Copyright and Royalites – How Songwriters Get Paid

My name is Trystan Matthews, owner and founder of Demo My Song. In an effort to better understand copyright law as well as how royalties get paid, I recently did some research on the topic. Here is what I discovered:

Copyright:

Under present copyright law, a work is automatically protected by copyright as soon as it is created and exists in a tangible or audible form such as mp3, CD, sheet music etc…

The type of recording needed to copyright your work could be a simple demo of your song or a fully produced studio version. Sheet music is most easily prepared as a “lead sheet” which contains lyrics, melody, and chords all in one.

Not all artists choose to copyright their songs with the U.S. Copyright Office but you are more likely to receive compensation in court should your copyright ever be infringed upon. It costs $45 to register your song with the U.S. Copyright Office but you can register a published collection of songs with one application fee if you are claiming sole ownership of all the songs in the collection.

In cases when a lyric writer and songwriter/producer co-author a song, copyright law dictates that the two writers split the copyright 50/50. While this is a fairly standard split, songwriters and lyricists can split it up however is deemed most appropriate, like say for instance 60/40 and so on… To avoid later confusion with your band members or co-writers, it’s always a good idea to square away these agreements early on.

Publishing:

Publishing royalties are paid to the composer if someone covers, samples, or licenses their song for a movie, television show, or commercial.  David Byrne, formerly of the Talking Heads, refers to publishing rights as a songwriters “pension plan.”  He wrote an interesting article on the topic which can be found here.

Performing Rights:

Performing rights are the right to perform music in public.  Royalties must be paid to the songwriter or copyright holder of a song in exchange for permission for you or your band to perform the piece in a public venue.

Performing rights are also paid to the artist and/or copyright holder when their music is played in public, for example the radio, or in any store-front or restaurant which are required to pay music licensing fees in order to legally play music for their customers.  There has been an interesting development in Spain recently, where store owners are being required to pay similar music licensing fees for the first time ever.  Some business there are even boycotting the radio altogether.  In the U.S. however, business have been required to pay these fees for quite some time.

Mechanical Royalties:

Mechanical royalties go the songwriter anytime a copy of one of his/her songs is made.  This pertains to the physical manufacturing of CDs as well mp3 and electronic distribution.  It is not un-common for the songwriter to share mechanical royalties with his/her band members and occasionally, studio musicians depending on their contractual agreement.

Do I get paid as a musician on a record or album?

Studio musicians or band members who perform on recordings sometimes make money through mechanical royalties (described above) depending on their contractual agreements.  Not to be confused with performing rights royalties, which are paid to the songwriter only, mechanical royalties can be paid to all musicians present on the recording.

Do I get paid as a producer of an album?

The answer depends on the specific contractual agreements set forth by the parties.  A freelance producer is generally paid a flat rate that is agreed upon (and often paid in full) before production begins.  The royalty rate a producer can claim varies on their status in the industry.  A producer can claim royalties at a rate of, none at all, to the industry standard of about 3% to 6% of the PPD (Published Price to Dealer).

A song can also be produced on a “work for hire” basis meaning the producer as well as studio musicians sign away any claim to rights or ownership of the songs regardless of their artistic input.

It is always recommended that contractual agreements be prepared and signed before work on a song begins.

What is the difference between a record label and publisher?

Record labels roles in the industry have been dramatically altered over the past decade as internet sales and peer to peer file sharing have radically changed the way that we buy and listen to music.

Recognizing that the old model for distributing music was no longer viable, record companies are now attempting reinvent themselves and how they do business in a whole new landscape.  The larger record labels have taken a big hit, while some smaller, leaner, and more efficient companies are still thriving as they continue to find more and more ways to re-imagine the industry.

It is a bit unclear what record labels of the future will look like and what they will offer they’re respective artists.  Here is what record labels used to be responsible for:

Funding studio recording sessions
Artist development
Accounting and bookkeeping
Marketing
Manufacturing
Distribution
Loans for expenses such as touring, music videos etc…

A music publisher is an intermediary between songwriters and record companies.  Historically, music publishers assumed copyright ownership of the song and split the royalties with the songwriter.  In exchange the publisher would try to place the songs with recording artists, as well as in movies, television, and advertising.

Publishers also used to help performing artists obtain recording contracts.  While some publishers still take this approach, the advent of hard-disk recording has made producing in general, more economical than ever before, and increasingly, traditional models are giving way to a trend of more self-produced material as well as more professional songs being produced in smaller, project studios.

Self-Producing:

You own the publishing rights to any song you have written.  If you have co-written a song with another songwriter each are entitled to an equal share.  Therefore, you are by definition a publisher the moment your song exists in tangible or audible form like say, for instance, a recording or sheet music.


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