Previously we reported on the Music Modernization Act, a bill proposed to ensure digital music services pay fair royalties to the copyright holders, and where it stands during its process to be become an enacted bill. As we are aware from the timeless SchoolHouse Rock classic “I’m Just A Bill”, in order to enact a bill it takes time and votes from different levels of Congress. The bill passed the House unanimously April 25, with a revised and amended version coming out of the Senate Judiciary Committee June 28. If the bill passes a Senate vote, it goes back to the House for a final sign off.
The bill seemed to be moving full steam ahead with no objections from any party until lobbyists discovered how much control private entities would lose to the newly formed MLC, Mechanical Licensing Collective. These offered amendments from the private sector have put the bill in danger of not passing. Technically, this copyright bill has until the end of the year to pass but legislators are targeting Oct 12 as the deadline. This date is before Congress adjourns for the midterm elections because after Congress goes on vacation, nothing new will be passed.
First the MMA received push back from The Blackstone Group, owners of SESAC and The Harry Fox Agency. They proposed an amendment that would allow the current mechanical licensing organizations to stay in control of mechanical royalties collection and administration. The Blackstone Group questioned why a government-commissioned mechanical licensing body was necessary, when these organizations already exist. After negotiations, the reps for the MMA clarified the restriction on what licenses can be administered by the MLC, which include sync, lyric and performance licenses. This allowed groups like SESAC and Harry Fox to maintain their clientele and continue business as usual, thus still allowing the MLC to collect data and administer mechanical royalties.
After putting out that fire, the MMA is now seeing restraints from another organization. SiriusXM is fighting a portion of the bill’s CLASSICS Act provision which calls for digital and satellite radio to pay royalties for playing pre-1972 master recordings, while terrestrial radio would be exempt.
The SiriusXm CEO has criticized the bill for expanding the royalty requirements for satellite radio without also expanding the requirements for terrestrial radio. Traditional radio doesn’t pay for the broadcast of any sound recordings and this bill does nothing to change that. During a period in which SiriusXM paid 2.2 billion for the use of post 1972 works, terrestrial radio paid nothing. The future of radio is digital and it would be wise for the drafters of the MMA to carve out language to fairly compensate artists in both the digital and terrestrial areas. At this point, neither side has figured out a solution and they only have a couple months left to do so.
Moving forward, the Music Modernization Act has only three paths to move through the Senate: 1. by speedy unanimous verbal consent, which would require all 100 senators to vote yes; 2. the more difficult floor process, which includes time for hearings and would require support of at least 60 Senators (46 Senators have signed on as co-sponsors); or 3. by attaching the MMA as a rider to another piece of legislation that is sure to pass.
Please continue to follow along the MMA’s progress (or lack thereof) here at L4M, @l4m, tkhlaw.com, @TrogliaKaplan or email us for more info.
Maybe it is a millennial thing or maybe it is just a product of the industry but we consistently hear several things from new artists that are trying to make it to the next level:
“I need a manager”
“I need a label”
“I need a publisher”
Sometimes there is a need for one of these. Sometimes there is a need for all of them. But when does an artist really need a publisher?
We think there are only a couple of situations where a musician who writes music truly needs a publisher rather than self-publishing:
1. You are a top-line (lyrics) writer or producer that needs a publisher to set up writing/recording sessions with other similar or more established writers or producers.
2. You are in need of a substantial check as a loan/advance.
Going in reverse, the only way you are going to get to #2 is if you have a previously released catalog of music that is making substantial revenue on the publishing side of things (actual record sales, licenses, performance royalties etc.). Obviously, easier said then done.
So in our opinion #1 is probably the best and primary reason that an artist should consider or seek out a publishing situation. If you are a writer/producer that either writes for him/herself or has written for another artist and your goal is to try to continue to do so or write with writers who have credits on gold/platinum albums, a good publisher should be able to facilitate this. They should be able to pair you with established and up-and-coming artists that have budgets behind them. Getting in with those artists and getting music actually released with a budget for radio/pr etc. obviously builds your own value and the value in your publishing.
As many of you know, getting tracks to the top artists is incredibly difficult. Even if you have a direct line to the artist you still have to get through the artists, management, publisher and label to even have a shot of getting a placement on that artist’s album. Getting a writing session with the artist is even more of a challenge.
If you are at the point where you have the chops, you have a history of writing really solid music, your previous writing is actually earning you some money and you can write for other people, you want to make sure that you are doing everything you can to maximize your value and that of your publishing. We have so many stories of writers/producers that were involved in big songs that weren’t credited the right way or were left off registrations for some reason or the other. So making sure you are handling your publishing yourself is the first step in preparing yourself to even be considered by a major publisher.
Please don’t get it twisted (as the young folks say), if you self-publish you better be able to administer your works or have a lawyer/manager who knows how. Without registering your music with the PROs or securing correct split sheets or hounding labels for statements or hitting up independent artists who have used your music, you are essentially lighting money on fire. You have to know what rights you have in and to your publishing and how to go about collecting it. Registering works is not complicated. Understanding how and when you get paid from those works is.
There are several companies popping up that are offering admin services. Some are directly tied to the big publishers but then you have companies like CD Baby and Tunecore rolled out an admin service and functions a couple of years back. Songtrust is another one that offers a ton of services including administration of publishing. We have clients that have positive things to say about each one and those that have negative things to say about each one. So we will leave it up to you to decide if one of these outlets is right for you.
Remember, if you write a song and do nothing to register it or attempt to collect on it, it’s not really “published”.
Just like everything else in music (or most industries for that matter) you have to work your way up. You won’t get a publishing deal that makes sense unless you have already proven yourself as a writer. It is tough to prove yourself as a writer without getting a break in a very competitive industry. But you won’t get a break at all if you don’t treat your writing like an actual business and get the people you need to be in your corner to help you do so.
One of the most misunderstood areas of the music industry is publishing. Trying to explain that there are two equal halves of publishing each equating to 100% (getting you to 200%), you are bound to get some glazed over faces. We work with several publishers, administrators, writers and producers and think (brushing our shoulders off) that we have a pretty good handle of how publishing actually works. Our contributor, Lauren Schulz, does a great job of breaking it down in this straight forward article below. While this is by no means a comprehensive treatise on publishing, we hope that it can shine the light on some of they dark, mysterious and befuddling issues that is music publishing. Enjoy!
The Purpose of a Music Publisher; What Does a Publishing Contract Do For A Songwriter?
Many individuals in the music industry are aware that once a songwriter or composer starts to receive compensation for their compositions or work, they often sign with a music publisher. But what does a publisher actually do? And what are the various terms of a good publishing agreement?
In a nutshell, a writer signs with a publisher to have the publisher handle the rights to their compositions for the purpose of making the writer more money. A publisher is experienced in the business side of the music industry and often has the connections to create opportunities for the writer that they could not create on their own. Additionally, when a writer handles their own administration, accounting, and/or promotion of their work, there is often very little time to continue creating music, leaving the writer with a not so successful business plan.
To break it down, if a writer is signing a publishing contract, the writer is essentially hiring the publisher to handle copyright registration, licensing, collection of the writer’s royalties and accounting services. This is often referred to as administration. This is a huge job that often takes a considerable amount of time and knowledge of the music business. A publisher handles quote requests, license requests, monitors how a writer’s composition is used, delegates any fees or payments, prepares paperwork as well as often negotiates license terms. Additionally, publishers collect performance, mechanical and synchronization royalties on behalf of the writer. These royalties are paid in exchange for different uses and sales of the writer’s work and involve third parties such as performance rights societies or the Harry Fox Agency.
In addition to administration, publishers will provide writers with advances and career opportunities. An advance is similar to a loan, given to a writer so that the writer may have an upfront income for his or her work. Often once a song is released, it could take a year or more before it starts to collect any royalties, meaning the writer has to wait a long time to get paid. An advance allows a writer to have income so that he or she may continue to create music. The amount of an advance often depends on the writer’s popularity, skill and potential opportunities. The writer then recoups (or pays back the publisher) through his or her collected royalties. Publishers also create opportunities for the writer. Publishers are often the link to performing artists, record labels and producers that will help generate revenue for the writer. These opportunities help a writer to maintain a longstanding and successful career in the music industry; basically a stepping stone to help a writer reach the next level in his or her career.
The next question then becomes, if I am a writer trying to develop my talent and create a career for myself, how am I going to pay for these services that a publisher provides? A publisher is paid by owning a portion of the copyright to the writer’s compositions. This allows a publisher to receive a percentage of the writer’s royalties for the use of his or her works. The percentage of the copyright granted to the publisher varies depending on how much responsibility the publisher is given. A publisher who only conducts administration will receive a lower percentage than a publisher who provides all of the services listed above. Often when a publisher provides administration services, opportunities to develop the writer, and an advance, the writer will sign a co-publishing agreement. A co-publishing agreement grants the publisher fifty percent of the ownership to the writer’s work on the publishing side (or twenty-five percent of the ownership including the writer’s share). This explains why a publishing contract is exclusive. A writer will not want to assign any additional portions of the copyrights to their work, nor will they want more than one publisher to handle the rights to their work.
A publishing contract is limited to a term, or certain period of time. A publisher will only own a percentage of the copyright for the work the writer creates during that period of time. For example, if a publishing contract has a term of three years this means that the publisher will own a percentage of the copyright for anything the writer creates during those three years. Often writers will also give their publisher the rights to their work created prior to the publishing contract. This allows a publisher to promote a work created by a writer five years ago that was never released. In exchange, the publisher might give the writer a larger advance. It is important to understand that a publisher does not control or limit a writer’s creative process. A publisher does not control the type or style of music a writer creates nor does a publisher have the ability to force a writer to collaborate with other writers or producers. Instead the publisher will bring opportunities to the writer, and the writer and publisher often decide together whether the opportunity is a good fit for the writer.
Overall, it is best to think of a publisher as an agent for the writer. The publisher will handle the business work, promotion, administration and accounting for the writer while the writer can be left to do what the writer does best, create music.
I had a lengthy internal debate over whether to join the endless number of blogs, articles, tributes and montages in honor of Michael Jackson. Even though I was big fan of MJ and I did rock the moon-walk on numerous occassions during bar and bat mitzvahs and family weddings during the 80’s, I decided that for purposes of my posts, we should learn from Michael rather than add to the endless fluff pieces circulating our globe at the moment.
So, what can we in the independent music industry learn from the King of Pop? One glove is better than two, Emmanuel Lewis (aka Webster) is cool, living on a ranch with children, monkeys, and an amusement park will definitely get you noticed. All joking aside, Michael Jackson was one of the biggest grossing artists of all time. He single-handedly changed the way music was marketed to the masses. He was one of the first truly international (Asia to Africa to Australia) superstars. Along the way, he purchased the Beatles catalog.
That purchase, along with some of his other buisness decisions is what I can’t help but focus on when thinking about MJ’s legacy. Michael and/or his management team had the foresight to purchase a large chunk of the greatest rock and roll band’s publishing catalog of all time. In 1985 he puchased ATV Music Publishing for $47.5 Million. ATV controlled around 200 Beatles songs. This investment, at a time where the value of music publishing was still unknown, was one of the best investments anyone could make.
Every time one of the Beatles’ songs was played on the radio, which is virtually every minute of every day, Michael was earning money as the publisher. For every song that was licensed in advertisements, tv shows, movies, greeting cards, etc. Michael got a check. At the time of his death, the Beatles catalog would have been one of his most valuable assets. Think about that; Michael Jackson albums sold in the 100’s of millions but he had more earning potential from another artist’s songs.
Obviously when we discuss the Beatles and Michael Jackson we are looking at musicians who are in a different stratosphere when compared to most indie musicians or even most major label acts. However, the lesson that any musician can learn from both the Beatles and MJ is that control of publishing, control over who owns your music and how it is maintained, can be the life-blood for your retirement, and even for future generations.
When you sign to a label you need to think about what you are signing away. If you choose not to sign with a label but pursue a publishing deal, the same rule applies. Most major label deals will come with a publishing deal wherein the label or a division of the label will get the right to publish your music. While this is not always a bad thing, just remember what you are giving up and what the financial repercussions may be. A good warning flag that indicates that a musician may be giving away her music forever is an offer of an advance. Typically, publishing deals, like label deals, come with an advance. BE WEARY OF ADVANCES. If you are getting money up front, it usually means that you are leaving something behind. The length of publishing deals can be for the life of the copyright (95+ years in some cases) or can even be perpetual (never ending). Is a $50,000 advance worth the value that publisher is going to bring to your music for the next 100 years? Maybe…
Publishers are ideally supposed to act as your world-wide agent. They are supposed to help advertise your music to the world and seek money making opportunities for that music. Also, publishers are there to collect the money that is earned for music which is actually “published”. The typical split with most publishers is 50/50. The even split looks better than it is (of course). Many artists need sub-publishers to reach different markets around the world. A sub-publisher will take its percentage which in turn reduces your percentage.
The easy argument to make in favor of publishers is that without them: are you going to get your music out to the public en masse and more importantly are you going to collect once that music has been published? While the new music industry has seemingly endless opportunities to get your music out to the public, the publisher still plays an important role. Several new bands and even labels have either formed their own publishing company or partnered with a publisher. The partnership or the self-publisher model will reduce the endless percentages that go out to people and companies who are not in the band. But, just like everything else in the D-I-Y music model, it takes a lot of work and a strong team to accomplish what established publishers can already provide.
God willing your catalog of music will be worth as much as Michael’s or the Beatles. Realistically, you might not get to that level. That does not mean that you should not think about the value of your music before you hastily sign it over to a publisher. A quick advance from a publishing company may look great now, but as I have ranted on several occassions, advances are simply loans which must be paid back. Look at all your options first and go with the one that is best for you and your band. Think before you ink.
SHAMELESS SELF PROMOTION OF THE WEEK: NALEDGE’S (AKA MR. BRAIN) CHICAGO PICASSO
One day a John J. Emo was walking through a mall in Suburbia, USA. As he followed his girlfriend into a Forever 21 he heard a familiar song over the cheap sound system. Why was it familiar? Because Emo wrote the music!
The next day Paula P. Techno was watching an independent horror film. During the first slasher scene a somewhat terrifying and recognizable techno beat could be heard. Techno, who had released her music for free all over the internet, had no idea how her music ended up in the movie.
Finally, somewhere in NYC, Hank H. Hiphop rode an elevator up to see his dad at his office. Typical Musac was entertaining the passengers of the elevator all the way up to the 83rd floor. Hank was dumbfounded to realize that his recording of Catch it Like it’s Cold had been made into an instrumental only masterpiece without his knowledge.
Are John, Paula and Hank a bit slow on the uptake? Probably, but that does not mean that they are dumb. The world of music publishing is also massively confusing. For the independent artist, there are steps to take to make sure that you do not end up like these poor fools; potentially losing out on uncounted royalty payments.
Once you have made the decision to write music and introduce that music to the world (your bedroom mirror or your Aunt Grace do not count) there are several steps you need to take. One of the first steps is to register you lyrics and music as copyrights. This can be done for a sound recording and/or the lyrics of your song. There is a relatively easy online application that is available on www.copyright.gov to fill out.
The next important step is to register with either ASCAP, BMI or SESAC (in the USA). These organizations will help you collect and manage (to a certain degree) performance royalties that are owed to you as the performer of a piece of music. So if your song was performed on Dancing with the Stars or on your local Morning Zoo radio show or even in the airport smoking area, one of these Performance Rights Organizations (PRO) is resonsible for collecting the statutory royalty owed to the writer, performer or composer of the song for the public performance of the song.
PRO’s are not fail-safe. There are a lot of artists that feel that their PRO is not collecting everything that is owed. However, think about how tough of a job that is these days. How many media and consumer outlets are there out there that utilize music? While every person, entity or business that publicly performs music (over the airwaves) is supposed to report the playlist to a database, it is nearly impossible to keep track of everything. Trust me, the PRO’s do 110% better than an individual on his own.
The next step in capturing your publishing and maximizing the value of your publishing income is to form an entity. I’ve written about the need to form an LLC in the past. Publishing is yet another reason to do so. Your LLC will become your first publishing company and will collect royalties for your music. If you are in your band, you can register the LLC with the PRO. That way, the payments go to your LLC and will be split amongst the band members that own a piece of the LLC.
Another advantage of forming an LLC to act as your publishing company is negotiation power with other large publishers (EMI/Sony/Warner). You may get a better split with a publisher if you have already formed and registered your music under your LLC. Instead of signing up with a major publisher and giving up 100% of your publishing for an advance (not that anyone has money for an advance these days), you can negotiate a better split.
Last week I was on a panel with other lawyers, a musician and publishers. We all seemed to agree that the music world is changing and the major label system is beyond repair. The do-it-yourself artist is a reality that is here to stay. But many musicians who are used to having a label handle their registration and publishing do not know what steps to take. This has allowed for an enormous amount of royalties to go unpaid as well as copyright infringement to go unchecked. Throughout this whole process of making music, an artist will need help and guidance. Instead of a label coming to the rescue, now the artist is charged with creating his or her own team of experts. Just like any other business, services have to be outsourced. No one would expect a doctor to be able to play the bass. Similarly, a drummer probably does not know corporate level taxation.
Consult with experts. Find your PRO. Hire a lawyer. Hire an accountant. Treat the music like a business. Whether it is losing opportunities or not collecting what it is owed, without the right team, the D-I-Y artist will see her career D-I-E.