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Royalties

Discussion in 'Band Management [BG]' started by Groover, Feb 24, 2008.


  1. Groover

    Groover

    Jun 28, 2005
    Ohio, USA
    Who collects the royalties for songs on a CD? Is the recoding label for the record (CD), or the copyright owner of the music (assuming different than the label)?
     
  2. There are different types of royalties. From CD sales the "mechanical royalty" is paid direct to the performer by the record company. The writer royaly is paid to the publisher and then passed to the writer(s). The performance royalties are collected by a separate body. In the UK its the Perfoming Writes society. I expect that the USA has a similar body. They collect from Radio stations based on their playlists. They also collect a licence fee from all music venues and divide that fund based on the average number of plays. Songwriters should get a royalty from the number of plays by covers bands.

    Confused yet?
     
  3. Groover

    Groover

    Jun 28, 2005
    Ohio, USA
    Very!

    So if say we (Band XYZ) record a CD with Recording label (Label ABC), then stop recording for ever.

    5 Years later, say a commercial (Commercial EFG) wants to use one of the songs from that CD.... Who gets the money every time the commercial is shown?

    I know that's an extreme case, but I'm just trying to understand how and what the best way (safest) to produce and copyright our music.

    It sounds like there are several scenerios, so I'll have to do a little more digging based on what you wrote...
     
  4. Depends on the stipulations of the contract at the time the commercials were aired. Also depends on who is in control of the original recordings, and how monies made towards these recordings are divied out, again at the time of the commercial.

    You would do well to get yourself first and foremost affiliated with an organization such as ASCAP or BMI. With them you will register yourself as a songwriter and publishing entity,and get yourself legally bound to your works...tax i.d. and all the fun stuff. I have been with BMI for over 10 years...they are excellent people to work with.

    Then, get affilated with an agency that would be willing to shop your works (obviously for a percentage) to markets looking for material be it for bed music, or commercial work, and has good affiliations with networks and / or television producers.

    Laugh if you want, but over the past 5 years, I have made alot of money on my band's work getting uncredited placement on Soap Operas. Yes, on NBC, ABC and CBS. I've also had my band's music as bed track on network show commercials, as well as alot of radio spot work. I have a great agency, needless to say.

    As for the frequency of pay and whatnot, there are alot of factors that break it down. It depends on how the work is presented...it's one payscale if it's _____, another if it has lyrics vs. instrumental....another if it;s placed on a _____, and the duration of the placement. The money per play is actually kinda small, what makes it lucrative is how many markets pick up the show being broadcast.

    I had a sopa opera spot that lasted 45 seconds on the show, as bed music with lyrics. It netted me X according to scale for network broadcast. Now, this X was kinda small, but mutliply it by the 1500 markets broadcasting that same show (you know how multiple channels play the same show at the same time sometimes? It's usually a big network and local affiliates linked to them), or ad, and whether there is a recap show later or what have you, and it all ads up really quickly into a nice little quarterly check.

    Alas, no taxes taken out, so you have to 1099 your earnings every year, but no big whup, you're making money for your art.

    I know I'm rambling, but I'm trying to get you motivated to get started.
     
  5. Groover

    Groover

    Jun 28, 2005
    Ohio, USA
    Great information. This is a long the lines of what I'm trying to understand, so thank you.

    I guess maybe I should say what I want to say...

    Our band, a three piece. One band member is no longer with the band, so while we search for that member...

    Two of us are going to form an LLC and create a Record Label. The first CD's to use the record label on will be our Band's music (the band in this case in not the same as the LLC, even though the LLC Record label would be owned by two of the band members, me being one of them).

    Just to make things easier, we will have one business bank account for the LLC, but it will be in my name.

    And again to simplify, the CD's and contents will be copyrighted by the other LLC member, but in his name only (without any affiliation to the LLC).

    There is plenty of trust between us, otherwise we wouldn't be doing this, plus I'd be the only one to have draw access to the account anyway, but I just want to make sure we are setting us up correctly for the future of the business and the future of any CD's that we record and copyright in this manner.
     
  6. Ah. Gotcha, but why would you have them in each other's names? In the interest of keeping each venture seperate?

    I'm sure you would be doing that tax-wise, but wouldn't it be better if all concerned parties were on all the books? I mean I know the basics of an LLC, but I dunno....

    Would you be doing the label simply to make the band look more "legit" or were you gonna go throuh more artists on a roster and hook up with good distribution for physical copies for store sales? This day and age unless you got big money to push a disc, it'll languish on a store rack if no one knows about you....better to focus more on web presence and e commerce.
     
  7. Groover

    Groover

    Jun 28, 2005
    Ohio, USA
    We're keeping some of things seperated just to simplify the process. One person deals with the copyrights, then other deals with the account, so we're not joined by the hip in everything. The "books" part I think will all be in the LLC, as both our names, etc will be there. All income (or losses) would be shown there and we'd use that information for the taxes.

    The reason for the label is to look more legit as a band, maximize (hopefully) the profits from the sales (not having to pay someone else's record label), but also to have just what you said, some other local bands under the same label and then hookup with a bigger signing label whom will possibly want to buy-out one of the bands... right's?

    It's all a little confusing to me, which is why I'm posting here. I'm all for the online sales, i-tunes, 99cent download type deals, etc, whereas the other person is more focussed on old-school mass producing CD's, which really is not a bad idea either, because we can sell those at shows and such, but I see what you mean.

    More advice is always welcome... Thanks again for the help.
     
  8. Ok, well.... in the area of "Mass Producing" cd's, please, I urge you to stick to the minimum order amount and really shop for the best prices (I know this is obvious) it's cheaper to reorder than to sit on 2000 unsold CD's.

    As for distribution, you aren't gonna get anywhere without paying for distribution and jumping on the backs of "stockers" with your product... the stores aren't gonna ask for your product, much less order it directly without someone coming in asking money in hand (so make sure you're in the phonolog books)

    ...also please note that many unsigned artists won't get that much rack space if at all, and most stores will only accept 2 to 3 copies at the most per store... and if you are gonna go that route, it would be in your interest to hire an entity to track the stock and if possible physically see how said stock is being handled (is it on the shelf? is it being featured in a "underground artist" section? Is the album in the books for ordering if needed?) this all will cost money, with little to no guarantee on return...it's quite a venture...and I am not trying to dissuade you from the undertaking, just have your "ducks in a row" and have a good business model in place with realistc aspirations... the days of labels buying up rosters are over. Even the smaller "indie" labels themselves are either shoestring budget or are operating as a subsidiary of a larger corporate entity, and you know full well there is not one sole person calling the shots on those types of affairs, so you'll have to make your pitches MIGHTY attractive, or sell real cheap (which you don't wanna do)

    In this day and age, a strong DIY ethic is more favorable, (if you go the store route you get to build rapport with the buyers for said stores...alot of phone calls in your future...) and I really strongly push the web presence and e commerce side of things because the "rabid record buying masses" are more into ringtones and downloads and other non-tangible product type dealings these days....ever notice every third MTV commercial is for ringtones? That is the big labels pushing that, in an arms flailing effort to make money since CD sales are in the toilet, and iTunes is so powerful they call the shots on monies with the labels too....

    One more reason we decided the broadcast media route was more lucrative.... but again, I wish you the best in your endeavors.
     
  9. Ok, well I thought it was sound advice. Just tryin to help.

    Mon
     
  10. Groover

    Groover

    Jun 28, 2005
    Ohio, USA
    Mon, I did read your last before last posts, but I was immediately sidetracked and then I forgot about it until your last post.

    Once again, you advice has been very valuable and much appreciated.

    We are going to stick with the original plan at this point; we’ll produce 500 of each CD at this point (we have enough material for 2 cds). Going with the larger quantity from what we have priced, is actually not much higher (a few hundred) than say just making 200 of each, and we'd probably wouldn't want to make any less than that.

    We'll probably use some for promo packs, give some to family and close friends, a few here and there... so it's really just a personal satisfaction at this point. If we sell a few, maybe we'll make our money back on them.

    I'm pushing for the iTunes and any other 99 cent type downloads venues at this point, 'cause that does really capture today's market.

    Ideally, and to be honest, I would die a happy man if one of our tunes, with perhaps one of my best bass lines would end up in some classic movie as a soundtrack - not necessarily for the money, but more for the legacy.
     
  11. 57pbass

    57pbass Supporting Member

    I work at The Harry Fox Agency..
    we provide mechanical licenses and distribute royalties to thousands of publishers worldwide...


    Take a look at our site

    www.harryfox.com

    Thanks
     
  12. Hey dude, that's cool, I was being facetious...I think your plan as a whole is really great and really sound. I wish you the best with it, especially on the "personal satisfaction" tip, because that's what's really important.

    I can't wait to hear what you have in store.
     
  13. Groover

    Groover

    Jun 28, 2005
    Ohio, USA
    Thanks again Mon, and thanks for taking the time to help "trouble-shoot" the concept.
     
  14. Wally Malone

    Wally Malone

    Mar 9, 2001
    Boulder Creek, CA
    AFM International Representative Endorsing Artist: Accugroove Cabinets & MJC Ironworks Strings
    Performance rights for radio play are not paid in the U.S. It is also the reason that many musicians in the U.S. to not get monies from foreign countries when they get played there since the arrangement is not reciprocal. The AFM is currently working on this lobbying our Congress.

    Wally
     
  15. Music Attorney

    Music Attorney

    Feb 22, 2004
    Assuming you are referring to terrestrial radio, that is correct. However, the Digital Performance Right in Sound Recording Act did create a digital performance right that allowed the owners of sound recordings (e.g., record companies) to collect a performance royalty in connection with the performance of those sound recordings via digital means (i.e., as opposed to analog terrestrial). In addition, the legislation created a royalty for featured musicians/vocalists as well as for non-featured musicians/vocalists on those recordings. The legislation and its application can be highly technical so I’m not going to go into it here, but I did want to clarify that a performance right does exist and that some royalties do flow to musicians (albeit very limited at this point in time).
     
  16. Wally Malone

    Wally Malone

    Mar 9, 2001
    Boulder Creek, CA
    AFM International Representative Endorsing Artist: Accugroove Cabinets & MJC Ironworks Strings
    You are correct, the AFM also played a part with a coalition in obtaining those rights.

    Wally
     
  17. Wally Malone

    Wally Malone

    Mar 9, 2001
    Boulder Creek, CA
    AFM International Representative Endorsing Artist: Accugroove Cabinets & MJC Ironworks Strings
    Here's the latest press release from the AFM at afm.org. There's a link at the bottom for full text of the resolution:

    AFL-CIO Supports Performance Rights

    Yesterday the AFL-CIO Executive Council committed to righting a wrong – the lack of compensation to musicians and singers whose recorded music AM/FM radio broadcasters use to attract listeners and thus to sell advertising.


    In “Fairness in Radio: A Performance Right for Sound Recordings,” the Executive Council called for enacting bills in Congress, H.R. 4789 and S. 2500, that would enable musicians and singers to receive compensation for terrestrial radio play of their recordings, as they already do for satellite and Internet use. The Council highlighted the inequity of compensating songwriters, but not vocalists and musicians. It pointed out that the United States is virtually alone among technologically advanced countries in denying compensation to these performers for terrestrial radio broadcasts of their recordings.


    DPE President Paul E. Almeida is a member of the AFL-CIO Committee on Public Policy and Legislation. He accompanied AFM President Tom Lee and AFTRA President Roberta Reardon as they spoke in support of the resolution first to the Committee and then to the Executive Council. DPE staff worked with AFM and AFTRA in developing the resolution.


    For the full text of the resolution, click on http://www.aflcio.org/aboutus/thisistheaflcio/ecouncil/ec03042008g.cfm

    Wally
     

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