Session 2Royalties, Licensing and Income Streams
Before you can make a buck from something,it’s not a bad idea to know what it is.According to law, you can copyright : • Literary works • Musical works • Dramatic works • Pantomime choreographed works • Pictorial, graphic and sculptural works • Motion picture and other audio visual works • Sound recordings • Architectural works
The music business is concerned withthese copyrights:• Musical works• Sound recordings• Motion picture and other audio visual worksPublishing is the part of the businessthat exploits these rights to maximizetheir value.
Before you try to realize any incomefrom your copyrights, make sure theyare in order. Here is a quick look at theU.S. copyright process.
The music publishing business offers music users theright to use recordings and/or musical works frommusic creators in exchange for a fee.The fees are collected by a variety of means includingperformance rights organizations (PRO’s) like:These companies collect money for public performance(radio, television, major live venues) of their membersmusic and then distribute it to the member writers andpublishers.
Other companies collect money forother types of uses like satelliteradio, internet radio, cable TVradio, cover versions of songs byother artists, etc.
The term “Royalties” can have a lot of differentmeanings.• Mechanical Royalties, are paid to the writer of a songwhen someone does a cover version of their song.These royalties are usually collected by the Harry FoxAgency (HFA) and distributed to publishers, who thengive a percentage to the writers.• Performance Royalties are collected by PRO’s,ASCAP and BMI, for public performance of a work(radio, TV) and then distributed to publishers and writersdirectly by the PRO.• Record Royalties from sales of CDs or other forms ofmusic are typically a percentage of adjusted MSRP paidto the artist after the record label has recouped all theirexpenses and deducted everything you can imagine.The percentage is typically between 10% and 20%.
MSRP $15.95 Just for fun (and tosee why we need to Less 25% $12.00find a better way) packaging discountlet’s look at that lastone a bit more,which we will cover By 85% Payment $10.20in greater detail in BaseSession 4. By 10% Royalty $1.02 RateSo if a label spent $250,000 to make and market arecording, all of which is recoupable, and the recordingsells about 250,000 copies, you and your band mateshave earned about $5,000 to split however many ways.Better hold off on buying that yacht.
Licensing is another term that has a variety of meanings. Theterm refers to the business of granting or receiving licenses touse a musical work.A Licensor has a product and is the grantor of the license (thecreator).A Licensee is the entity to whom the license is granted (theuser).In recordings (audio only) there are several types of licenses: Mechanical Master PerformingIn audio visual works (film, TV, videos): Synchronization Mechanical Master Performing
Income streams in the music business come from the granting andusing of these licenses and rights, and the different payments arederived from these uses.You can make money in the business from all of these sources (mostof which involve some or all of the previously mentioned rights andlicenses):• CD sales• Downloads• Satellite radio• Cable TV Radio• Internet Radio• Streaming• On-Demand• On-premises licensees (Muzak, DMX, PCM)• Music for films• Music for TV and Cable• Corporate Videos• Product Tie-ins• Live performances• Sponsorships and endorsements• Music and Sample Libraries• Teaching, blogging, websites, information• Playing guitar and putting a cup on the sidewalk Yay! Back to good news. Let’s talk about some of these…