Music Publishing 101: Licensing Your Music for Income

In the first part of this series we looked at how and why to register a copyright to protect your creative works.

This time, we’re going deeper into the world of music publishing to explore some ideas on how to make money from your music by licensing it out for others to use.

What Is Music Publishing and Music Licensing?

Music publishing is one of the oldest revenue streams in the music business.

Before the invention of recorded music, one of the only ways for artists to make money outside of live performance was by selling printed sheet music of their works.

When recorded music eventually became widespread, it created an opportunity for a second revenue stream by separating the song from the recording.

That’s why we have two types of copyright today: A “Performing Arts” (or PA) copyright for the song itself, and a “Sound Recording” (or SR) copyright for the master recording of the song.

This dual copyright paradigm led to the modern music publishing model that dominated the 20^th century:

Record labels would pay for studio time for artists in exchange for ownership of the SR copyright.

Performing artists would use Performance Rights Organizations (or PROs) to collect performance royalties whenever those recordings were played in broadcasts or live events.

And songwriters—who may be different than the performing artist—would earn money through their PA copyright, which covers the melody and lyrics.

A music publisher’s role in all this is largely administrative. They’re the ones responsible for monitoring when a songwriter’s material is used commercially, and collecting and distributing royalties accordingly.

In some cases, they can lend an essential hand in helping to secure new sources of revenue. They may even help find new opportunities for licensing songs for others to use in cover records, television, films, video games, advertisements and any other formats looking for music.

Let’s take a closer look at the various types of licenses, and how you can earn more by encouraging their use.

The Types of Licenses

A “copyright” is an exclusive right to make and distribute copies of an original creative work. By granting others a “license” to use your copyrighted work however, they can legally use your copyrighted material in their own productions.

This system basically allows you to charge a fee whenever someone else uses your song in their own commercial releases. How much of a fee exactly, depends on the type of usage. Under US copyright law, different formats require different types of licenses, each of which have their own rates and terms.

Some of these licenses are “statutory”, meaning that the exact payout rates are set by law. These types of licenses may be “compulsory” as well, meaning that anyone who wants a license can get one—as long as they pay the statutory fee. This is the case for radio broadcast, cover songs and more.

Other types of licenses however, are purely non-statutory and voluntary. This means that the exact rate is set by a negotiation between the copyright holder and those who want to use their protected works. Payouts here can be much higher in some situations. This is the case for music that appears in TV shows, movies, video games, advertisements and the like.

1) Mechanical Licenses: Purchases and Downloads

Mechanical licenses grant the right to sell recordings of a song. When it comes to making money by licensing your works to others, the most common use case is that of cover songs.

Traditionally, mechanical royalties for covers songs in the US have been both statutory and compulsory, meaning that anyone who wants to cover a song can—just so long as they pay out the statutory rate determined by law.

For instance, Bob Dylan was paid for every copy of Jimi Hendrix’s Electric Ladyland that was printed, because it featured a cover of Dylan’s “All Along the Watchtower.” Hendrix and his label didn’t even have to ask for permission. When a license is compulsory, it means permission from the songwriter is not required.

The current statutory rate for mechanical royalties is $0.091 per reproduction. This means that anytime a cover version of your song is printed on CD/tape/vinyl or downloaded, you earn about 9 cents in mechanical royalties.

It’s worth noting that these compulsory licenses only apply once a song has been officially released. Before a song has been commercially released and made public, the songwriter can refuse the right to record and release the song—perhaps even selling the first-usage right to the highest bidder.

This makes this another potential revenue stream for songwriters: In addition to collecting mechanical royalties for their songs, they can potentially charge a fee for the privilege of releasing the very first version of their new song. Either way, a good music publisher can help make these deals and encourage other significant artists to cover your works.

2) Mechanical Licenses: Streaming Services

The situation with streaming services like Spotify is a bit different. Here, the mechanical royalty rate is non-statutory and participation is strictly voluntary. This means that streaming mechanical rates depend entirely on what kind of deal the streaming service offers to copyright holders, and what kind of deal copyright holders are willing to accept.

The rates for mechanical royalties on streaming services is often quite a bit lower than the mechanical rates for outright music purchases—but then again, so are the barriers to getting a play. Although it varies across time and platform, the mechanical rates on Spotify’s premium service for cover songs is currently around $0.0006 per stream—a nominal fee to say the least.

Don’t like the deal? Unlike with mechanical royalties for CDs, downloads, radio broadcasts and the like, copyright holders have the right to refuse the use of their copyrighted material on streaming services, whether they are originals or cover versions. Today, some artists, like Taylor Swift, are choosing to do just that.

Either way, collecting payments of less than a dime each time a song is reproduced is tedious and cumbersome, even for music publishers who specialize in this kind of administrative work.

Most publishers will register songs with The Harry Fox Agency which has created a simple process for procuring mechanical licenses. They keep a small portion of revenue collected, and pass the rest along to the publisher.

3. Performance Licenses

Public performance licenses grant use of your music is public places like radio and TV broadcasts, as well as physical locations like bars, restaurants, and venues.

Performing Rights Organizations negotiate blanket licenses for public use of their songs. We have four PROs in the US: ASCAP, BMI, SESAC, and GMR.

They’re also responsible for monitoring these public performance venues, and distributing royalty payments to PA copyright owners as needed. Your music publishers will collect royalty payments from them on your behalf, and distribute your cut accordingly.

Large live music venues and theme parks will often keep records of the exact songs and sets performed for reporting purposes. But when it comes to bars and restaurants and smaller venues, revenue is often estimated by your PRO, and only the most popular songs will draw any significant income from these sources.

4. Synchronization Licenses

This is where things really start to get interesting, and lump-sum payouts in the tens of thousands of dollars (or more) are possible.

Synchronization, or “sync” licenses grant the right to synchronize songs to a visual medium. Most commonly, this idea applies to TV shows, commercials, films, video games, and web video. In this arena, the PA and SR copyright owners typically split sync license payments 50/50.

The situation with sync licensing is voluntary and non-statutory. Sync rights are secured and negotiated directly between the licensee and the songwriter or publisher on a case-by-case basis. Because of this, rates can vary dramatically depending on the type of production, its exclusivity, duration, and even popularity.

Major film studios tend to prefer “master rights” in perpetuity, and can pay anywhere from $15,000-$100,000 for the privilege. Use of a song for opening or closing credits can usually earn you an even higher rate as well. Indie films tend to have much lower rates, with something closer to $2,500-$7,000 being the norm there.

Historically, television licenses were for limited rights and for a limited time, ranging from $10,000-$50,000 per use. Commercials tend to bring in higher rates—often around $50,000-$200,000 for a one-year national campaign with a major brand.

Video games are a bit of a wild-card, and depend largely on the developer. A major company may pay up to $8,000-$10,000, while an indie dev may be working on a shoestring budget.

This kind of music licensing can be a major source of revenue for artists. In some cases, smaller artists may earn more in the way of profit off a single sync licensing deal than an entire full-length album release.

There are even songwriters who base their entire careers on making music for sync licensing purposes, whether they write “works for hire” or create “library music“.

5. Sample Licenses

Sample licenses grant the right to use a pre-existing sound recording in a new original work. Because the new work will contain a sample of the master recording, both the PA and SR copyright owners get paid from sample licenses.

Just like with sync licenses, a sample licenses are non-compulsory and non-statutory, which means that you must obtain a “clearance” for every sample that you use in your commercially-released recordings. Also like sync licenses, sample licensing deals are negotiated directly between the licensee and the songwriter or publisher.

Artists and rightsholders have the right to refuse the use of a sample, giving them much of the bargaining power. But if they refuse a usage or set their prices too high, sample-based artists have workarounds available: They can often record their own “sound alike” version of the sample in question, thereby removing any need to secure a license at all.

6. Reprinting Licenses

A reprinting license grants the right to reproduce a song as sheet music. While printed music may seem like a thing of the past, this license is actually more relevant than ever.

In addition to the growth of instructional sheet music online, streaming services like Spotify are now including lyrics within their platforms. Lyric videos are going viral on Youtube. In 2012, Beck released an entire album called Song Reader available only as sheet music. All of those formats require reprinting licenses.

Getting a Publishing Deal

Obviously, issuing and maintaining all of these licenses can be quite time consuming, so most artists choose to sign publishing deals and allow the publisher to handle administrative duties and outreach in exchange for a cut of the profits.

In a typical publishing deal, a songwriter assigns the PA copyright to the publisher. It’s important to note that the songwriter is still recognized as the original writer of the song, even though the publisher is the holder of the PA copyright.

In exchange for their services, the publisher generally agrees to take 50% of all revenue generated by PA copyright, called the “publisher’s share”. Occasionally, co-publishing deals are made between established songwriters and music publishers. In these deals, the songwriter receives the entire writer’s share, as well as half of the publisher’s share, for a total of 75% of the PA revenue.

In either of these cases, the publisher has a major incentive to help find new ways to license your songs if they think they can be successful in doing so.

Songwriters get music publishing deals the same way that performing artists get record deals—after years of hard work. So put together an EPK of your best songs, start making personal connections in the industry, and start reaching out to the dozens of music publishing companies out there.

How To Be Your Own Publisher

While music publishers offer many benefits, they’re not for everyone.

Some songwriters don’t feel comfortable transferring their rights to a publisher at all, and instead opt for a “publishing administration deal”, in which no rights are transferred, but the publishing administrators receive 10-15% of the PA revenue for their more basic services.

Publishing administrators typically only handle administrative duties such as registering copyrights and collecting royalties. That means you’re on your own when it comes to finding outlets to license your songs.

It’s certainly possible to act as your own music publisher. Many performing artists simply don’t have time to handle the additional work on top of their duties as a performer. However, many songwriters choose to make a career out of publishing their own work.

The process of becoming a music publisher varies depending on where you live, so it’s best to check with a legal advisor before finalizing anything.

The path to publishing your own songs begins with signing up with a Performing Rights Organization, or PRO. You may have already registered with a PRO as a songwriter, but now you’ll need to register with the same company as a music publisher as well.

Next, register your songs with the copyright office in the name of your new publishing company. If you already registered them under your legal name or artist name, you can fill out a form to have them transferred.

After your songs are properly registered with the Copyright Office, register them with your PRO, and be sure to include your information as a music publisher and independent recording artist in order to collect both SR and PA royalties.

Alternatively, you may hire a publishing administrator to handle work like this, or hire music licensing firms to help find additional licensing opportunities. But remember: It’s wise to try to focus your time on what you’re good at and outsource the rest. When it comes to the business of music, if it don’t make dollars, then it don’t make sense.

Brad Pack is an award-winning audio engineer and writer based in Chicago, IL. He currently owns and operates Punchy Kick, a professional mixing and mastering studio that specializes in pop punk, emo, punk, grunge, and alternative music.

He has been helping artists connect with fans through emotionally resonant mixes, cohesive masters, and insightful guidance for over 10 years. Check out his website PunchyKick.com or say hi on Instagram @PunchyKick.

Special thanks to Katie Crain for her contributions in editing this piece.

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