$$$$$ Royalties Anyone ??? $$$$$

Jayne Nozik, Supervisor of Licensing

Greetings from someone who's been working with the "outernet" for too long! To tell you the truth that sounds like a new brand of hairspray, or some device the bungee jumpers need for the George Washington Bridge! But what can I tell you - this is my first time online!

So maybe you've been singing in the shower a lot lately...and you start to imagine $ signs through the shampoo suds...

Before you quit your day job to join a band, you might want to learn how the real $ is made and then learn how to write some good songs! What this all boils down to basically is that you can earn music publishing royalties from the sale of those videos or records which feature your songs! (Make sure you copyright your songs first!)

One of my responsibilities in the Business Affairs Department as Supervisor of Licensing, is to determine the rates for those artists, producers or independent songwriters who are earning music publishing royalties from the sale of videos and records (and some TV - I'm going to keep this basic because I could write a whole book about this job!). Other responsibilities include supervising the whole "synchronization" licensing process for PolyGram videos (including roster/non-roster artists), as well as supervising the "mechanical" licensing process for Island Records and various other labels (see photo!). More explanation of these terms later.

Before I explain more about this $ stuff, let me first tell you that I started in the record industry as a Sony Music College Marketing Representative for the Southwest Region, when I was in my first year of college. I spent my first two years of college promoting artists to college markets in the Southwest (no time for "Frat" parties!) This included creating and implementing marketing strategies, radio promotions and airplay tracking, concert promotions, publicity, merchandising and proposing concepts for advertising campaigns. I was awarded my first "gold" record within the first three months (beginner's luck?) and was later promoted to a Sony Music Field Marketing Representative for the Southwest Region (no, not wheat fields!), where I did more of the same on a larger scale. Then it was on to "bright lights, big city"... I moved to New York City to pursue feature film production! I especially enjoyed selecting "mood" music for the director to play while filming on the set, as well as suggesting music to be used in the soundtrack. So after a few flicks and TV shows, it was back to the record industry and to the business side of things! I worked at BMG in the Copyright Department and then moved on to POLYGRAM!

Now back to basics. The $ earned for your share of the music publishing, for any given song, will be determined by a few different factors: the first factor being whether your song has been recorded on an album by a band that has a recording contract with a record company, with you as a member of this band. In this instance, you, as a songwriter, would be defined as a "controlled" writer, meaning that for music publishing royalties, you are "controlled" by the terms of the band's recording contract. If, on the contrary, you are writing as an independent songwriter and your material is recorded on an album by a band that you are not a member of, then you would be defined as (yep, you guessed it) a "non-controlled" songwriter. In other words your rate would generally not be subject to the terms of another band's recording agreement. Ahh- the sweet taste of freedom!

However, before you get too cozy with this freedom thing, there is a limit to what your rate will be per "non-controlled" song, and this is based on the "statutory rate", which is part of the Copyright Act of 1976. This rate was established to secure the songwriter's rights to music publishing royalties, and it is based on song timings and date of sale of the product, since the rate increases every two years. The term "minimum statutory rate" refers to a song with a timing of one second up to five minutes in length, and therefore the "full statutory rate" takes into consideration songs with longer timings. In 1976 the minimum statutory rate was $.02, and $.005 (one half of a cent) per minute for songs over five minutes long. The rate in effect for 1996 has increased to $.0695 for the minimum statutory rate and $.013 per minute for songs over five minutes (note that you should always round to the highest minute and should take into consideration your percentage of publishing of the song). For example, if a song is six minutes and thirty seconds in length, and you own 100% of the publishing, you would calculate the full statutory rate by multiplying $.013 X 7 = $.091 as the rate for that particular song per record sold. This is otherwise known as the "mechanical rate". DON'T GO SURFING FROM THIS WAVE JUST YET!

Let's refer back to the "non-controlled" scenario. If your friend's band featured one of your songs on their record, you would then be automatically entitled to receive 100% of the full statutory rate (with regards to playing time) in effect at date of sale of the record. Your rate would increase along with the statutory rate increase which occurs every two years. Basically, your royalties would be determined by multiplying the number of records sold by the figured rate determined per song.

Now let's return to the "controlled" scenario. A standard recording contract would generally state the maximum $ per record that the record company is willing to pay for your band's music publishing royalties or "mechanical royalties".

A standard music industry maximum for CD, Cassette & LP would most likely be based on calculating ten times 75% of the minimum statutory rate in effect at the year of initial release of the record (of course there are variations on this language). If the record is first released in 1996, you would then multiply 10 X $.0695 X 75% which equals $.521 as the band's maximum per record. Now the only catch to this is that if you sing another songwriter's song besides your own band member's (including using samples), then you are obligated to pay that songwriter their full rate share out of the band's maximum allowance! Your rate per song would then be reduced accordingly. For instance, let's use an example of your band recording 12 songs on a record, but you sing one song which is six minutes and fifty four seconds in length and not written by one of your band members. You would take your maximum of $.521, then subtract out $.091 for the "non-controlled" song, which would leave you a total of $.43 left to be divided among your 11 remaining "controlled" songs; this leaves you with the fixed rate of $.039 per song per record. It sure works to your benefit to write your own songs if you're an artist! Have you quit your day job yet???

Note that the Copyright Act does not designate a statutory rate for videos; each mechanical rate for a "synchronization" (audio-visual) license must be individually negotiated. After a rate has been calculated for any type of use, each song must then be licensed to the record company under particular terms. Also note that other factors play a part in how much your actual mechanical royalty check will be, such as determining how many records have been returned by retail, whether you're getting paid on gross or net sales, and reserves that the record company holds until you sell a certain amount of units...but hey...we'll save that for a rainy day.

As for my future...I would like to creatively combine my music, film and writing experience in some capacity down the road. But in the meantime, I hope this took some of the sting out of your sudsy $ signs.

Oh, but isn't it just so fun to play air guitar???