Who Else Wants to Receive A BIG FAT Royalty Check for Their Music?
by Ty Cohen
Published on this site: May 11th, 2005 - See
more articles from this month...
Some Help with Figuring Out the Sometimes Confusing Ways That
Artists Are Paid For Their Work In The Music Industry.
The thing we like most about the music industry is also the thing
that is most confusing and frustrating. It just doesn’t work
like every other job in the country. When you make a living as a
professional songwriter, producer, musician, rapper or singer, you
don’t work 9-5, you don’t have a boss and a desk and all
of those “normal job” things. That’s what we like
about it.
But the music industry is a business and a lot of money flows through
the companies that promote, produce and market the music you make.
The process of getting the money you deserve works much differently
in the music industry than it does in corporate America.
To be considered full time at your art and craft of being a songwriter,
producer, musician, rapper or singer, you have to get paid. Being
an artist doesn’t exempt you from the rules we all live by.
You have to eat, live somewhere and pay the rent as they say. And
you don’t want to just “get by”. Ideally your music
will become recognized and well liked and you will become one of
those “filthy rich rock, pop or rap stars” you see on
VH1, MTV or BET. But to do that you have to master one basic idea.
You have to figure out how to get paid.
This article will give you the basics. We will go over some of
the unique terminology that pertains to how money is collected and
paid out to artists in the music business as well as discuss some
of the organizational systems that you must understand to be able
to “make a buck” in this business.
Strange New World
The terminology or the words we use to refer to the payments systems
in the music industry are much different from in a normal job. You
don’t just report to payroll for your regular paycheck every
other week. So our first order of business is to define and understand
a couple of terms and the systems they represent. The two terms
you should get to know the best are “recoupment” and “royalties”.
You Mean It’s Not a Gift?
Recoupment may seem like a sweet deal up front. Recoupment is essentially
a loan from the record company to fund the expenses of your recording
work. The record company has signed you and now the work of producing
the CD is ahead of you. In order to allow you to focus all of your
energies and time on making the record for them, the record company
will “advance” you a lump sum of money to handle both
your living expenses and the expenses of the recording. This is
to go for:
- The gear and equipment you will need to produce the recording.
- Living expenses and incidentals during the recording
process
- Touring expenses
If you receive recoupment money for recording your CD, immediately
discuss with your band or other key people in your camp two important
concepts and enforce them religiously.
- Keep track of what you spend and use the money wisely.
You could blow through your recoupment money very easily
and suddenly realize you have no more expense money and
the recording or touring is not done. You don’t want
to face that. Pick the most trustworthy, numbers aware person
in your band or entourage and make him the budget wizard
for the entire process and obey him like he was your master.
You will be happy you did.
- It isn’t your money! Remember, recoupment money
is a loan. It is an advance against the profit the record
company will make from your work. The record company must
recoup the funds from sales and if they do not, they loose
money and you could be dropped.
So be careful in how you negotiate and use your recoupment funds.
Recoupment is a wonderful system to give you the freedom to produce
a quality recording. But beware that there are hidden costs and
demands that come with a recoupment. Don’t let them take you
by surprise.
A Royalty That Does Not Refer To Princess Di.
The term “royalty” when it pertains to the music business
is somewhat more familiar. The simplest definition is that a royalty
is a percentage of the sale of a song or CD that is paid to the
artist, the composer and other participants in the process. Royalties
are used in many creative industries including publishing, television
and movies as well so most people are aware of the idea.
But you might wonder who handles the collection and distribution
of royalties? As a rule, the publishing company takes on this job.
They have the accounting departments and the organization to handle
this on-going duty. That helps you out a lot. Oh, they take their
cut too but for the most part, if they treat you honestly, it is
worth letting them participate for the hassle they save you in managing
these details. There are four kinds of royalties to discuss before
we are done with this topic and those are...
Mechanical Royalties
The cut you get when another artist records or covers your song
to release on their CD. You receive a royalty for the sales of that
CD as the author and copy right owner of the song. This type of
royalty applies whether you write a song that the artist releases
initially or if the artist is covering a song you have already released.
Synchronization Royalties
You receive these payments when your song is used in a movie, a
TV show or a video. These are negotiated on a royalty-by-royalty
basis so make sure your agent is experienced in this kind of contract.
If your song becomes the theme some for a popular Sitcom, it could
be a huge windfall for you if the synchronization royalties are
negotiated correctly.
Print Royalties
As the title implies, print royalties are what you receive when
sheet music of your song is sold. Print royalties can run in the
10-15% range so they are worth securing and protecting.
Performance Royalties
Royalties are due to you every time your song is played on the
radio or performed. Performance royalties, as you might expect are
very complicated to track and collect so you will come to rely on
a type of service organization known as a PRO.
A PRO is not a Terrorist Organization.
PRO stands for Performing Rights Organizations and they are the
good guys because they help you get paid the performance royalties
you deserve for your material. These organizations work on behalf
of song authors and publishes to collect performance royalties on
any possible venue including:
- Radio
- Television
- Movies and even
- The Internet
Now you may think every time you hear your song on the radio, you
immediately earned a small royalty but it doesn’t work exactly
that way. Instead, radio or other broadcast media including internet
pay services pay a single flat license fee to broadcast from a catalog
of songs represented by the PRO. The PRO then establishes a song
frequency percentage based on samplings of air play to determine
how much your “cut” of each radio station license fee
might be and from that they pay your performance royalties.
To learn more about the major Performance Rights Organizations,
here are the big three and how to research or contact them...
BMI
20 W. 57TH ST.,
NEW YORK, NY 10019 USA
Tel 212-586-2000
SESAC
SESAC (headquarters)
55 Music Square East
Nashville, TN 37203
615-320-0055
Fax 615-329-9627
ASCAP
One Lincoln Plaza
New York, NY 10023
Tel: (212) 621-6000
Fax: (212) 724-9064
Conclusion
There is a lot to learn about how you will be paid for your artistic
work in the music industry. But it’s a worthwhile investment
to understand the system as much as possible because in doing so,
you increase the amount of money you will see come to you for your
songs and performances.
In this article, we have given you an overview, some definitions
and introduced you to a few organizations that are central to making
the music industry payment system fair and workable, to find even
more as well as thousands of other essential music business contacts
visit http://www.MusicBizPhoneBook.com
Don’t stop with this introduction though. Work with your management
and become “industry savvy” about royalties, contracts,
recoupment and all the inner workings of the money side of the music
business. Your homework will pay off and lead to a long and prosperous
career as a performer in the exciting world of the music industry.
Thank you for taking the time to read this article and I wish you
Much Success!
Ty Cohen, the music industry's most recognizable voice!
Ty is the C.E.O of Platinum Millennium Publishing and Platinum Millennium
Records as well as owner of: http://www.MusicContractsOnline.com
and http://www.MusicBusinesSuccess.com
To find out more about Ty Cohen, his services, products and
how he may be able to help you succeed in the music industry go
to: http://www.MusicBusinesSuccess.com
and sign up for his free
limited edition music industry success 10-part "Mini-Course",
it will work wonders for you and best of all, it's FREE, but EXTREMELY
VALUABLE!
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