How are music royalties collected on your registered songs?
Travel back in time with me, a little more than 100 years in the past…renowned American composer, cellist, and conductor Victor Herbert is dining in Shanley’s Restaurant in New York City as one of his songs fills the crowded establishment. At the end of his meal, Herbert gets the bill and realizes something is wrong. He is paying for his meal, yet the music and atmosphere he provided to the other patrons and staff at Shanley’s received no reward or compensation. Herbert sued the restaurant for the unauthorized use of one of his compositions. Shortly after, fellow composer John Philip Sousa brought a similar “for profit” suit against the Vanderbilt Hotel on the same grounds.
The restaurant and the hotel argued that their use of the artist’s compositions was not “for profit” because they did not charge their customers for listening to the music. In Herbert v. Shanley Co. in 1917, U.S. Supreme Court Justice Oliver Wendell Holmes reasoned that showing a direct charge to the customer is not required. All that needed to be shown was that the music was used in the process of making a profit.
Justice Holmes famously concluded that “if music did not pay it would be given up.” The U.S. Supreme Court refused the requirement of a direct charge in order to meet the “for profit” definition. The Herbert decision broadly defined “for profit” in favor of composers.
Fast forward to today, while we are experiencing different, technological challenges, the same reasoning holds true. If audiences are listening to your songs, how do you receive the appropriate compensation? More importantly: How do you as the songwriter get your songs registered and how do you collect royalties?
Artists and composers do not always think about how to properly monetize their musical efforts. However, for anyone creating music it is important that they register their music with performance collection societies, as this is integral to receiving performance royalties and to providing feedback on the usage of their catalog.
As I outline the steps, I’ll explain the terminology to help you make music—and get paid for your efforts.
What exactly is a performance royalty and how is it collected?
Performance royalties are collected in instances where your music has been performed either live, through radio, or from sheet music. Each time:
- You pay to watch a live music performance at a venue, the performance societies collect money.
- A copy of sheet music is sold, a performance society collects money.
- Music is played on the radio in the United States…this gets a little tricky.
If each radio station and venue had to pay a different license fee for individual works of music, this could be incredibly chaotic. Performance societies generally have radio stations and venues pay what is known as a blanket license, which allows them to play all music for composers belonging to their society. There are a few performance collection societies in the United States with whom you as a music creator can register your music. These include the American Society of Composers, Authors and Publishers (ASCAP), Broadcast Music, Inc. (BMI), Global Music Rights (GMR), and the Society of European Stage Authors and Composers (SESAC).
For the purpose of this blog, I will focus on ASCAP. A prominent force in performance royalties, advocacy and service for music creators for more than 100 years, ASCAP is a professional organization of 850,000 songwriters, composers and music publishers (sidenote: Victor Herbert, John Philip Sousa, and Irving Berlin were among the founding members of ASCAP).
How do songwriters and composers receive compensation?
During the registration process, you as the composer must provide information pertaining to:
- The share of the music you composed (e.g. if the work was composed with multiple writers)
- Who your publisher is and the percentage of their share.
Upon registration, each piece in your catalog receives a unique work number. This is essentially a unique code which allows ASCAP to track the musical work.
When your music goes out into the world and generates income from its performance, ASCAP can more efficiently track its usage. This usage, and ASCAP’s own proprietary financial calculations, determine the performance royalties you will receive.
Upon receipt of payments from the various sources of revenue, ASCAP distributes earnings to you as the composer. Each composer receives a quarterly statement with payment. Both you and the publisher receive quarterly statements for domestic and international earnings.
Once you have received your statement, you should take the time to carefully examine the different streams of revenue you are receiving. This can lead to better business decisions in the future. For example, if you discover that your dramatic underscore cues for a particular television show are generating the most income, it might be a good idea to focus on creating more musical works in this genre for exploitation. As they say, work smarter, not harder!
It’s important to understand music rights and royalties so you can build a successful career as a composer or songwriter. The royalties you earn help cover all those gigs and sessions that went unpaid and all that time, effort, and energy you committed to the craft of creating music.