By Marc Jacobson
With more songwriters administering their own catalogs, and the growth of the music publishing industry generally, songwriters and publishers should be aware of their responsibilities and opportunities for sub-publishing. It may be even more important to know the consequences of not having a subpublisher on your team.
To get the full picture, we need to review the basic streams of revenue in the music publishing industry. They are:
Mechanical income, which is income derived from copies of the composition which can be perceived with the aid of a mechanical device. The first mechanical royalty in the U.S. was paid in connection with "piano rolls", which only the player piano could "read", and in so reading make the composition perceptible. Today, mechanical income is generated from, among other uses, the manufacture and distribution of cassette tapes, vinyl records, downloads, and on demand streams. Non-interactive streams, such as internet or terrestrial radio, do not generate mechanical income. Mechanical income is typically collected in the U.S. by www.themlc.com for on demand streams and outside the U.S. by a performing rights society. The Harry Fox Agency may also collect mechanical income for physical copies of the composition. In the U.S., the rate paid for mechanical royalties is fixed by Congress and the Copyright Royalty Board, in regular hearings.
Performance income, which is generally generated and paid by local collecting societies, such as performing rights societies. In the U.S. those societies include ASCAP, BMI, SESAC, and Global Media Rights (GMR). ASCAP and BMI are available for anyone to join, while SESAC and GMR are by invitation only. In most of the remaining countries of the world, each country has a single collecting society that collects performing rights. These societies, like their sister societies around the world, collect income in respect of public performances of musical compositions in each local territory, such as on television, radio, the internet, and live venues. In the U.S., no performance income is derived from the public performance of music in a movie theater, while in much of the rest of the world, royalties are due for the public performance of musical compositions in a motion picture theatrical release. The rates are set by tariff or negotiations, depending on the country and its legal structure. The principle is that in each territory, each competing business making the same use of music rights pays at the same rate as any other competitive business.
Print income, as you might imagine, is income in respect of printed copies of the composition. In the U.S., there are only a few larger companies that offer "sheet music" from a store or online. Often, only successful songs can find a "print deal" with the likes of Alfred Music, Hal Leonard Music, MusicNotes.com or other print publishers.
Synchronization income is income derived from the licensing of a musical composition to be used in timed relation with an audio-visual image. Think about music in a TV commercial or TV show, movie, or other audio-visual work. (Of course, when the audio-visual work is publicly performed, additional performance income is generated.)
Grand rights income is income in respect of the songs when used in a performance before a live audience and when the songs help advance the story. This is not an area in which revenue is common, as it only applies to those songs used in a live play. Grand rights are not implicated in concert performances.
A music publisher's job is to:
be sure that the compositions are properly registered at each collecting society, for performance and mechanical income, so that when revenue is earned in the local territory, it is paid out to the proper party, in the proper amounts.
to promote the composition in a manner which helps or assists the composition in generating revenue, increasing its value, and otherwise enhancing or increasing the revenue stream from the composition.
secure cover recordings of the composition in the local language, thereby also increasing revenue on the composition.
secure synchronization licenses for the composition, thereby increasing the revenue stream and the value of the composition.
generally, promote the words and music of each composition in an effort to generate more revenue.
Bearing in mind that copyright is territorial in nature, and each country that has a copyright law enacts its own laws, which differ from others, often in material ways, it makes sense that to properly administer and promote copyrights in many territories, a local publisher would be valuable in each territory. Major multi-national companies, like Universal Music Group, Sony Music Publishing, and Warner Chappell Music Publishing frequently have local subsidiaries in each territory assigned to administer and promote the repertoire to the local industry.
Publishing collecting societies typically have reciprocal agreements with other collecting societies around the world. If a composition is originally registered in the U.S. and with BMI, and is then broadcast in a local territory, and there is no local subpublisher, the local society will pay royalties to BMI, which in turn makes a distribution to the publishers and songwriters. Those distributions by BMI are scheduled throughout the year, and it may be an extended period before funds earned from foreign performances are actually paid to the publishers and songwriters in the original territory, if there is no local subpublisher.
If a local subpublisher is in place, then the local collecting society will pay the local subpublisher, which will in turn account to the original publisher directly. This allows the revenue to be received by the original publisher in a much shorter timeline.
Further, a U.S. based administrator, which relies solely upon the U.S. collection societies, loses the opportunity to have local people promote the composition in the individual territories around the world. A U.S. hit can spawn local covers in many territories, and lots of other potential exploitations.
Ultimately, a local subpublisher performs the same job as the original publisher, except that the subpublisher is focused on its local territory. The local subpublisher also expedites the payment of royalties to the publisher and songwriters. Indeed, for example, a German publisher may need a U.S. subpublisher as much as a U.S. subpublisher needs a German subpublisher.
__________________ Marc Jacobson is an entertainment attorney in New York, NY. He is admitted to practice in NY, CA and FL and is the Founding Chairman of the NYS Bar Association Section on Entertainment, Arts and Sports Law. He is listed in Best Lawyers in the USA, Chambers USA, and SuperLawyers. © 2021 Marc Jacobson.