Note: This is part 3 of a multi-part series called “Music Publishing Money Explained”. For the first article in the series, please click here, and for the second article, please click here. Today, we tackle the often asked question of “What is a Publishing Company?“
RECAP: The Two Copyrights, Mechanical Royalties, & Neighboring Rights
Okay, so in part 1 of this series, we did a deep dive into copyrights, what they mean, and how they get you money from your music. If you missed part 1, here is a quick recap of the two copyrights associated with music and what they mean:
- The Composition Copyright protects the underlying music in a song, aka the lyrics and melody, and is owned by the composers, songwriters, and lyricists. The organizations that collect the Performance Royalties for Composition Copyright holders are called Performance Rights Organizations, or PROs.
- The Sound Recording Copyright protects the recording of the song, and is owned by the performers, producers, and audio engineers. The Record Royalties, also known as Master Royalties, are collected by distributors or record labels.
In part 2 of this series, we went into Mechanical Royalties & Neighboring Rights, which are the two ways that the Composition Copyright and the Sound Recording Copyright interact and “overlap” with each other. If you missed part 2, here’s a quick recap of what Mechanical Royalties & Neighboring Rights are:
- Mechanical Royalties are a small portion of money generated from the Sound Recording Copyright that are paid out to the owner(s) of the Composition Copyright. This money is collected and paid out to your publishing company or publishing entity by four organizations: Harry Fox Agency (HFA), Music Reports Inc (MRI), Medianet, and The Mechanical Licensing Collective (The MLC).
- Neighboring Rights are a portion of money generated from the Composition Copyright (via public performance, broadcast, or digital performance) that are paid out to the performers and owners of the Sound Recording Copyright. In the U.S. we do not have laws that recognize traditional Neighboring Rights. Sound Recording Copyright holders and performing artists can collect their digital performance royalties portion of Neighboring Rights from an organization called SoundExchange.
We created a little chart that may help visualize everything we’ve discussed thus far:
So wait, you see that there are 2 halves on the Composition Copyright that says “Writer’s” and “Publisher’s”, what does that mean? What even is publishing anyway? How does it work? Well, let’s break it down:
Writer’s Share vs. Publisher’s Share
Money is generated from the Composition Copyright in the form of sync royalties and performance royalties (including public, digital, and broadcast). Each of these royalties gets split down the middle into the Writer’s Share and the Publisher’s Share. So what’s the difference exactly?
Your writer’s share is what is owed to you as a songwriter, composer, or lyricist. This is paid out to you as an individual, which is why here in America you register for your writer’s account with your Social Security Number. No matter what, as a songwriter, composer, or lyricist on the musical composition, you are owed this writer’s share, regardless of what type of publishing deal you may sign (more on this later).
Your publisher’s share, on the other hand, is the portion paid to your publishing company or publishing entity. If you haven’t signed up with your PRO as a publisher, then guess what? You are missing out on half of all of your performance royalties (including public, digital, and broadcast) and your sync royalties too. Also, since mechanical royalties only have a publisher’s share and not a writer’s share, you are missing out on 100% of your mechanical royalties without some sort of publisher or publishing entity.
So wait… publishing? What’s that?
A Brief History of the Publishing Company
To some degree, music publishing has existed since the printing of sheet music began, shortly after the Gutenberg Bible was first printed (around 1455). After Octaviano dei Petrucci achieved a number of monopolies in printed music in Venice in the late 1400’s, various publishers began reproducing, selling, and specializing in printed sheet music. Thus, the music publishing industry in its earliest form was born and began to take shape.
In America, sheet music began to gain popularity in the late 19th century surrounding an area of Manhattan known as “Tin Pan Alley”. Many early hits came out of this area, which prompted a boom in the music publishing industry in the early 20th century. This, paired with the copyright protections outlined in the Berne Convention and the 1909 U.S. Copyright Act, gave us the modern music publishing industry here in the U.S.
Now, due to the advent of recorded music, sheet music has declined in popularity, so publishing companies have expanded their focus to monetizing public performance, mechanical licensing, and sync licensing.
So What Is a Publishing Company?
Essentially, a music publishing company is in the business of monetizing and maximizing the use of musical compositions. Basically, they make sure the Composition Copyright is making money and collecting on it. There are two ways a publishing company can be set up.
One way is to simply sign up as a publisher via your Performing Rights Organization (PRO). This will create a publishing entity that can collect your publishers share of performance, sync, and mechanical royalties on your behalf.
Another way is to set up a legal business entity, such as an LLC. With this method, income and taxation is done through your business, which could provide tax benefits as well as legal separation and protections.
Either way, we highly recommend that every songwriter, lyricist, and composer have a publishing entity of some kind, because remember, without one you would be losing out on well over half of your royalties from the Composition Copyright.
But wait… I’ve heard about people signing publishing deals, or signing to these big publishing companies like Sony/ATV (now re-branded as Sony Music Publishing) or Warner Chappell. What’s the deal with that?
Signing a Publishing Deal
Some songwriters, composers, and lyricists sign to larger publishing companies, and grant them the ownership and/or rights to part or all of their musical catalog. In exchange, the company is expected to provide services that can include setting up songwriting sessions, pitching their songs to larger recording artists, and pitching their completed works to sync opportunities.
The intricacies of how publishing deals work would require an entire article to fully explain, but here is a brief overview of the main types of publishing deals:
Full Publishing Deal
These deals typically involve signing over 100% ownership and collection rights of the publisher’s share to a third party publishing company. There is usually an up-front advance paid to the writer or composer as well as the full scope of the publisher’s services.
These deals typically involve signing over 50% ownership and collection rights of the publisher’s share to a third party publishing company. “Co-pub” deals, which are becoming more common in recent times, have a wide variety of terms that vary between individual companies and contracts.
In “Pub Admin” deals, the writer, lyricist or composer typically retains the ownership of their works. They do, however, sign over rights to collect on their publisher’s share to a third party publishing company, who also typically keeps a percentage of the money they collect as a fee for their service. Essentially, these pub admin companies make sure that your works are registered accurately with all the societies that collect the various royalties generated by the Composition Copyright.
So, What Do I Do Now?
Basically, do you want to retain ownership of your music while collecting ALL of your royalties, beyond the writer’s share? Then we recommend creating a publishing company or entity with your PRO and registering with the 8 collection societies we mentioned in the previous article. That way, you’re getting all the money you’re owed.
However, if you don’t want to have to go through all the hassle of signing up and registering your songs with 8 different collection societies (and that’s just the ones here in the U.S.), then check out our publishing administration services at Gvngaroo Publishing. All you have to do is sign up and register your works ONE time with us, and we make sure that your works are registered with all U.S. collection societies, as well as with collection societies around the globe, that way you’re not missing any of your royalties.
Music Publishing Money Explained pt. 4: Revenue Retrievin’ is coming next week, so be on the lookout!