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A GUIDE TO PUBLISHING, MECHANICAL ROYALTIES AND RELEASING COVER VERSIONS

AN ESSENTIAL GUIDE FOR PREPARING TO RECORD AND RELEASE MUSIC


The music industry revolves around two distinct copyrights: the master right, and the publishing right. When someone uses your music, money is collected from them and distributed between the various rights holders of that song. These two copyrights are: 1. The copyright in the sound recording (also known as the master right) This is the copyright that exists in a recording of a song, and protects the owner of that copyright, who is usually either a recording artist or a record label, by giving them the right to collect money from the use of that sound recording. 2. The copyright in the musical work (also known as the publishing right) This is the copyright that exists in the underlying song - the lyrics and the melody. It comes into existence as soon as evidence of the song exists (for example, a demo recording, or a written expression of the song), and gives the owner of that copyright (usually either a songwriter or music publisher) the right to collect money from the use of that song - for example when a recording of that song is played or sold, the song is performed live, or reproduced / recorded. It is important to differentiate between these two copyrights, and their owners, as they offer different income streams - even if the person who wrote and recorded the song is the same. You may, for example, be in the situation where a band records a song that only one member of the band wrote - in this example, the individual songwriter has different rights to the band as a whole that recorded and released the song. What money does EmuBands collect for artists? When a recording that you have distributed via EmuBands is downloaded or streamed online, a royalty is generated, which the retailer will pay to you via your EmuBands account. If you are a record label, then you will then pay a portion of this royalty on to the recording artist as per the terms or your agreement with them. These royalties cover the copyright in the sound recording.


What sources of income are there for a songwriter?

While every download or stream generates royalties for the holder of the sound recording copyright, as explained above, they also generate separate royalties for the songwriter and / or publisher (if the songwriter(s) have signed a publishing agreement). There are two types of royalty due to songwriters / publishers in this instance:

1. Mechanical Royalties 2. Performance Royalties 1. Mechanical Royalties:

This type of royalty becomes due when a permanent copy of a sound recording is made. In terms of physical releases, think of this happening each time a copy of the song is made e.g. CD manufacture, or CD to CD, CD to DVD or CD to Hard drive. In terms of digital releases, the mechanical royalty becomes due when a copy of the master is made from the retailer's server, and is transmitted to the fan as a permanent download. In order for the mechanical royalty to become due, first a mechanical license needs to be granted by the songwriter / publisher - this license grants permission to the recording artist / label to issue copies of that song, in the form of a sound recording whether that sound recording is a digital download via a store like iTunes or Amazon, or on a physical format like a CD. The second part of the process is making the payment from the owner of the sound recording to the owner of the composition. So, we can think of this as a two-step process: 1. Receiving permission from the songwriter / publisher 2. Making the payment to the songwriter / publisher The actions required for each step vary depending on the format of your release (digital or physical) and the country in which you sell the recordings.


Mechanical Royalties in Physical Recordings: In order to be able to manufacture CDs, you need to gain permission from the songwriter / publisher via the relevant collection society in your country. In the UK, this would be via the MCPS, who are part of PRS For Music. As long as the songwriter / publisher is an MCPS member, the MCPS will issue you with a Mechanical License and you will pay to them a set amount of money, depending on how many copies you wish to make. A manufacturer is, by law, not allowed to proceed with manufacturing CDs until they are in receipt of the mechanical licence. Therefore, if you are an artist wanting to manufacture CDs containing your own songs, you still need to go through a process with the MCPS, even if you aren't a member. They can grant you a 'Certificate of No Claim', meaning that you are free to manufacture the CDs without payment of the mechanical royalty, since you would be making this payment to yourself. If you are an MCPS member, you will need to set up an exclusion to avoid MCPS collecting on your behalf. Mechanicals in Digital Recordings: In order to understand the way mechanical licenses are granted for digital recordings, it is important to grasp how things work with physical recordings - hence why we have explained this above. Where mechanical royalties in physical products are dealt with solely by the MCPS, for digital usage, the royalties are split between the MCPS and the PRS, who together make up PRS For Music. More details on these splits can be found later in this article. We are now going to raise the concept of the ‘MCPS Licensing Agreement’, as it helps explain how mechanical licenses are granted for digital recordings. If the owners of both the sound recording copyright (the artist / label) and the composition copyright (the songwriter / publisher) are the same entity (for example, a singer/songwriter), then permission can be said to be granted automatically, as permission is implied when the artist records their own song. If the owners of both rights are not the same entity (for example, a record label releasing recordings by an artist, or, an artist releasing a cover version), then a licence can be granted by the MCPS/PRS as long as the recording is a 'faithful reproduction' of the song. In order to be considered a 'faithful reproduction' of the song, there are certain things you cannot do.


"For instance, adapting a work – e.g. by changing lyrics or melody – is off-limits unless the copyright owner agrees beforehand. Similarly, making off-the-wall arrangements, adding samples, raps etc could infringe the composer’s moral rights so must be agreed beforehand. If not, the MCPS license may be invalidated.

Duncan McCrone, MCPS

Industry practice is that anyone can record and get a mechanical licence as long as the work has been previously released and is not subject to an ‘FLR’ – a First Licence Refusal’. This is a mechanism whereby a copyright owner can decide who releases the work first. After that release, anyone can record and release it, but conditionally on moral and other neighbouring rights not being infringed. Straightforward covers should be okay, but if in doubt – ask!” So, if you wish to record a cover version, bear these factors in mind. It is always advisable to err on the side of caution when considering whether or not you need permission to record a cover version. PRS for Music can help track down the publisher of a particular song if you think you may need to contact them to gain permission.

2. Performance Royalties:

Whilst a 'mechanical' royalty becomes due on a permanent download of a song, when a song is streamed through, for example Spotify or Deezer, a royalty is due through PRS for Music. In essence, the permissions required are the same - the songwriter, or the publisher, needs to approve the use of their song before you can record and release the sound recording. Again, unless you are making changes to a composition, a licence can be granted. Whilst these are the two sources of income for a songwriter when a recording of their song is downloaded or streamed, there are also other sources of royalties to consider. A songwriter will also earn royalties whenever one of their songs is performed live or is broadcast on TV or radio (via the collection society PRS for Music), and a recording artist will also earn money whenever a recording they played on is played in public (via the PPL, another collection society). There are also royalties due to the owner of both copyrights when a recording used in a 'sync' - when a recording is used in a film, tv show, advert or video game.

Tip: Learn how to claim your songwriting royalties properly whenever you play a gig. For more information the PRS For Music Gigs And Clubs Scheme – click here.


Making Payments for Mechanical Royalties

Now that we have covered the issue of gaining permission from a songwriter to make and release a sound recording, we turn to the issue of making the payment of mechanical and performance royalties due to the relevant songwriter / publisher. The good news is that, throughout the World, streaming services will pay the performance royalties due to the relevant local collection societies for you. For mechanical royalties, it is similar in the vast majority of the World, where the retailer (e.g. iTunes or Amazon) will pay on your behalf the mechanical royalty due to the relevant collection society for each territory (e.g. PRS / MCPS in the UK). So, for a UK-based artist releasing recordings of songs they have written themselves, as long as they are registered with both PRS and MCPS, they will be able to claim their mechanical royalties from these societies. However, this is not always the case with mechanical royalties due on downloads. For sales from within a few territories, the mechanical royalty will be included within the royalty that EmuBands pays to you. So, if you are releasing music written by someone else, you will need to make a payment to the songwriter or the publisher.

The countries where this is happens are: USA Canada* Mexico India Pakistan *For some retailers.

Tip: To view how Mechanical Royalties are handled for each contract, just click on 'More Info' next to each contract when selecting which ones you want to opt in to for your release, or contact your account manager at EmuBands.


Mechanical Royalties in the USA The USA is the largest music market in the World, so let's take some time to consider how things work there. The process for granting mechanical licenses and paying mechanical royalties for digital sales in the USA can be equated to the process of manufacturing CDs in the UK. You need the license to be granted up front, and sometimes you will need to make the payment for the number of downloads up front. This poses an obvious problem, in that you don't know in advance how many sales you are going to make. Fortunately, there is an American organisation that can help - think of them as an American equivalent of the UK's MCPS, discussed above. They are called the Harry Fox Agency (HFA), and here they explain a little more about what they offer: "HFA issues licenses, collects and distributes royalties to, and conducts royalty examinations on behalf of, music publishers. If you want to record and distribute a song that was written by someone else, you need to get a mechanical license. In the US, a mechanical license is obtained through HFA or by contacting the publisher directly. An easy way to obtain a mechanical license for most songs is through Songfile®, HFA’s online licensing tool, which was created specifically to serve the D.I.Y market.

Profile: HFA Founded: 1927 Subsidiary of: The National Music Publishers Association

Users can obtain mechanical licenses for a limited quantity of CDs, cassettes, LPs, permanent and full‐length downloads (2,500 or less) through Songfile. You can access it at www.songfile.com.

Websites: www.harryfox.com www.songfile.com

If you can’t find a song in our database, you can ask HFA to add the song using the ‘Song title not found? Click here’ link, found on the bottom of the Songfile song search results page. Another option is to contact the publisher directly."

Members: Over 46,000 publisher members

HQ: New York City


In the USA, the amount of publisher royalties’ an artist or label is responsible for paying to the writer or publisher depends on the length of the song. HFA explain the situation on their website, and have a calculator to work it out for you. Visit these links for more information: http://www.harryfox.com/public/StatutoryReports.jsp http://www.harryfox.com/public/RoyaltyRateCalculator.jsp The cost to use the Songfile service is $16 per song (plus the statutory mechanical rates), however if you license more than 5 songs in one transaction, this processing fee is reduced to $14 for each additional song. Focus: Canada In Canada, the Canadian Musical Reproduction Rights Agency Ltd (CMRRA) issues mechanical licenses. They have formed a joint venture with the Society for Reproduction Rights of Authors, Composers and Publishers in Canada (SODRAC), called CSI (CMRRA-SODRAC Inc) to represent the wider interests of songwriters and publishers. As an indication, for anyone selling a cover version in Canada, you will have to pay the publisher a rate of 8.3 Cents (CAD) for a 5-minute song, and 1.66 Cents (CAD) for each additional minute there after. We have a contact at CSI, so if you need advice on licenses in Canada, you should contact your EmuBands account manager for more information. Focus: Mexico Mechanical licenses in Mexico are covered by the Sociedad de Autores y Compositores de Mexico (SACM). If you wish to record a cover version, your first port of call for permission would be SACM – if, however, they do not manage the rights for that composition, then you should contact the rights holder directly. As with the CMRRA in Canada, EmuBands have a contact at SACM in Mexico, so if you need advice on mechanical licenses in Mexico you should contact your EmuBands account manager for more information. For India and Pakistan, we would recommend contacting the Publisher directly.


Music Publishers As we can see, one of the options available to artists or labels releasing recordings in the USA that were written by someone else is to deal with the publisher directly. So, what is a music publisher?

Sentric Music is an example of an independent music publisher. Established in 2006, they now publish tens of thousands of artists and writers and operate Worldwide. Sentric work to collect publishing royalties from live performance, broadcast, downloads, streaming and other sources globally. They offer synchronisation opportunities with TV, film, gaming and advertising clients. Sentric is free to join; similar to EmuBands, you retain 100% control of your copyright and, whereas a ‘normal’ publishing agreement may tie you in for a specific period of time, you can leave at any point with just 28 days' notice. Sentric simply take a small share of what they earn you.

Profile: Sentric Music www.sentricmusic.com info@sentricmusic.com +44 (0)207 099 5991 Founded: 2006 HQ: Liverpool


Here are some useful tips from Sentric Music: What Is A Music Publisher? “Music publishers look after music writers and the songs that they have written. A publisher should work to maximise income from your publishing copyright through efficient administration of your songs and creative exploitation (such as synchronisation or writing/recording partnerships). What Are The Differences Between a Music Publisher And a Collection Society? It’s important to understand that publishers and rights societies, such as the PRS for Music (jointly operated by PRS and MCPS), are different entities. Rights societies represent the rights and interests of publishers and songwriters. They create collection policies and set royalty rates for the use of your songs. A publisher should work proactively to get your songs used and collect any royalty income from those usages from rights societies around the world.” So, if you are a songwriter, it could be beneficial to sign with a publisher, so that they can manage your catalogue of compositions. What should a songwriter look for from a publishing deal? “There is no steadfast rule as to what you should give up for a certain level of publishing investment – it very much depends on your needs and goals – but here are some key points to consider: • • • • •

The publisher’s reputation, previous work and global links The amount of money being offered (the ‘advance’) The share of royalties being given up The length of the agreement (the ‘term’) The control of copyright being waived (e.g. your moral rights – will you be able to refuse your song to be used in certain ways?)

With regards to finding a publisher, those which are offering an advance will probably be looking for a certain level of profile or track record and will most likely want to tie your rights down for a lengthy term. It’s likely that they would find you via A&R/management rather than you going to them directly so building your profile and making these links are important. The main alternative is seeking a publisher which offers to administer your works for a small percentage of income rather than offering an advance. They may have no barrier for entry and so offer artists a good initial option for publishing representation. In these cases an artist should carefully consider the length of the term (which should be minimal if no advance is being offered) and what it is the company will do to ‘work’ your songs: will they make claims for your royalties where possible?; will they look to sync or licence your songs?; how else will they look to generate publishing income for you?”


How Can Sentric Music Benefit Songwriters? “At Sentric, for example, we work with thousands of artists – from first time songwriters to commercially successful bands. Under our regular agreement we don’t offer an advance but we do proactively work our catalogue to maximise income for our artists by making royalty claims directly with rights societies around the world and regularly securing sync placements. Our artists retain an 80% share of their income and also the right to decide where their music is used. Sentric is free to join and artists can leave with only 28 days notice whilst retaining 100% of their copyright.” Dealing With A Publisher Directly As discussed earlier, one option when recording and releasing cover versions is to deal with the publisher directly, either to gain permission or to arrange payment of any royalties due to them. Firstly, you will need to find out who the publisher of the song is – remember, this can be a different publisher in each country, depending on what agreements the original songwriter signed. To identify the correct publisher for a given territory, it would be a good start to contact a collection society in that country. However, some countries may maintain a copyright database. Currently, there is no such thing in the UK, so PRS For Music would be the best place to start your enquiries. In the USA, there is such a database, and it can be found at http://www.copyright.gov. Receiving Your Songwriting Royalties If you are a songwriter, in order to receive the relevant royalty each time your music is downloaded or streamed, it is very important that your songs are registered correctly with collection societies – both a mechanical rights society (e.g. MCPS in the UK) and a performing rights society (e.g. PRS in the UK). You can do this yourself, or if you have a publisher, they would help with the registration process. The collection societies should have reciprocal agreements in place with others around the World, which helps ensure that you receive your songwriting royalties from sales in other territories – but it is important to check with your collection society which territories are covered, and to seek advice if you are seeing sales from other territories. Tip: PPL are different from PRS / MCPS, they represent the rights in Sound Recordings. Click here to see an interview with PPL. This explains more about them and how to register recordings with them.


Sentric Music have provided these guidelines as to how much you can expect to receive for songwriting royalties – remember, this is on top of the sound recording royalties you will receive through EmuBands (subject to the conditions mentioned above in certain countries, for example the USA): “For major online services, the PRS and MCPS charge a licence fee based on a percentage of the service’s gross revenue. They then split that fee between each other depending on the type of service: • • •

Permanent download services (eg iTunes) – 75% MCPS // 25% PRS On demand streaming services (eg Spotify) – 50% to each Webcasting services – 25% MCPS // 75% PRS

This means that income from services can vary but, as a rough guide, at Sentric we’ve received the following from the PRS and MCPS for our artists: PRS • £0.005 - £0.015 per iTunes download (£5.00 - £15.00 per 1000 downloads) • £0.0008 - £0.001 per Spotify stream (£0.80 - £1.00 per 1000 streams) MCPS • £0.02 - £0.06 per iTunes download (£20.00 - £60.00 per 1000 downloads) • £0.0008 and 0.001 per Spotify stream (£0.80 - £1.00 per 1000 streams)”

SUMMARY / CONCLUSION: We hope that you have found this guide to Publishing, Mechanicals and Releasing Cover Versions useful. Please feel free to share it with anyone that you may feel might find it useful. Some key points to remember are: •

PPL represent the rights owners of the Master Rights – record companies and recording artists

PRS For Music represent the rights owners of the Publishing Rights – music publishers and songwriters

When releasing cover versions, you may need to gain permission first and pay Mechanical Royalties to the rights holder(s) for sales in certain territories

You will earn money each time a recording you perform on, or a song you have written, is performed in public. These royalties will come from Collection Societies.

It is very important to register your releases with the relevant Collection Societies, so that you can claim these royalties due to you.


Published: August 2013 Authors: Ally Gray – Co-Founder & Managing Director, EmuBands. ally@emubands.com / @AllyGray7 Suzie McGee – Artist Relations & Marketing Manager, EmuBands suzie@emubands.com Contributors: Duncan McCrone, Senior Manager at MCPS Scotland - duncan.mccrone@mcps.co.uk About EmuBands: EmuBands provides a simple-to-use but powerful digital music distribution service for artists and record companies to sell music online through iTunes, Spotify, Amazon MP3 and many more of the World's leading digital music services. In a non-exclusive deal, artists and labels earn 100% of the royalties generated from sales, and maintain full ownership and control of their rights, and with a simple oneoff pricing model, there are no annual fees. Get started now – click on the image below to create your account.

We would like to thank the various contributors that helped with this guide – from Sentric Music, MCPS / PRS For Music and HFA. Image credits: “Duncan McCrone” – © Dave Arcari “Advice” – courtesy of Stuart Miles / FreeDigitalPhotos.net “Copyright Symbol” – courtesy of Stuart Miles / FreeDigitalPhotos.net “Collecting Money” – courtesy of scottchan / FreeDigitalPhotos.net “CDs” – courtesy of artzenter / FreeDigitalPhotos.net “US Flag” – courtesy of creativedoxphoto / FreeDigitalPhotos.net “Canadian Flag” – courtesy of sippakorn / FreeDigitalPhotos.net “Mexican Flag” – courtesy of domdeen / FreeDigitalPhotos.net “Sheet Music” – courtesy of Grant Cochrane / FreeDigitalPhotos.net “Playing Guitar” – courtesy of jiggoja / FreeDigitalPhotos.net All other logos and images are the property of their respective owners.


A guide to publishing mechanical royalties and releasing cover versions