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Who Else Wants to Receive A BIG FAT Royalty Check for Their Music?
Copyright (c) 2005-2022 Ty Cohen
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.
1. 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.
2. 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...
1. BMI 20 W. 57TH ST., NEW YORK, NY 10019 USA Tel 212-586-2000 2. SESAC SESAC (headquarters) 55 Music Square East Nashville, TN 37203 615-320-0055 Fax 615-329-9627
3. 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!
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This article was written by 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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Top-Level Category: Articles
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