SongBizness: How Your Songs Earn Money

Though relatively few songwriters make a great living on royalties, the possibilities of income from a successful song can be mind-boggling. Remember that the following income streams are only from the songs. Don’t confuse them with the royalties you may receive from a record company as a recording artist.

The four major types of royalties for music are mechanical, performance, synchronization and print. Though there are many other sources including Grand Rights for musical theater and newly emerging sources arising from the Internet transmission of music, these are still the most basic.

Mechanical royalties
It’s easy to think of mechanicals as something you can hold in your hand, like CDs or tapes. This royalty is paid to the publisher by the record company after having signed a mechanical license agreement that describes how often the record company must report sales figures and send checks to the publisher. It also states the amount per unit sold of the composition to be paid. In the U.S. there is an amount set by the Copyright Royalty Tribunal called the statutory mechanical rate which is updated every two years. It is currently (2/03) 8 cents per composition per unit sold or 1.55 cents per minute, whichever is greater. Mechanical licenses can be obtained online from the Harry Fox Agency. This is also a good place to go for more detailed information about mechanical licenses.

A little arithmetic shows that one song on a million-seller CD or single will bring a total of $80,000. (Divided between publisher and writer(s) according to your writer/publisher contract.). When you have a song as a single, you can figure it will be on the CD too. Down the road there are also “Greatest Hits” recordings and TV packages like “The Top Hits of ‘the ’90s” etc. It all adds up.

Performance royalties
Performance royalties can be a major source of income for a writer. They’re not to be confused with the money a performer earns for public appearances. Performance royalties are royalties the copyright owner(s) and songwriter(s) receive when their song is performed publicly. According to the copyright law, nobody can publicly perform a copyrighted song without permission of the copyright owner or the owner’s representative.

The most common uses of music in public performance are radio, network and local TV, jukeboxes, Muzak and live performances (clubs and concert halls, whose owners and promoters pay annual license fees), restaurants, bars. When your songs are played in any of these venues, you, as the writer, and the publisher (whoever owns the copyright) are entitled to get paid for their use.

Performing rights organizations in the U.S., BMI (Broadcast Music Inc.), ASCAP (American Society of Composers, Authors and Publishers) and SESAC (no longer using their original title, Society of European Stage Authors and Composers) are the organizations that issue licenses and collect money for public performances of your songs. A writer or publisher may collect from only one of these organizations for the same song. You may belong to only one organization at a time in the U.S. though you may simultaneously belong to PRS (U.K.) or another performing rights organization in Europe.

Each of these organizations has their own method of determining how much you’re paid based on the number of times your songs are played. Performance royalties for a song that gets considerable airplay (which can continue for many, many years on oldies stations) generally will amount to a great deal more than the money earned from mechanical royalties. Over $5 million (before writer/publisher split) for the life of a hit is not uncommon. For more in-depth information on each performing rights organization, go to: ASCAP, BMI and SESAC.

Synchronization royalties
Another important area of income for writers and publishers is the licensing of the right to record the music or song in synchronization or “timed relation” to the pictures in a film, TV movie or commercial.

The film or TV producer negotiates the synchronization (or “sync”) license with the copyright owner, which is usually the publisher. There are several companies including Copyright Management Inc. (CMI) in Nashville and the Clearing House in Los Angeles, that negotiate synchronization rights between film producers and publishers. The Harry Fox Agency issues licenses on behalf of publishers who have already negotiated the terms of those agreements.

Synchronization fees are totally negotiable (from nothing to over $50,000) and depend largely on the previous popularity of the song and the way it’s to be used. If the song has already been a hit and it’s a perfect selection for that particular film, it’s worth a lot. If it’s an unknown song and there’s a soundtrack album as well, a lower sync fee might be negotiated because the film’s exposure of the song may benefit record sales, print or other areas. You will, in addition, receive performance royalties when these films are shown on television, in theaters outside the U.S. or if the song is in a TV production.

Music in print
If you write mass appeal songs, particularly adult contemporary, pop, R&B or country, you’ll be able to take advantage of a potentially lucrative print market. With the possible exception of the education print market, though, the songs will have to have been very popular records to make all those piano bar singers, cover bands and other print buyers want them. There are several types of print music publishing: 1. Sheet Music: piano/vocal arrangements, often with chord designations for other instruments. 2. Personality Folio: in which the concept is based on a name artist or writer; “The…Songbook.” 3. Matched Folio: music from a particular album or musical theater show. 4. Mixed Folio: based on concepts like “Easy Piano Tunes,” “Hits of the ’90s” etc., which involve songs from several writers. 5. Educational: included in this category are how-to books (“How to Play Slide Guitar” etc.), arrangements for choruses, marching bands, (concert bands, jazz bands, and orchestras.) These are obviously sold to schools, drill teams, drum and bugle corps etc. It’s not unusual for popular choral writers to net $9,000-$10,000 a year for a composition.

How you get paid
Mechanical, synchronization and print royalties are collected by the publisher who takes his percentage and sends you your percentage, usually semi-annually, though some pay quarterly. The performance royalties are collected by the performing-rights organizations, BMI, ASCAP and SESAC (SESAC also collects mechanical royalties). They will send a quarterly check and statement directly to you and one to your publisher, the amounts divided according to the terms of your publishing contract (usually 50% to you, 50% to the publisher).

These explanations are simplified but at least you¹ll have a basic idea of how your songs can work for you beyond being good therapy. John’s book “The Craft and Business of Songwriting” gives a more in-depth look at these topics.

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2 Responses to SongBizness: How Your Songs Earn Money

  1. tm July 27, 2010 at 7:57 pm #

    Good question if a song had 100 000 BDS certified spins
    in the USA how much would that song earn in performance royalties about how much does a song earn every time its spun on broadcast radio I know the rate for internet radio is on the web it would be great to know the rates for broadcast radio

    • John Braheny September 8, 2010 at 7:56 pm #

      An answer every songwriter would like to know but BMI, ASCAP and SESAC each have their own formulas that change every quarter based on how much $ was negotiated with the broadcasters and how many plays each of their respective catalogs received during that quarter.

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