Role of the
Copyright 2005 by Keith Holzman,
Holzman Solutions Unlimited.
Back to The
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.
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
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
There are five different rights that a music publisher controls.
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.
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
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
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.
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.
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!
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
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
on the Recommended Reading page on my web
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
Copyright 2005 by Keith Holzman, Solutions Unlimited. All rights
reserved. Adapted from "Manage for Success," Newsletter #50,
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
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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