Simplifying Songwriting Royalties for Writers and Publishers
As a music creator, publishing is one of the most critical aspects of your career. But it’s not always easy to understand all the details of the process. One of the most important things you need to understand is mechanical and performance royalties and their split.
BAND Royalty works with royalty owners around the globe, so what we share about songwriting royalties here will be mainly about the USA and then the rest of the world. However, European royalty splits have slightly different handling. If you, dear reader, are an artist yourself, we suggest you contact your local collection association for specifics.
Usually, performance royalties divide into two equal parts, one for the writer and one for the publisher. That means both parties get 50% of the songwriting royalties. These revenue sources are collected and accounted for by the Performing Rights Organizations (PROs) and the Collective Management Organizations (CMOs).
The Writer’s Share
As you may already know, performance royalties come from the public performance of the songs — such as live concerts, live streams, and radio. The writers of the original composition receive royalty shares depending on ownership. Commonly, agreements through a split sheet are what determine such cuts.
Imagine the case where you created a band with three other people, and you all worked together on a song. To distribute the royalties equally, you would have to split the song’s ownership 25/25/25/25, so everyone gets an equal piece.
As a songwriter, when you register your song title and ownership, every collection society involved for the parties will use that registration as a guide to collect your share of the performance royalties. As in the previous example, your share would be 25% of the performance royalties.
The more knowledgeable artists are -either indie or established, the more they will control their own careers.
How to Collect a Writer’s Share
When you’re a songwriter, you need to become affiliated with either a Collective Management Organization or a Performing Rights Organization. These societies handle the licensing and also track and pay performance royalty shares to songwriters and publishers.
It’s vital that you take the time to do your research and consider all available options before choosing a society. You cannot affiliate to multiple organizations at once, which is often not allowed nevertheless. Hence, it would be best if you made the right choice from the get-go. Once you have a collection society, they will make the payments, and you will receive your writer’s share directly from them.
Additionally, your chosen organization will collaborate with societies overseas to collect your global earnings. Therefore, if your ownership of a song is 25%, that’s how much you will receive from your composition’s domestic and worldwide use. The collection society of your choice will use the registration details to determine what your co-writers will get.
Still, your music is used in a different territory as well. For example, let’s say you have chosen ASCAP in the United States as your collection society. In this case, the organization from those territories would pay your writer’s share and your publisher’s share if you’re not working with a publisher. Once your society receives the shares, they will divide them, take a royalty cut, and pay the writer and publisher.
Suppose you are working with a publisher and they registered the song with a society overseas. In that case, they will receive their publisher shares directly, and then they will pay you according to the agreement you’ve made.
Typically, the society will directly pay you the writer’s share of the performance royalties in its entirety. But if you wanted to be paid for the activity in all territories, hiring a publishing administrator is the way to go, as they will register your songs with global societies.
Why so? Because it is a requirement to be a citizen to join these societies. When you have a publishing administrator, the collection societies will send the writer’s share to the organization of your affiliation.
Royalties for songwriting are fundamental to understand because they are the cornerstone of BAND Royalty’s ecosystem.
The Publisher’s Share
When a song gets completed, whether you wrote it on your own or with co-writers, you are automatically the publisher. However, you cannot always easily collect the publisher’s share. There are three options to consider: you can sign with a publisher, create a publishing entity, or continue being an independent songwriter.
- Sign With a Publisher
Publishers and publisher administrators can join a collection agency just like songwriters. Publishers can collect both mechanical and performance royalties; songwriters cannot do that. Publishing entities can also become affiliated with more than one organization -not something songwriters can do. That means publishers can collect directly from other territories if they have affiliated with PRO or CMO societies.
- Create a Publishing Entity
Publishing entities can affiliate with the society you’ve chosen, so you can act as your publisher and receive the shares; this would often include an additional fee. The drawback is that publishers have to be affiliated with relevant global societies if they want to receive the mechanical and performance royalties directly. As you can imagine, this is a time-consuming and convoluted process because territories can sometimes have multiple societies.
- Continue Being an Independent Songwriter
In some cases, collection societies let writers collect the publisher’s shares even if there’s no publishing deal. However, this is not the norm, so not all organizations do this. Either way, you can’t benefit from mechanical royalties if you affiliate with a PRO only.
How to Collect a Publisher’s Share
As writers do, publishers collect a percentage of the compositions based on a contractual agreement or a split sheet agreement, and this allows societies and organizations to determine how many royalties they have to provide to the writer and the publisher.
Usually, the publisher’s share would be equal to the writer’s share. So, if the writer holds a 25% share, the publisher would also have 25%. Publishers receive 50% of the performance royalties and 100% of mechanical royalties from collection societies.
Sources for mechanical royalties in the US include The Mechanical Licensing Collective, The Music Reports, and The Harry Fox Agency. There are global collection societies that will collect mechanical and performance royalties, which are CMOs.
Additionally, it’s customary for record labels in the US to pay publishers for the mechanical earnings the song has produced through download sales and physical sales, so that’s something to keep in mind.
Final Words
Royalties for songwriting are fundamental to understand because they are the cornerstone of BAND Royalty’s ecosystem.
The more knowledgeable artists are -either indie or established, the more they will control their own careers. And it will also be more evident to see how working with BAND Royalty puts them in control of their financial future.
