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!
|
