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Folk Alliance Newsletter

Performers Column

by Joel Mabus

written October 1999

ROYALTIES

"Only one thing is impossible for God: to find any sense in any copyright law on the planet. Whenever a copyright law is to be made or altered, then the idiots assemble."
-- Mark Twain: Mark Twain's Notebook, May 23, 1903

I don't know what Mark Twain would have to say today, nearly one hundred years later, but certainly the copyright laws in the USA haven't been made any simpler since his observation. While I won't be the one to paint our hard-working congress as an assemblage of idiots, I will point out that the most recent major revision to the copyright law was introduced by the Late Honorable Sonny Bono. When you have finished smirking, read on.

For the songwriter or the recording performer, the copyright laws can be more than a bit confusing. I won't begin to untangle all the sordid mysteries for you in this column, but lets take a look at one practical aspect of the situation: royalties.

When I converse with other performers, I am often amazed that so many of us are "at sea" when we consider royalties. Let me just hit the keynote. There are basically three kinds of royalties that a copyright holder can be paid: "Mechanicals," "Performance," and "Synch."

Mechanical royalties refer to the money due the copyright holder when the performance of a song is fixed in a tangible, "mechanical" form - i.e. "phonorecord," compact disc, tape, etc. Much of the law dates to the day when piano rolls were the hot "mechanical" technology. A direct legacy of the piano roll era is a law (in the USA) that would make Mark Twain roll over: Compulsory License. 

Here is Compulsory License in a nutshell: If an outfit wants to record a particular song they must obtain a license from the copyright holder before they can do so. That's all well and good. Then comes the Compulsory License law, which states that the said license cannot be denied. Huh? The upshot is that once a song has been published & recorded for the first time, then anybody can record it. The copyright holder is compelled to grant the license. However, in compensation, the licensee must pay a statutory rate of so much per song per unit. (For years this rate was fixed by a special board of political appointees. Now the Library of Congress sets the rate, which is adjusted periodically. The current royalty rate as of January 1, 1998 is 7.1 cents per composition or 1.35 cents per minute of playing time, whichever is greater, per record, tape or CD made and distributed.)

So if you want to record, say, your rendition of Rodgers & Hart's "Thou Swell" on your next CD, the publishers of the song cannot refuse you the right to do so. However you must pay the publisher the statutory rate for mechanical royalties on each copy distributed. (It is possible to negotiate a rate lower than the statutory - but you stand a much better chance of cutting a deal if you do so before you record. For example, "75% of statutory" is a common deal..) There is a company, The Harry Fox Agency, Inc. (HFA), which acts as a licensing house & collection agency for most publishers' "mechanicals." Some smaller publishers - and a few not so small - do the work themselves, but HFA has the clout to audit record companies books, and thereby earn the small percentage of the proceeds they charge their clients.

Note that if a song is currently unpublished, the copyright holder has the right to say who records it first - and at what royalty rate. This is an important detail of the law which is used to great advantage by songwriters who are perceived to be "hot," or for specialty songs that are ripe only once.

If you think Mechanicals are confusing, enter the wonderful world of "Performance Royalties." This is where the big three acronyms appear: ASCAP, BMI and SESAC. (Add a "dot com" to any of those and you'll get their websites) Any public performance of a copyrighted song triggers royalties due to the copyright holder. You can imagine the nightmare of trying to collect those monies on your own. ASCAP was formed early in this century to do the job. BMI & SESAC - ASCAP's rival Performance Rights Organizations (PROs) - came later. They collect money from all venues of live and recorded performance - radio, TV, concert halls, restaurants, coffee shops, churches, cruise ships - you name it. Then they divvy up the dough among their songwriters and publishers. Exactly "how" that money is collected & paid out is often a bone of contention. Each PRO does it differently, but each relies upon an arcane system of statistics, and radio airplay is often the baseline upon which the money is paid out. Don't expect to collect any performance royalties on your own - the courts have given the collection muscle to the PROs. So it is necessary for any serious songwriter or publisher to ally with one of the PROs.

Performance royalties are paid to writers and to publishers only. (The musicians' union has been lobbying congress for years for a law to get the recording session musicians a royalty - no luck yet.) The publisher gets a royalty of "100%" and the writer gets a matching "100%." If you are the writer and self-publish, you get 100% of the total royalty - all 200%. As weird as that math is -- that's the rule. Mark Twain is smiling. This law is the rationale for many "co-writing" and "co-publishing" deals. If you are merely the recording artist or hit-making producer, but want a taste of that performance royalty money from radio airplay, you must acquire some of the credit for writing or publishing. (Maybe that's why it sometimes takes seven people to "write" a hit in Nashville!)

The thing a lowly performer out in the trenches needs to remember is that the onus of paying the royalty is on the producer of the concert, or the owner of the club, or the management of the radio station, etc. Just getting up and performing the song doesn't make you liable to pay the performance royalty - unless you are also the producer of the show or the owner of the club, etc.

The last royalty to discuss is the "Synch" or synchronization right. (This term comes from the early days of the "talkies" when music was first synchronized with film. In the days when I was getting started, "needle drop" was the term sometimes used when the "synch" rights to a recording were bought.) This is a royalty due to the copyright holder when music is used in conjunction with a visual image - in a film, or on TV, or in a stage play or even a commercial -- just about anything that is not covered by "mechanicals." (Don't ask me about imbedded chips and MP3 downloads - hoo boy!).

When you are negotiating Synch rights, it's anybody's deal. There are no statutory rates and no truly "standard" deals. Some publishers hire HFA to negotiate these deals, but many do it themselves. The PROs only get involved once the song is performed in public and they collect, again, the "performance" royalty only. But for Nike or Burger King, or Stephen Speilberg to use your song to accompany their images, they must pay you for that right - the "synch" - above and beyond whatever monies accrue from the repeated offerings to the public.

Confused? You are not alone. I've tried to keep this simple and elementary. If you need a better understanding - and trust me, if you are going to do any business on either end of these royalty situations, you NEED a better understanding of the law and common business practice -- you should consult a competent authority. An attorney specializing in the music business can lead you through it. Much cheaper is a good book. There are many on the market or in your local library. However BE SURE you have a book that is CURRENT on the law. There are changes EVERY YEAR and there have been some significant changes in the '90s. You don't want to base your actions on outmoded regulations. (For example, if your book doesn't mention the Sonny Bono copyright amendment, chuck it for a newer edition.) The Internet is a boon for up-to-date information, but be prepared to wait for slow servers from the federal offices. 

Here are a few useful URLs to get you started:
nmpa.org/hfa.html (Harry Fox Agency, Inc.)
ascap.com
bmi.com
sesac.com
mpa.org (Music Publishers Assoc.)

Once you become expert in US copyright law, then try International Copyrights! Mark Twain, move over!