The 5 Kinds Of Music Publishing Payments

Too many musicians underestimate or just plain don't understand how important music publishing is. It's always been the hidden-in-plain-sight cash cow of the music business, but also has been one of the least sexy. That said, publishing is literally the gift that keeps on giving, where you can get paid (and paid well) while you sleep. It's also the one part of the business that still continues to do well even though it's taken a hit like most other areas in music.

DIY Musician posted a short article on publishing recently that I'd like to paraphrase a bit regarding the 5 kinds of payments that music publishing can provide. If you're not hip to publishing, hopefully this will wet your appetite to learn more.

1. Mechanical Royalties: Every time your song is sold either on a vinyl record, CD or MP3, the songwriter is entitled to $.091 per copy. What that means is that if there's an album with 10 of your songs on it, you'll make $.91. This is why some writers made big money in the glory days of the business when albums where king. It's also why those same writers have far less income these days where it's a singles world, and will have even less when the world changes to streaming, although you do get a mechanical from some services like Spotify, although at a far lower rate.

2. Performance Royalties: Every time your song is played in public, you're owed a royalty payment. This includes airplay on the radio (terrestrial, satellite or Internet) and television, or in restaurants, clubs or even high school plays (although that's a lot harder to collect).

3. Synchronization License Royalties: Whenever your music is played along with moving pictures like television or movies, the creator of the movie or video has to pay the songwriter a fee. If fact, if you're the artist as well and they use your recording, they have to pay a fee on that as well. This is where most of the growth in the publishing business has come from recently, thanks to the proliferation of television channels.

4. Sample License Royalties: If someone samples a piece of one of your recorded songs, they owe you a royalty. Once again, this is a relatively new revenue source that's only happened in the last 20 years. There's been some big lawsuits regarding samples that have largely gone in favor of the songwriter.

5. Sheet Music Royalties: Any time your music is reproduced in a printed form, you're owed a royalty. This includes hard or soft copy sheet music, lead sheets, and anything else that represents your music or lyrics. When the music business was young over a hundred years ago, this was the major source of revenue for the entire industry.

As you can see, publishing pays in more ways than one. Having a piece of a big hit can pay off for the rest of your life, which is why those in the know are so protective of it. I still get paid for some songs I wrote that appeared on the 80s hit television show Bay Watch (although it's not much these days), which goes to show how powerful being a songwriter can really be.

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The New Digital Music Mechanical Royalties

Don't look now but the a new mechanical royalty rate for digital media is coming. The Recording Industry Association of America (RIAA), National Music Publishers Association (NMPA), and the Digital Media Association (DiMA) have all settled on an agreement that will cover how digital media creators and their representatives will be compensated from 2013 through 2017. The agreement still has to be approved by the US Copyright Royalty Board, but at this point that seems to be just a formality.

The agreement generally keeps the music publishing royalty status quo of 9.1 cents per song download, per song on a CD or other physical formats, 24 cents per ringtone, and the complex formula for subscription and streaming formats, but also adds 5 new categories:

• Paid Digital Music Locker Services providing on-demand streaming and downloads like those supplied by iTunes and Amazon, where music publishers will now get a mechanical royalty rate of 12% of revenue or 20.65% of total content cost, or 17 cents per subscriber, whichever is greater.

• Free Digital Music Locker Services that include a download purchase, music publishers will receive a mechanical royalty rate of 12% of revenue or 22% of total content cost, whichever is greater.

• A new term for a category called "Mixed Bundle" which could include a locker service, limited interactive service, download or ringtones combined with non-music product like a cell phone, consumer electronics device or Internet service would provide music publishers a royalty of 11.35% of revenue or 21% of total content cost, whichever is greater.

• Another new category called "Limited Interactive Service," which is when a subscription service offers a limited amount of music to a single genre or playlists that the user can access at a lower price, will pay publishers 10.5% of revenue, 21% of total cost, or 18 cents per subscriber, whichever is greater. 

• And yet another new termed category called "Mixed Bundles," which is when a CD comes with a download, publishers see 11.35% of revenue or 21% of total content cost.

How publishers get paid for these scenarios has been a very contentious issue over the last few years, but the new categories seem to insure that the writer and publisher will get paid in those circumstances where they didn't before. That said, the above figures come mainly from the industry association's own press release, so there are a lot of details that are yet unknown. I'm sure we'll revisit the topic many times as more info becomes available.

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Help support this blog. Any purchases made through our Amazon links help support this website with no cost to you.

You should follow me on Twitter for daily news and updates on production and the music business.

Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.