I love musicians, I really do, but most of them will admit they are not the best managers of their own affairs. They generally know they should belong to one of the performing rights societies, ASCAP or BMI, but that’s about it. Yet, there is so much more to the business of making music, especially today when everyone samples everyone else. So it’s important to know from where your income will be generated when you score a Top 10 hit.
There are four types of income for each musical composition:
Performance Income – is collected by one of many performance rights organizations (PRO) which administer performance licenses, to bars, broadcasts, clubs, concert producers, etc. Each of those third-parties must pay for the right to play your song in/on their establishment. So, the PRO collects the license fees from the third-parties and pays royalties to the copyright holder(s), which is generally a 50-50 split between the publisher and composer.
Mechanical Income- This is income you earn from the sale of sound recordings. It is paid to the publisher by the record company which manufactures the sound recording, pursuant to §115 of the Copyright Act. The Harry Fox Agency administers these licenses. The license itself can be limited in scope, territory, number of units manufactured, etc.
Synchronization Income – This is income earned by you when a TV or film production company wants to use your song in a show or movie.
Print Income – This is income derived from the printing of sheet music for your composition and understandably generates the smallest amount of scratch for your cache. Ask a musician today what a lead sheet is and they’ll probably look at you with crossed eyes and wrenched neck. Yet, in today’s digital world, even electronic sheet music comes under this category so don’t dismiss your print income as a possible source of income.
Understanding the potential source of your cash flow, places you in the driver’s seat when negotiating with potential labels and publishers.