When a musician composes, performs and records music, they make money by distributing it commercially through stores and online retail locations. If they own full rights to the music, they can also resell it to third parties, such as film producers for soundtracks or advertising agencies for commercials. Even years after the musician’s death, the musician’s estate can still collect income from those individuals and organizations who listen to, use or distribute their music. This income is known as royalty income or residual payments. But who ensures that artists are paid for their work? How do they do this?
What is a Music Publishing Company?
A music publishing company is a firm that ensures that musicians are paid royalty payments for their work. They also promote the musicians’ work to maximize the earnings potential of their music.
Music Publishing Companies and Musicians
Musicians enter into a contract called a publishing contract, which allows the music publishing company to manage the use of the musicians’ music. Think of it like a power of attorney agreement. The music publishing company is authorized to market and license the music as well as market the musician for non-album musical work, monitor how the music is used (and help initiate legal action against unauthorized users) and collect royalty payments on behalf of the musician.
Music Publishing Company Fees
Music publishing companies generally offer their fees for a percentage of the royalties generated. Fees, which can be as high as 50 percent, are generally higher for unknown or unpopular artists then for popular artists. Because of this compensation structure, music publishing companies have a strong incentive to promote and license the musicians’ music as much as possible.
Music Publishing Companies and Record Companies
Music publishing company services typically do not extend to the music musicians record for albums produced and distributed by their record company. This copyright, known as "masters," is generally owned by the record label, which may manage the music as they see fit. In certain extraordinary cases, a musician may own their masters, but usually only after buying them back from the record company.
Music Publishing Companies and Songwriters
Music publishing companies also often work with songwriters to copyright their music as well as place their music with musicians. In this case, songwriters will also generally pay a percentage of their royalties to the music publisher and derive income if the song is recorded by a musician and distributed on the musician’s album or performed in concert.