How Music Publishing Companies Generate Money
Music publishing companies are responsible for matching songs from their catalog with business opportunities and administering any income generated. Income generated by music publishing ventures is one of the most important and lucrative streams of revenue available to a songwriter or copyright holder. Music publishing can take many forms and affect a variety of industries, including television, movies, video games, live events and websites.
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Publishing Agreements
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To obtain control of music for their catalog, music publishers enter into publishing agreements with songwriters or copyright holders. These agreements dictate the percentage of ownership for each party and any contractual obligations. Publishing income is divided into two parts---the publisher royalty and the songwriter royalty. As the publisher generates income from the licensing of a song, any royalty paid is divided according to the publishing agreement.
Performance Royalities
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One of the most common types of income for music publishers is performance royalties. These royalties are generated through the public performance of copyrighted songs. For example, concert venues must pay royalties for music played by bands performing in their venue. Performance royalties in the United States are administered by one of three Performance Rights Organizations (PRO). These include the American Society of Composers, Authors and Publishers, Broadcast Music Inc., and SESAC, which originally stood for the Society of European Stage Authors and Composers. This full name is no longer used and has been replaced by the acronym SESAC.
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Mechanical Royalties
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Mechanical Royalties, originally named for the mechanical process of manufacturing wax records, dictate payments due for the physical reproduction of music. Music publishers generate income through mechanical royalties by licensing songs from their catalog for uses such as compilation albums, "Best of" albums or re-release of older recordings. Evolving technologies such as ringtones, downloads and online streaming have been added to the list. Mechanical royalty rates are set by the U.S. Copyright Office and vary depending on the particular use and quantity.
Synchronization
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Synchronization royalties, also known as Sync Royalties, are generated when a copyrighted song is combined with another media. For example, songs used in a movie or television show, video game background music or music used in a software program require a sync license. If a particular recording of a song is used, a Master Recording License must be obtained from the performer or record label.
Single-Use License
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Music publishers make money from single-use licenses when songs are used for commercial ventures, events or other limited-use applications. For example, if a company wants to license a song to be used in conjunction with an advertising campaign, they would obtain a single-use license from the music publisher. A good example of this would be Microsoft Corporation's single-use license of "Start Me Up" by the Rolling Stones, which it used as part of its launch campaign for the release of Windows 95.
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