7 things all songwriters should know about royalties

Technique article in Songwriting Magazine Winter 2017

The founder and CEO of US company Sound Royalties, Alex Heiche, highlights some of the royalty-related pitfalls facing music makers

It’s not easy being a songwriter. Between trying to run a business, forge deals, promote your music, and still carve out time to actually create more, it can be tough to find enough hours in the day. Most importantly, you want to make sure you fully reap the fruits of your labor – also no easy task with the complicated business of royalties. But it can be done.

Below are the top seven things that songwriters should know and understand to conquer the world of royalties and ensure full compensation for their works of art.

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1. SPLIT SHEETS

It all starts at the time of creation. While you may not want to have awkward conversations just after a fun collaborative session, it’s vital to do so if you want to ensure you get paid for the work and receive your fair share. Confirm song splits early and make sure everyone signs a split sheet.

You may feel that you’re entitled to an equal share or a specific percentage, but until you discuss this with your co-writers and producers, you really don’t know if you’re on the same page. If every single participating party doesn’t sign off on splits, your royalty payments can be held up for months or even years, despite the success of the song.

Recognise if you wrote the music, lyrics, or both and what is the agreed contribution value amongst your co-writers. Each portion is typically worth 50% of a song. Negotiate upfront with your co-collaborators and know your true credited share.

A split sheet memorialises your agreement with those you are working with and identifies each producer and songwriter, as well as their ownership percentage. It also outlines each person’s performance rights organisation (PRO) and publisher information, what they contributed (lyrics, hook, beats, melody, etc.), whether or not different versions of the songs were created, the date, and all other details to avoid disagreements later after the song becomes a hit.

2. COPYRIGHTS

If you hold a copyright on your works, then you alone are able to create copies, distribute them, license them out and make derivatives. You may also choose to authorise others to do this on your behalf.

You don’t technically have to register your songs with the U.S. Copyright Office to own the copyright, but doing so gives you additional protections including statutory damages. It’s also your best proof of your ownership.

Another good tip is to bundle your works when copyrighting them. You’ll save a lot of money by processing multiple songs with one registration.

3. PERFORMING RIGHTS ORGANISATIONS (PROs)

Register your works with a PRO. You can’t get paid if you don’t register, and it’s another backup to copyrighting your works.

There are four PROs (ASCAP, BMI, SESAC and GMR). The latter two are for-profit and by invitation only. Research how each organisation works with writers and decide which one is the best fit for you.

Once you have activity on one of your songs, register a publishing entity with the PROs, or sign with publisher or administrator.

Make sure you understand the difference between a publishing (co-pub) or admin deal. If someone shows interest in your song and tries to sign you to a publishing deal, get a copy of the offer in writing, review it, and speak to an entertainment lawyer.

While there are many options for legal representation, it’s important to work with someone who specialises in your unique area. Entertainment lawyers have a deep understanding of the complex music industry and can help ensure you’re protected.

4. SOUND EXCHANGE

If you’re a performing writer and have your own recordings out there, be sure to also register with Sound Exchange.

Sound Exchange collects and distributes royalties for digital performance rights to artists and the copyright owners of the sound recordings. Think of them as a PRO with a focus on digital radio.

5. PAYMENT SOURCES

After you’ve created and registered your songs properly, it’s time to identify the payments you should be receiving. These will be coming from a variety of sources for a number of different credits.

Songwriters primarily get paid Performance Royalties (i.e. radio play). You may also earn money from Mechanical Royalties (physical CD or record sales of your works) and Synchronisation Royalties (TV, film, ads, etc).

6. ROYALTY STATEMENTS

Now, it’s time to watch your royalty statements carefully. These can be a good indicator if you’re receiving payment in all areas due and check if your songs aren’t registered properly.

At Sound Royalties, we often find songs that are incorrectly registered, holding up the paycheque to the songwriter indefinitely until all is corrected.

Note that it’s your responsibility to report any errors. And often, if you don’t appeal a statement within a certain period of time, you’re automatically considered to be accepting it in its current form.

7. COPYRIGHT RECAPTURE

If you did sign away your copyrights years ago (perhaps before you knew what they were really worth), don’t worry, there is an opportunity to eventually recapture these.

At 35-40 years after release or publication, there is a window of opportunity for songwriters to regain ownership of their copyrights and/or negotiate new licenses. During this five year period, you can either re-grant your copyright to the same entity for a better deal or recapture the ownership and license it directly to yourself.

Your rights to this option cannot be signed away in advance, so don’t fret too much over what was in your original contract.

This provides a second chance to regain ownership of your works or have their value re-evaluated, and ultimately, negotiate a better deal for yourself.
Many people say that music publishing is a penny business. As the world moves to streaming, it has become a micro-penny business. But the fact remains that there are a whole lot of pennies and they add up quickly.

Take care of the pennies, and the pounds will take care of themselves.

Alex Heiche is the CEO and founder of Sound Royalties, a company working to transform the way that music professionals fund their creativity. Find out more at soundroyalties.com

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POUND NOTES

Though the broad points of this article are universally relevant, there are some points for our UK readers to bear in mind:

• PRS for Music look after the rights and royalties of songwriters and publishers. PRS collects royalties for the performance of its members’ works, MCPS collects royalties for the reproduction (CDs, vinyl etc) of its members’ works.
• PPL (Phonographic Performance Limited) look after the rights and royalties of performers and rights holders.
• Obtain memberships for both these organisations. You cannot rely on others to make sure that you are a registered songwriter or performer on a recording. In doing so you give a mandate to both these collection societies to collect royalties on your behalf.
• As a songwriter with a publishing deal, it is the responsibility of your publisher to register your work with PRS. Likewise, it is the rights holder – usually the record label – to register with PPL. You will still need to be a member, and it would serve you well to regularly check your catalogue.

ANDY KELLY, UK ROYALTIES EXPERT

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