Making Money In Music

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1 LESSON 12 Making Money In Music Publishing/Performing Rights/Distribution

2 In the music business there are many ways one can earn an income. In this chapter we discuss the publishing and distribution of your creative works and the necessary steps to earn royalties you so deserve. Publishing means taking something that was originally created and letting it out to the masses. Example; Pressing a CD and making them available to the public, or putting one of your songs on itunes. Music Publisher In the music industry, a music publisher (or publishing company) is responsible for ensuring the songwriters and composers receive payment when their compositions are used commercially. Through an agreement called a publishing contract, a songwriter or composer "assigns" the copyright of their composition to a publishing company. In return, the company licenses compositions, helps monitor where compositions are used, collects royalties and distributes them to the composers. They also secure commissions for music and promote existing compositions to recording artists, film and television. The term originally referred to publishers of sheet music. In the late 19th century sheet music was the primary commercial use of musical compositions. Today, the two businesses have diverged, and the large companies known as "music publishers" typically are no longer in the business of producing printed music. The copyrights owned and administered by publishing companies are one of the most important forms of intellectual property in the music industry. (The other is the copyright on a master recording which is typically owned by a record company.) Publishing companies play a central role in managing this vital asset. The Music Publisher's role Successful songwriters and composers have a relationship with a publishing company defined by a publishing contract. The publisher agrees to see to it that the composers receive royalties from various uses of their compositions. They also provide substantial advances against future income. In return, the publishing company receives a percentage, which can be as high as 50% and varies for different kinds of royalties.

3 There are several types of royalties: mechanical royalties derive from the sale of recorded music, such as CDs or digital downloads. These royalties are paid to publishers by record companies (through the Harry Fox Agency as well as through American Mechanical Rights Agency in the U.S.). Performance royalties are collected by performance rights organizations such as SESAC, BMI, ASCAP or PRS and are paid by radio stations and others who broadcast recorded music. Synchronization royalties are required when a composition is used in a film or television soundtrack. These royalties typically pass through the hands of a music publisher before they reach the composer. Publishers also work to link up new songs by songwriters with suitable recording artists to record them and to place writers' songs in other media such as movie soundtracks and commercials. They will typically also handle copyright registration and "ownership" matters for the composer. Music print publishers also supervise the issue of songbooks and sheet music by their artists. Steps to License your music for use in media There are several ways to get your music placed in television shows, movies, video games, etc. Below are the most common avenues. Music Library Companies Stock Music Libraries Unlike popular and classical music publishers, who typically own less than 50 percent of the copyright in a composition, music production libraries own all of the copyrights of their music, meaning that it can be licensed without seeking the composer's permission, as is necessary in licensing music from normal publishers. This is because virtually all music created for music libraries is done on a work for hire basis. Production music is therefore a convenient solution for media producers they can be assured that they will be able to license any piece of music in the library at a reasonable rate, whereas a specially commissioned work could be prohibitively expensive; similarly, licensing a well-known piece of popular music could cost

4 anywhere from tens to hundreds of thousands of dollars, depending on the prominence of the performer/s. Production music libraries will typically offer a broad range of musical styles and genres, enabling producers and editors to find much of what they need in the same library. Music libraries vary in size from a few hundred tracks up to many thousands. The first production music library was setup by De Wolfe Music in 1927 with the advent of sound in film, the company originally scored music for use in silent film. Library music is frequently used as theme and/or background music in radio, film and television. Writing for a stock library can be quite lucrative but you will only receive a one time out right fee and never receive royalties or retain ownership. In most cases they own the music once you sell it to them and you can not use the composition any where else. Also most stock music is a very generic watered down version of popular music. It is meant to be vary affordable. Popular Music Libraries Popular Music companies are very different in comparison to stock music. They are looking for real musicians that make professional sounding music. Most of them represent independent artist that have great music available for license. Most production companies, movies and TV shows would rather use great independent music in their productions rather than national artist. The main reason is cost as well as availability. Most of these companies pre clear the music and have the artist sign a non-exclusive agreement. The agreement basically states that the company has the rights to use the composition and shop it for placement in media. In return they normally will split any sync fees related to placement and will retain the publishers share of the royalties and the artist retains the writers. The great thing about a non exclusive agreement is that you can place the same composition with many companies and you retain full rights. Music Supervisors The Music Supervisor position is difficult to generalize and highly versatile, depending upon the industry and project the role is involved in. Typically, a

5 music supervisor handles the process of choosing, negotiating, and incorporating pieces of music into visual media (such as a television show or movie), acting as a liaison between the creative and business ends of this process. This position is most active within media based industries, including live events, television, film, advertising, theatre, and video gaming. Music supervisors may work within production companies, film studios, networks, music supervision companies, or do freelance work. The overarching responsibility of a music supervisor is to meet the needs of a project s director and producer. This means catering to the creative goals of a project under a strict budget: often less than 5% of a project s total budget. The director/producer will discuss their vision for the project with the music supervisor, and how they expect the music to enhance this vision. The visual media will then be spotted by the supervisor - a process of choosing where selected music will be inserted. Traditional spots include the main title, opening credits, and closing credits, while additional spots are incorporated to trigger emotional responses from viewers. Scores, or background music, are also an important consideration for enhancing visual media. Scores can range from the background to a dramatic scene to television bumpers - the music signifying leading into or coming back from a commercial break. After being given or creating a budget, the supervisor must select appropriate music for the project - either by licensing existing songs/scores, or creating new songs/scores. If creating new music, the supervisor may become responsible for additional roles, including securing artists or composers, facilitating the production and recording process, overseeing finances, and finalizing post-theatrical uses of the soundtrack (Baskerville). When using pre-existing music, the supervisor s duties focus on the legal and financial aspects of licensing and negotiating. About thirty to fifty percent of a music supervisor s job revolves around music clearance alone.

6 If you can get your music noticed by a music supervisor they can be very lucrative. Also you will retain full rights and royalties as there is no middle man you are dealing directly with the source. Performing Rights In order to be paid royalties you have to be affiliated with a Performance Rights Company also known as a PRO and register your works with them. There are 3 major companies in the US; ASCAP, SESAC, & BMI ASCAP The American Society of Composers, Authors and Publishers (commonly known as ASCAP) is an American not-for-profit performancerights organization (PRO) that protects its members' musical copyrights by monitoring public performances of their music, whether via a broadcast or live performance, and compensating them accordingly. ASCAP collects licensing fees from users of music created by ASCAP members, then distributes them back to its members as royalties. In effect, the arrangement is the product of a compromise: when a song is played, the user does not have to pay the copyright holder directly, nor does the music creator have to bill a radio station for use of a song. BMI Broadcast Music, Inc. (BMI) is one of three United States performing rights organizations, along with ASCAP and SESAC. It collects license fees on behalf of songwriters, composers, and music publishers and distributes them as royalties to those members whose works have been performed. In 2009, BMI collected over $905 million in licensing fees and distributed $788 million in royalties. BMI songwriters create all forms of music in all genres. BMI represents artists such as: Mariah Carey, Lady Gaga, Taylor Swift, Eminem, Rihanna and Shakira; bands including Maroon 5, Evanescence, Nickelback, Linkin Park and Lady Antebellum; legends such as Sam Cooke, Willie Nelson, Fats Domino and Dolly Parton.

7 SESAC SESAC, originally the Society of European Stage Authors & Composers,is the smallest of the three performance rights organizations in the United States. SESAC was founded in 1930, making it the second-oldest performing rights organization in the U.S. SESAC is also the fastestgrowing PRO in the United States. Based in Nashville, Tennessee, SESAC deals with all aspects of the business, from creation to licensing and administration. The company also has offices in New York City, Los Angeles, London, Atlanta, and Miami. SESAC touts its small size: If the phrase 'quality vs. quantity' ever mattered, SESAC is the place. While SESAC is the smallest of the three U.S. performing rights organizations, size is its largest advantage. SESAC prides itself on developing individual relationships with both songwriters and publishers. Whereas ASCAP and BMI operate on a not-for-profit basis, SESAC retains some income as profit.while ASCAP and BMI distribute all income from performance royalties to their composer and publisher affiliates (less an administrative fee), SESAC retains an undisclosed amount of performance royalty income.sesac is also unique among the US performing rights organizations in that it does not offer open membership one must be approved to join. Distribution In this day and age the independent artist has technology on there side. No longer do you have to be signed to a label to have a great product available in all outlets were people shop for music. It is however important to know

8 how distribution works so that your product can be in that record store or on itunes for your fans to buy. How it works Physical media (such as CDs) are sold by music retailers and are owned by the consumer. A music distributor delivers the physical media from the manufacturer to the retailer and maintains relationships with retailers and record companies. The music retailer pays the distributor, who in turn pays the record company for the recordings. The record company pays mechanical royalties to the publisher, composer, and songwriter via a collection society. The record company then pays royalties, if contractually obligated, to the recording artist. In the case of digital downloads, there is no physical media other than the consumer's hard drive. The distributor is optional in this situation; large online shops may pay the labels directly, but digital distributors do exist to service vendors large and small. When purchasing digital downloads, the consumer may be required to agree to record company and vendor licensing terms beyond those which are inherent in copyright; for example, some may allow freely sharing the recording, but others may restrict the user to storing the music on a specific number of hard drives. Digital Distribution VS Physical Distribution Lets face it even though it is sad to admit CDs are on the way out. They are expensive to make,print and ship. With that being sad there are still people that want that tangible thing in there hands. Physical distribution is still an option for an independent artist, although is is tough and can be expensive to lock down a good deal. The plus to having your cd distributed to big chains is the validity it gives you and the availability it gives your fans that yearn for a hard copy. Digital distribution is vey popular today. As an independent artist you can basically have your music available to anyone in the world via the internet. Also it cost a fraction of the price that it would to get the physical copies distributed. And the most important thing about having your music available on line is that is super convent for your fans to buy it right then. Some of the major download stores are: itunes, AmazonMP3, Spotify, Rhapsody.

9 The first half of 2011 saw a resurgence for the music industry, with album sales up for the first time since According to Nielsen and Billboard s Mid-year Music Industry Report, overall album sales, digital album sales, catalog album sales and vinyl album sales all saw increases over the same six-month period in Digital sales, which accounted for one out of every three album purchases, are up 19% through the first six months over 2010 and are on pace to set a new sales record at the end of the year. This is just one of a number of records set to be broken or already broken in 2011.

10 Lesson 12 Publishing/Performing Rights/Distribution Quiz 1. A music publisher (or publishing company) is responsible for ensuring the songwriters and composers receive payment when their compositions are used commercially. 2. Stock Music Libraries generally license generic music in mass quantities. 3. Name and explain the three major performing rights companies in the US. ASCAP, BMI,SESAC 4. The music supervisor handles the process of choosing, negotiating, and incorporating pieces of music into visual media. 5. Popular Music Libraries work with accomplished independent artist that make authentic sounding music. 6. The act of getting your song used in media is called landing a placement. 7. The way to get your CD in record or department stores is by getting it physically distributed by a distribution company. 8. itunes is one of the download stores your music will be in after getting it digitally distributed.

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