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The Role of the
Music Publisher
Copyright 2005 by Keith Holzman,
Keith Holzman
Solutions Unlimited.
All rights reserved.

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A key adjunct, and potentially considerable asset, of a record label is it's own music publishing company. Not every label establishes one, either through lack of expertise and experience, or insufficient time to deal with it. But failure to establish a publishing division could be a lost opportunity and a very costly mistake.

The Music Publisher's Purpose:
The essential purpose of a music publisher is to administer, exploit, and collect royalties for its copyright properties.

Administration entails the filing of a notice of copyright with the U.S. Copyright Office in Washington, the issuing of licenses, collecting of royalties, and paying writers and co-publishers their share of the proceeds. Exploitation involves getting artists to record your copyrights, and extends to getting them used in films, television, radio and TV commercials, etc.

Creative publishers with song-writing savvy work with their writers and help them improve their craft and ultimately their output.

A music publisher acquires rights to songs from songwriters, lyricists, and composers. Assuming you're a label that wants to start a publishing division, you should try to acquire the publishing rights to material written by your artists when you negotiate their recording contracts.

In some cases an artist may not want to grant total publishing rights, but may agree to a co-publishing deal. The record company, as co-publisher, doesn't acquire as large a piece of the pie, but it's more than it might otherwise be able to obtain, yet still be worthwhile.

There are five different rights that a music publisher controls.

They are...

Public Performance Rights
Performing rights societies such as BMI, ASCAP, or SESAC collect royalties on behalf of music publishers for radio, television, live public performance spaces such as nightclubs, hotels, discos, retail stores, etc. that use music in an effort to enhance their business. If your songwriters are already affiliated with any one of these agencies, then you should do so as well. As a result, many publishers affiliate with two or more societies.

Mechanical Rights
The Copyright Act provides that, once a piece of music has been recorded and publicly distributed, anyone else can record that work provided they pay the current statutory rate. This is called a compulsory license.

Not surprisingly, mechanical rights are the rights to reproduce music via mechanical means, and dates back to the early days of piano rolls and the phonograph. Permission is required to mechanically reproduce a licensed work. Thus a publisher issues licenses to those who request the right to record a work already mechanically reproduced. And the money paid and collected for such licensing is what we call a mechanical royalty.

Many publishers prefer to have someone else issue licenses and keep track that payment is received for such usage. The largest firm that handles such matters is the Harry Fox Agency, Inc. for the U.S. The CMRRA is its Canadian counterpart.

Synchronization Rights
With lots of hard work -- and a bit of luck -- you'll have songs and copyrights that are of interest to film and television producers to use as background or source music in their productions, or for use in commercial advertising. This can be extremely lucrative. As publisher you would negotiate and subsequently issue a "synchronization" license so that the copyright can be used in timed synchronization to a visual. And in the case where, as record label, you also own the recorded performance that's used, you would issue a "master use" license for the work as performed on your recording.

Thus there are two licenses (and two fees) involved, one for the written copyright, and one for the recorded performance. In the case of feature films each license can range from $20,000 well into six figures, so there's a lot of potential income.

Print Rights
Traditionally, music publishers issued sheet music of all of their copyrights. This was a huge undertaking for it required the actual printing of all of its copyrights and then maintaining inventories in varying versions based on instrumentation, etc. Such extensive printing is rare these days, but publishers occasionally still issue printed folios of works by major songwriters who they represent.

Digital Print Rights
Digital music rights have become a millennial addition to the previous four. It's now possible for publishers to make available digital versions of songs and sell them on-line. This can be done as MIDI files, or as digital representations of printed sheet music, such as Adobe Acrobat PDF files.

The advantage of this is that a publisher need not actually print and subsequently maintain in inventory versions of all of its copyrights, but can instead have every single one digitized and be available indefinitely on a computer server. Thus they can be made available and sold on a 24-hour basis, seven days a week! And no warehouses full of dusty print materials!

Foreign Sub-publishing
Not only do you have domestic rights to consider, but you also have to deal with foreign rights. That's where a foreign sub-publisher comes in. Many governments overseas collect mechanical royalties automatically, so you may as well receive your fair share. Therefore it's a good idea to retain a sub-publisher in each territory where your copyrights are utilized.

The terms of publishing agreements vary considerably, and are too complicated to explain in a brief newsletter. However, it's been common practice that a publisher takes 50% of all income and turns over the remaining 50% to its songwriters.

With the exception of very large publishers who can set almost any kind of deal they want, I think a record label shouldn't be too greedy. Be fair to your writers with a simple, straightforward co-publishing deal where you share the benefits. For example, an artist would not just retain his normal 50% writer's share, but might be willing to grant you half of the publishing share, giving him a total of 75%. Thus you, as co-publisher, would control 25% of the copyrights.

Dealing With All of This
Publishing is a huge responsibility. Therefore small publishers may opt to have a larger publisher handle all of the administrative work -- for a fee, of course. This makes a lot of sense if you don't have the time or experience to cope with the necessary volume of work. And as your catalog of copyrights becomes substantial, you'll find quite a few companies willing to administer them on your behalf.

But once you've decided on an administrator, be sure they do their job, not only to issue licenses and collect funds, but also that they work to properly exploit your copyrights. There's a great deal of ancillary income to be obtained by having other artists record your copyrights and by getting them employed in other media.

Setting up a publishing company, although not terribly difficult, is beyond the scope of this newsletter. Specifics for doing so can be found in some of the books found on the Recommended Reading page on my web site.

By the way, there's an entire chapter devoted to Publishing, plus a whole lot more, in my book, "The Complete Guide to Starting a Record Company."

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Copyright 2005 by Keith Holzman, Solutions Unlimited. All rights reserved. Adapted from "Manage for Success," Newsletter #50, June 2005. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Keith Holzman is the principal of Solutions Unlimited, a management consultant specializing in the recording industry. A trusted advisor and troubleshooter, he is a seasoned music business senior executive with extensive experience in all aspects of running a label. He was President of ROM Records, Managing Director of Discovery Records, Senior Vice President of Elektra, and Director of Nonesuch Records. He publishes "Manage for Success," a free monthly email newsletter devoted to solving problems of the record industry. You can subscribe at his website <
http://www.holzmansolutions.com>. Keith is a member of the Institute of Management Consultants and has served as a panelist for the National Endowment for the Arts, and as a board member of many arts organizations. He can be reached at mailto:keith@holzmansolutions.com. Keith is also the author of the recently published "The Complete Guide to Starting a Record Company" available both as a 235-page, printed spiral-bound book, as well as a downloadable E-Book.

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