The Three Main PROs - ASCAP, BMI and SESAC

By Jessica Klausing

Any public venue that plays your music is required to obtain a license and pay a fee or performance royalty. Public venues include radio stations and television networks, cable stations (such as HBO, MTV, and VH1), satellite networks, colleges and universities, nightclubs, Internet websites, and mobile carriers.

The amount you receive varies, but one thing is for sure: to collect anything, you must first become a member with one of the major performing rights organizations (PROs) then register your songs and percentage shares with them.

The three main U.S. societies include the American Society of Composers, Authors and Publishers (ASCAP), Broadcast Music Incorporated (BMI), and what was formerly known as the Society of European Stage Authors and Composers, today recognized as SESAC.

ASCAP is a nonprofit organization established in 1914 and is run by writers and publishers.

• To join you must have written or co-written music or lyrics for at least one musical work that is ready to be registered. There is a one-time, $50 fee for submission of an application.

BMI was founded by broadcasters, but its decisions are made by management.

• To join you must have written or co-written at least one musical composition. Membership is free for songwriters. For publishers, there’s a $150 fee for individuals and $250 for companies.

SESAC is a “for profit” organization founded in 1930. SESAC is a much smaller organization than ASCAP and BMI, representing only 5 percent of all licensed music out there.

• SESAC members must be selected by a referral process. There is no cost to join SESAC.

Although each of these organizations conducts business differently, they have similar functions and one general principle: to protect the performing rights of songwriters and publishers.

Here’s an overview of how they operate:

Blanket Licenses – PROs issue “blanket licenses” to music users, which include radio stations, television networks, nightclubs, some restaurants, concert halls, airlines, shopping malls, and Internet sites for a negotiated fee that covers all of the compositions registered to a society by thousands of different writers and publishers.

Monitoring Songs –PROs conduct research to give them a representation of the copyright titles that are broadcast during each royalty period. Although there are a variety of licenses issued by the PROs, royalty payments are based primarily on the number of radio and television performances per quarter.

• Radio – The monitoring of analog radio and internet radio are generally accomplished through two methods: digital monitoring and random radio “logs.”

Digital monitoring is done by services like Nielsen Broadcast Data Systems (BDS) that encodes songs with recognition technology.

Logs are part of a sample survey where radio stations list every song they play over a two to three day reporting period each quarter.

• Television –The monitoring of television stations, cable, etc., is accomplished through cue sheets.

Cue Sheets provide details of which song was used, the composer and publisher of each song, and how, when, and where music is used.

In order to decide which organization to join, the best option is to speak with a representative from each society when you’re about to have a song published. Base your decision on the information that seems the most reasonable to you. In order to receive performance royalties, you must be registered with at least one performing rights organization.

SOURCES:

Borg, Bobby. The Musician’s Handbook: A Practical Guide To Understanding The Music Business. New York: Billboard Books, 2008.

Publishing Royalties: Independent Publisher Vs. Corporate Publisher

By Jessica Klausing

Let’s say that a major record label likes your song and has a recording artist sing it. They fill out a mechanical license agreement (refer to previous blog: Mechanical Royalties) to obtain the rights to record your song. That song is recorded, promoted, and it becomes a hit. If you are the songwriter, then you own the composition and should have the publishing rights worked out.

Music publishing includes many things from compositions of a single songwriter to the multinational affiliates of record companies, film companies, and media giants.

Publishing companies can be publicly owned, artist/writer owned, or retained and administrated by managers, lawyers, or even songwriters’ relatives or friends.

How are publishing royalties divided up for writers and publishers?

Many administrators will combine both the writer and the publisher share and then pay all those royalties to the publisher, so that the publisher can pay the writers accordingly.

Generally the royalties that are accrued from the usage of your music:

• 50% gets paid to the songwriter (s)

• 50% gets paid to the publisher (s)

• There may be a special case where some collaborators decide whether or not it’s best to split everything evenly.

You do have options for publishing – self-publishing or going with a corporate publisher. There are pros and cons with each choice.

Corporate Publisher: The big publishing companies that make most of their income through performance royalties, sales, score, and part rentals.

Pros:

• Handles promotion within its network of contacts, from retailers to music supervisors.

• Preparation, production, distribution of music scores.

• Passing on performance information to the Performance Rights Organizations (PROs).

• Contract negotiations, both for commissions and performances.

Cons:

• Owns the copyright and take a percentage of all royalties.

• Owns the copyright and take as much as 90% of retail score sales.

• Owns the copyright and controls your licensing.

Self-Publishing: Independent publishers carry out the same functions as the corporate publishers.

Pros:

• You own 100% of the song’s rights.

• You receive both the songwriting and publishing royalties.

• Full control over where your music projects get placed.

• You’re not limited to a term of service.

Cons:

• You’re responsible for registering your work with a PRO.

• Corporate publisher connections, like music supervisors, are not available to you.

Keep in mind, composition shares (songwriting and publishing splits) need to equal 100% for most PROs; unless the PRO calculates songwriting as 100% and publishing as 100%, which would create a 200% composition share.

Whether you decide to sign up with a corporate publisher or become your own publisher, make sure you understand the implications of each and what to expect in the long-term for your copyright.

SOURCES:

Borg, Bobby. The Musician’s Handbook: A Practical Guide To Understanding The Music Business. New York: Billboard Books, 2008.

Carey, Christian B. “The Pros and Cons of Self-Publishing.” Musical America Worldwide. 3 June 2014. 7 Feb 2019. https://www.musicalamerica.com/news/newsstory.cfm?archived=0&storyid=31861&categoryid=7

Obringer, Lee Ann. “How Music Royalties Work.” HowStuffWorks. 1 Feb 2019. https://entertainment.howstuffworks.com/music-royalties5.htm

What are Mechanical Royalties?

By Jessica Klausing

Mechanical royalties are owed to a songwriter whenever a copy of one of their songs is made. For example, when your song or composition is manufactured on a CD, downloaded from an online music store (i.e., iTunes, Amazon, or Google Play), or streamed with an online music service (i.e., Apple Music, Spotify, or TIDAL), you are due a mechanical royalty.

According to the United States Copyright Act, “mechanical royalties are mandatory by law and should not be (unless you agree to it) subject to recoupment of recording costs by the record company.”

When an audio streaming service wants to use music on their site, they must first obtain the master license from a record label or digital distributor to use the sound recording, or ‘track’. Once the service has secured the master license, they must also issue a separate license for the type of use the composition, or ‘song’ will be used in.

In the case of an audio subscription streaming service, a mechanical license will have to be administered to use the composition. The publisher of that song will be the recipient of the mechanical royalties that may accrue.

Here is a breakdown how mechanical royalties work:

Online Audio Streaming: mechanical royalties are owed to the Publisher (owner of song or composition) every time a user streams the sound recording through a streaming subscription audio service.

• Streaming audio triggers a mechanical royalty because the song is mechanically reproduced in the form of data on a computer server. In this case, the mechanical revenue is calculated as a per-play rate which is determined by the publisher’s percentage of usage on a particular streaming service, in relation to that subscription service’s entire catalogue of music.

Digital Downloads: mechanical royalties are owed to the Publisher when a user downloads the sound recording.

• Publishers should still get paid even when the owner of the sound recording decides to give away the track for free. This method triggers a mechanical reproduction of the composition.

• You should not do a cover song and post it online for people to download for free! You will owe a mechanical royalty to the Publisher of the original song for each download, even if it is free to the user.

• Once a user receives or purchases a digital download, the user can play the music for personal use as many times as he or she wants without triggering any more mechanical royalties to be owed to the Publisher.

Physical CDs : mechanical royalties are owed to the Publisher when each CD is manufactured.

• If someone presses 50 CDs of your song, they owe you mechanical royalties for 50 copies of the CD, even though they haven’t been sold yet.

•  Once a CD is created and the mechanical royalty is paid, and a user receives or purchases the CD, the user may play the music from his or her CD player for personal use. No more mechanical royalties are due to the Publisher at this point.

Aside from mechanical licenses, there are many more ways to accrue money with other music royalties.

SOURCES:

Baskerville, David, Ph.D. Music Business Handbook And Career Guide. Eighth edition. Thousand Oaks, California: Sage Publications, Inc., 2006.

Baskerville, David, and Baskerville Tim. Music Business Handbook And Career Guide. Tenth edition. Thousand Oaks, California: Sage Publications, Inc., 2013.

Borg, Bobby. The Musician’s Handbook: A Practical Guide To Understanding The Music Business. New York: Billboard Books, 2008.

McDonald, Heather.  “Mechanical Royalties: How are they collected?” The Balance Careers. 08 Sept 2018. 16 Jan 2019. https://www.thebalancecareers.com/mechanical-royalties-2460503

Shepard, Issac. “What are mechanical royalties and how do I earn them?” The Music Maze. 23 Feb 2017. 16 Jan 2019. https://www.themusicmaze.com/mechanical-royalties-earn/