[Article originally posted on SoundCtrl]
If you’re a musician in the US, there’s a good chance you’re familiar with the names ASCAP, BMI and SESAC. You also likely know that joining one of these Performance Rights Organizations (PROs) will help you collect royalties that you’ve earned as a songwriter.
What you may not realize is that the world of rights and royalties is incredibly complex, and in this increasingly global, multi-platform world, you might not be quite as covered as you think. In this article, we take a look at the royalties PROs can and can’t collect and demonstrate how a publishing administration partner like TuneCore Publishing Administration, in conjunction with PROs, can help ensure you’re able to get your hands on all the revenue your songwriting earns.
Performance Is Just One Type of Right
The first misconception held by many songwriters is that copyright is a single thing – like a blanket – that covers your work. The reality is it’s more like a quilt, and if one piece of that quilt is missing, you may be left in the cold.
There are multiple ways compositions generate revenue for songwriters. Organizations like ASCAP and BMI cover one of them: the P in PRO, Performance. While Performance encompasses much more than an actual stand-on-the-stage-and-play situation, it by no means covers all uses of a composition. It’s these other revenue generators that, if you only work with a PRO, may represent earnings that are just sitting on the table.
What Is Performance?
Performance quite obviously includes live public performances, but it also includes radio play and even having your composition played as background music in a public place like a restaurant or hair salon. As a group, these are referred to as “Analog Public Performance,” and the royalties they generate are based on negotiations between your PRO and the radio station, TV network, bar, restaurant, airline, office, etc. using your composition.
Thanks to the Internet, royalties are also collected for “Digital Public Performance.” This category is then subdivided into Non-Interactive and Interactive “Streaming” Public Performance. Non-interactive services are those that don’t allow you to pick songs, create playlists or otherwise “interact” with the music. Pandora, iHeartRadio and Sirius XM Satellite Radio are examples of non-interactive platforms. Interactive service examples are YouTube and Spotify. For any of these uses, there’s no set royalty rate. Royalties are negotiated between the PRO and the other entity and are often based on a percentage of that entities’ gross revenue.
If the song you wrote is performed or broadcast publicly in one of these settings, and you’re affiliated with ASCAP, BMI or SESAC, you can feel safe in knowing that they will collect on your behalf and pay you…at least in the United States.
US-Based Organizations Cover the US
Copyright regulations are laws, and as such, they are codified and enforced in each territory. Much like how the NYPD won’t be giving you a traffic ticket in Los Angeles, ASCAP isn’t collecting for you in Germany. Or France. Or Malaysia. Those countries have their own “societies” for the enforcement of copyrights and collection of royalties.
Fortunately, there is a measure of cooperation. ASCAP or BMI will work with the society in whatever country to get you paid, but again, this is just covering PERFORMANCE. So imagine you gave permission for your song to be used in the TV Show Breaking Bad. It airs in the US so your PRO collects any resulting performance royalties for you and pays you. As a result of the song being in the show, your iTunes downloads skyrocket, and again, your PRO will get you paid. But if the show airs in Germany, and as a result your song catches fire on Spotify in that country, you will only get a part of what you’ve earned – the performance royalty. You will NOT receive royalties collected as a result of the streaming mechanical or download mechanical. Instead, the society for the region will collect the money on your behalf, but because they don’t know who to pay, they’ll just sit on it. By contrast, once you’ve registered with a company for publishing administration, they will track rights and collect on your behalf worldwide.
These internationally-earned royalties can really add up, too. For example, TuneCore Songwriter Brian Crain, an ASCAP member, had distributed and even licensed his music for a few years before he learned that his PRO wasn’t collecting everything he’d actually earned. As soon as he signed up for TuneCore Publishing Administration, TuneCore was able to get $4000 in download mechanicals to him that had previously just been sitting in Canada.
“Performance” Covers a Lot, but Not Everything
In addition to performance, royalties and revenue are generated when your compositions are sold, streamed through interactive services, downloaded, or when they are licensed for use in something like a TV show or movie. These avenues can be incredibly lucrative. But if you’re just relying on a PRO, the money generated by them may never make it into your pocket. In these cases, a publishing administration service is essential. In the past, these services were only available to the most elite tier of songwriters. Today, in much the same way that digital has opened the door to global distribution for all, any songwriter can get a publishing administration partner.
If you write a composition and someone copies, prints, covers or even transforms it into something else, you’re owed a “Mechanical Royalty.”
Reproduction is one of the main ways compositions generate mechanical royalties, and these royalties are owed on every single CD, LP or other physical manifestation of that composition. As soon as that “thing” is made, the royalty has been earned. If a million CDs are burned but not a single one sells, it’s still a reproduction of a million units. Every time a sound recording is downloaded or streamed (interactively) on digital stores like iTunes, Amazon or Google, it counts as a separate reproduction, as well.
Mechanical royalties are also collected for “Derivatives” of your composition. An easy example of a derivative use would be someone doing a bossa nova rendition of your hip-hop song. While this transformation no longer counts as a reproduction, you’ve still earned royalties for the use.
According to the letter of the law, derivative works include any work based on one or more pre-existing works. This could be a translation or new musical arrangement but could also include a dramatization, fictionalization or even a movie version. A good and complicated example of this is “Born in East LA,” a movie that was derived from a Randy Newman composition that was derivative from Bruce Springsteen’s composition, “Born in the USA.” Every time the movie gets shown, Bruce earns mechanical royalties.
PROs like ASCAP, BMI, SESAC or SOCAN do not collect mechanical royalties. This means any revenue you’ve earned from streams, downloads (outside of the US & Latin America) and physical sales are not collected by ASCAP and won’t make it into your pocket. While the royalties will be collected per the law by places like digital stores that stream and sell downloads outside the US & Latin America, without publishing administration, they won’t know who to pay. The money, therefore, goes unclaimed. A publishing administrator, on the other hand, will register your information with these sources, song by song, and you’ll collect the mechanical royalties that you’ve earned.
If we go back to the example of the bossa nova rendition of your hip-hop song, we’ve already established that mechanical royalties will be collected on your behalf, but you may not ever receive that money. What we haven’t yet discussed is the fact that you have to give permission to the band in order for them to legally do the rendition in the first place. That permission – or more accurately, the licensing of your intellectual property – is another avenue to revenue. It’s also a road the PROs can’t help you navigate.
Licensing comes into play with more end uses than just our derivative examples. Use of samples requires a license, and as we’ve seen through lawsuits against Robin Thicke, Jay-Z, Moby, Kanye West and scores of other artists, failure to obtain the correct permissions can have costly results. Also in this category are things like mobile ringtones, printed sheet music, online guitar tabs and even lyrics posted online. Legally, anyone doing these activities without the proper license is in violation of the law.
In a lot of these cases, it’s completely plausible that the violators are unaware of their crimes, but ignorance does not make them innocent. They’ve violated your rights and you could sue them. But first you’d have to find the unlicensed use, then you’d have to figure out how much it’s worth and then good luck actually collecting. ASCAP and BMI can’t help you here. A publishing administrator can.
We at TuneCore believe very strongly that Performing Rights Organizations are an incredibly important and necessary tool for songwriters and publishers. They are the watchdogs of the airwaves, so to speak, with the enormous task of collecting performance royalties from thousands of sources. However, we also see how this is a very different business than it was back in the days of physical media on brick-and-mortar store shelves. Now, both the media and shelf can be digital and the channel and audience can be anywhere in the world.
Every year, millions of dollars in royalties that are collected on behalf of songwriters by societies all over the world just sit, unclaimed, because the songwriter doesn’t have a publishing administrator locating and obtaining these funds. That’s why it’s crucial to have a publishing administrator in addition to your PRO, so your share of those millions of dollars makes it into your pocket.