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MUSIC PUBLISHING
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.