Here’s a primer on some of the basics of the music business. I hope it helps you to further your understanding of licensing and publishing.
All revenue in the recorded music industry is generated by ownership of 2 main copyrights: Song Copyrights and Sound Recording Copyrights.
Another way to say this is all money flows back toward the owners of either Songs (Song Copyright) or Masters (Sound Recording Copyright).
Lets first take a look at Song Copyright ownership.
Songs: Publishing and Licensing
As soon as a songwriter has written a song, and they fix that song in a “tangible medium of expression” (write it down or record it), the song is protected under U.S. law by the Copyright Act. This protection gives the songwriter exclusive ownership and a particular set of rights. No one else can use the song without permission.
To make money off of the song, the songwriter can then sell limited permissions (licenses) to other people and businesses who would like to use that song in a particular way.
This selling of limited permissions is what “Licensing” in the music industry is all about. There are 3 main licenses that songwriters sell:
Mechanical License - Buys the purchaser the right to make a recording of the song and distribute those recordings. This license is typically purchased by record labels and/or producers, looking for the perfect song to match with their hot new artist.
*Once the record label funds that recording, the second important copyright (Sound Recording Copyright) is created and is owned by that label. More on this later.
Performance License - Buys the purchaser the right to play the song publicly or broadcast the song. This license is typically purchased by radio and TV broadcast companies and venues like bars and restaurants. These broadcasters and venues use the music to attract viewers, listeners, and patrons.
Synchronization License - Buys the purchaser the right to synchronize the song with a visual work. This license is typically purchased by TV and movie production companies to allow them to use songs in their productions.
So what is a Publishing company, and how do they factor in here?
Publishing companies make the following pitch to songwriters:
“Hey songwriter, you’re great at writing songs, but horrible at the business of getting those songs to make money and accounting for the minutiae of registering your songs with the appropriate organizations. We like your songs, and think we can go convince people to use your songs. Why don’t we partner up? We’ll handle the business, and you’ll handle the creative output. We’ll give you an advance on future royalties upfront, and once we’ve recouped that advance we’ll split all subsequent profits 50/50.”
The money generated when the publisher goes out and sells a license is split into 2 halves (based on this typical 50/50 split). The industry has long taken to calling the half that goes to the writer the “Writer’s Share”. The half that goes to the publisher is called the “Publishing”.
So what is “publishing”? It is 50% of revenue created by the selling of permissions to use the song. (usually via selling mechanical, performance, or synch licenses)
This 50% can be given to a partner, like a publishing company, in return for their services. It can be also be kept by the songwriter. If the songwriter holds on to this 50%, they are said to be “self-published”.
Should you give over your publishing? The answer to that is totally dependent upon what the person or company asking for you to give it to them can deliver for you.
Occasionally a particularly successful songwriter has enough leverage to get a better than 50/50 deal. But the typical “publishing deal” is 50/50.
Now let’s look at Sound Recording Copyright ownership.
Master Recordings:
The person or company who funds the recording of a song will own the subsequent master recording. This is usually a record label, producer, or independent artist. The Sound Recording Copyright is protected under Copyright Law much like the Song Copyright. Only the owner of the master can use it.
If some other person or company would like to use the recording, they must purchase a…
Master Use License. This license is needed when wanting to put a particular recorded version of a song in TV or film, or when an artist or producer would like to sample a part of the sound recording to create a new work.
The trick here, though, is that it is not possible to use the master recording without simultaneously using the underlying song. That’s impossible (of course).
Huh?
Let’s use an example to sort this out.
Let’s say you own a movie studio, and are creating the next big blockbuster film. The director of your movie just has to have the song “Single Ladies” in the film.
You would need to seek out the songwriter(s) and their publisher(s) to purchase a Synch license for permission to use the song. You would then need to seek out Beyonce’s record label to purchase a Master Use license for permission to use her particular recorded version of the song.
There will only ever be one song “Single Ladies” (just so happens it was written by Tricky Stewart, The Dream, Thaddis Harrell, and Beyonce). But, there can be multiple recorded versions of that song.
This would be the case in the well known example of the song “Smooth Criminal”. The song was originally written and recorded by Michael Jackson. This makes him the Song Copyright owner and his record label the Sound Recording Copyright owner. It was then re-recorded by Alien Ant Farm. Two different recorded versions of the same song.
So if a movie studio wanted to use Michael’s version, they’d have to go to Michael’s publisher to by a Synch license, and then to his record label to buy a Master Use license.
If a movie studio wanted to use Alien Ant Farm’s version, they’d have to go to Michael’s publisher for the Synch license, but then to Alien Ant Farm’s record label for the Master Use license.
And guess what Alien Ant Farm’s record label had to purchase to get the permission to record another version of “Smooth Criminal” in the first place? They had to go to Michael’s publishing company to buy a Mechanical license.
In review, Song Copyright owners (and their publishers) sell Mechanical, Performance, and Synch permissions. Sound Recording Copyright owners sell Master Use permissions.
This system of ownership of copyright, and selling of permissions, is what publishing and licensing is all about.
I will continue this primer in subsequent posts. For now, if you have any questions, feel free to head over to the “Connect” page of the site and shoot me your questions. I’d be happy to help.
Ty