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Sound Advice Your inside source to the world of entertainment law with Peter Vaughn Shaver, Esq. |
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I want to join a performing rights organization but I understand that I have to be affiliated with a publishing company first. How do I go about starting my own publishing company? First off, performing rights organizations are private companies, such as ASCAP, BMI, and SESAC, that collect performance income of copyrighted songs for songwriters and publishers. Essentially, these companies track down royalties and issue licenses to publicly play song compositions belonging to these parties. The "performances" refer to the playing of songs via radio or at bars, restaurants, clubs, TV and sporting events. Note that the licenses and royalties here only apply to the song compositions, NOT the recordings by specific artists. For example, Bob Dylan and his publishing company get paid whenever "All Along the Watchtower" is played - regardless of whether it is Bob's version of the song, or Jimi Hendrix's, or anyone else's. Note: There are now other companies, such as SoundExchange that track and pay the specific performer or owner of the sound recording for digital performances (Internet transmissions, satellite radio transmissions, cable radio) of their recordings. This, relatively new, source of income is often overlooked by many recording artists. Check 'em out at soundexchange.com. Each performing rights organization has its own rules, but, basically, it works like this: 1. Writers may sign up with the organization after the release of a recording or public performance of their compositions. Publishing companies must prove that they are engaged in the publishing business and handle songs that meet the minimum guidelines for writer membership. Affiliation with SESAC, the lesser known of the three companies, is more exclusive and the company must first review each writer or publishing company. 2. Membership fees or dues may be required for both writers and publishing companies, but some organizations are free to join. Writer and Publishers are required to register with the same company. 3. Individual compositions are then registered with the company so that payments can be listed in the company's database 4. The company then issues licenses with radio stations and other outlets playing your songs and collects this income in a pool for all the company's affiliated writers and publishing companies. The major American companies also have agreements with other similar companies in foreign countries who will track and recover performance royalties. 5. Performances of each composition are tracked and periodic accounting statements and payments are issued to the writers and publishers, including bonuses for frequently performed songs. Note that payments are not made every time a song is played, but rather representative samples are recorded during a certain periods and estimates are then made about how many times an individual song might have been played during an accounting period. 6. The overall income is then divided between the songwriter and the publishing company for each composition. Each different company offers slightly different benefits, mostly related to the sources they monitor for computing payments. Before joining, I suggest that you fully investigate these companies by checking out their websites [BMI.COM, ASCAP.COM, SESAC.COM]. Ok, so now let's look at how to set up a publishing company. In addition to money from live performances, publishing income is one of the most important sources of revenue for musicians. Publishing companies are businesses that own or control copyrighted musical compositions. You can either work with an existing publishing company, or start your own, in order to maximize your income. However, setting up your own publishing company is important to ensure that you collect all the income related to your songwriting as such income is typically split between the writer and their publishing company. Creating a publishing company is fairly simple. The basic steps are: 1. Determine exactly who will be a member of the company. If you have more than one member, you will need to draw up an agreement about how the company is to be managed and how income will be divided between the members. 2. Choose a name and clear it with your chosen performing rights organization. 3. Register your business with the state in which you are doing business and obtain a free federal tax identification number (essentially a Social Security number for the company). 4. Open a bank account for the company. 5. Register your copyrights and transfer them via a written agreement to the company. Again, the publishing company then "owns" the copyrights to the song compositions. 6. Collect your publishing income. The Bottom Line: Joining a performing rights organization is an important way to track income from radio airplay and other performances of your song compositions. Starting a publishing company is fairly easy and can help maximize payments from performing rights organizations and other sources. SEND YOUR QUESTIONS TO: pvshaver@aol.com Disclaimer: The advice and opinions offered in this column are meant to be educational only and should not be relied upon as personal legal advice. The reader is cautioned to seek advice from qualified counsel regarding the specific facts of any legal matter. Neither the writer nor Music Liberation Project accepts any responsibility for the reader's reliance on, or use of, the contents of this article. |