Learning Where The Money Comes From, Part 1
Many developing songwriters resent having to be a businessperson.
I've heard them lament, "I've written the songsnow let somebody
else take care of the business." But the reality is that this
is the music business. The greatest song in the world will not
become a hit if it's neither demoed or brought to the attention
of music business professionals.
Although it's perfectly acceptable to write solely for your
own pleasure, if your goal is to be successful in the music
business, you have to pay as much attention to the business
as you do to the music.
For starters, it would be helpful to understand the difference
between a music publishing company and a record label.
A publishing company's primary function is to generate income
from songwriters' songs. This income typically results from
getting these songs recorded by recording artists, or included
in television shows or films. The term "publisher" is often
used interchangably to refer to an individual who's employed
by a publishing company to pitch songs, and to the company
A record label is a company that's in the business
of producing, distributing and seling albums. A rercord label
signs recording artists. If these artists do not write their
own songs, members of the label's A&R department will meet
with publishers in the hopes of finding hit songs for their
Songwriters' incomes come from a variety of sources. Songwriters
earn money primarily from mechanical royalties, performance
royalties, print royalties, synchronization
licenses and publisher advances. If a songwriter
is also a recording artist and/or producer, he will earn additional
royalties, but those royalties are totally separate from monies
generated by the songs themselves.
Mechanical Royalties is the name given to revenues paid for
the "mechanical reproduction" of musical compositions on sound
recordings. It refers to the royalties paid for the sale of
a physical, tangible product containing musicaudio cassettes,
CDs, record albums, and videocassettes all generate mechanical
royalties. In plain english, mechanical royalties are the
monies you are paid for the copies of your songs that are
In the United States, the mechanical royalty rate is established
by Congress and is called the "Statutory Rate." With
one exception (the 3/4 rate which we'll discuss another time),
the Statutory Rate is not negotiable and applies equally to
all songwriters. Therefore, Michael Jackson, Diane Warren,
Garth Brooks and you, all receive the same mechanical royalty
for each album or single sold.
Payment is made per unit. A "unit" refers to one recording
of a song on an audiocassette, CD, or record, whether it's
an album or a single. Each song included on an album is considered
one unit. If you are lucky enough to have written 10 songs
on an album, you will be paid for 10 units for each album
Occasionally, more than one version of a song may be included
on an album or singlethe radio mix, the dance mix, the urban
mix, etc. In these instances, the writer is paid for each
version of the song, just as if it were a separate song.
For single releases, mechanical royalties are paid equally
for the "A" Side (the song that is sent to radio stations
and marked as the probable hit) and the "B" Side (a
song that the buyer is probably not familiar with). Therefore,
the writer of the hit song and the writer of the unknown song
receive the same amount of money for the sale of each single.
Although this may not seem fair, you should know that the
writer of the hit will earn the bulk of his income from performance
Next time, we will take a look
at exactly how much mechanical royalties actually pay, based
on the Congressional chart which was negotiated through the