to the publisher for such a license is set by Congress
at a few cents for each copy made of a recording of the composition.
Normally, however, a record label that wishes to record a publisher's
composition will negotiate a private license with the publisher
rather than follow the strict accounting and reporting rules that
accompany recording under a compulsory license. Because of this
situation, the statutory compulsory license rate has become the
effective ceiling rate for recording a composition, because no
one need pay more than the rate set by law.
A lucrative part of music publishing involves
performance royalties. Performance royalties are paid when a song
is played on the radio or television, used by businesses for background
music, or used by clubs for dance music or by bands performing
at a club. A popular song can earn thousands and sometimes millions
of dollars through the collection of performance royalties. However,
it would be too demanding for a publisher to sign performance
licenses with every club, radio station, and business office that
might use a particular song. Instead publishers and songwriters
register with a performing rights organization (PRO) to collect
fees on their behalf.
The three PROs in the United States are
the American Society of Composers, Authors, and Publishers (ASCAP),
Broadcast Music, Inc. (BMI), and the Society of European State
Authors and Composers (SESAC). The PROs negotiate blanket licenses
with all who use music for profit. Such fees can range from less
than one hundred dollars for a small business using music to enhance
its business environment, to hundreds of thousands of dollars
or millions of dollars for large-scale broadcasting entities.
The PROs then monitor radio and television broadcasts and, using
a complex statistical model, pay publishers and songwriters based
on projected actual uses of a song. When a composition is registered
with a PRO, the registrant informs the PRO what percentages of
royalties are to be paid to the publisher and songwriter. The
PRO issues separate payments to the publisher and to the songwriter
(or songwriters). A particular songwriter may only be registered
with one PRO at a given time to avoid confusion as to which PRO
is responsible for collecting performance royalties on the songwriter's
behalf. The use of blanket licenses allows an artist to perform
compositions written by another songwriter without first requesting
the songwriter's permission.
As opposed to mechanical licenses, there
is no statutory rate for the use of a song in films and television
advertisements (synchronization licenses), in radio advertisements
(transcription licenses), or for sale as sheet music (print licenses).
These fees are negotiated separately between the user and the
music publisher. The licensee pays the entire fee to the publisher,
who then pays the songwriter's share to the songwriter.
Since the 1960s, many popular musical performers
have written their own musical compositions. Some of these artists
choose to "self-publish," forgoing relationships with
publishers and thus retaining full ownership and control of their
copyrights. These artists are more often songwriters whose compositions
are so unique that they are not likely to be recorded by other
performers. Therefore, this type of artist will receive little
benefit from an outside publisher's marketing efforts. However,
because the music industry's royalty structure assumes that publishing
income will be paid to a publisher, a self-published artist often
will set up her own publishing company under an assumed name to
receive publishing income. A self-published artist will frequently
hire an accounting firm to handle specific admin2istrative functions
such as royalty collection, for a much smaller fee than a full-service
music publisher would demand.