If money means nothing to you then good for you and go away. As romantic as producing songs for free may sound in Hollywood, the reality is that the music industry needs to support its artists financially or else the industry would vanish overnight. As such, it’s important to know your rights in regard to royalties, music licensing, and getting paid.
Most successful bands need a publisher. A publisher is a third party to whom the band assigns the copyright of a composition in exchange for the publisher’s services with regard to music licensing the song, monitoring unlicensed uses of the copyrighted material, and distributing royalties to the band. Some publishers provide advances for musical compositions. Other publishers distribute royalties after they are earned.
Publishers routinely command 50% of the total royalties from a composition. Since they are expensive, it’s important to know your rights when interacting with them.
Song rights are divided between publishers and writers. Writers’ royalties are protected by copyright law and the publisher’s rights are negotiable. Famous artists can negotiate for more of the publisher’s rights than less known artists. Large publishers offer many opportunities for up and coming artists, so they demand more royalties. The key element in any contract with a publisher is that the agreement must contain a reversion clause for lack of performance. The last thing a writer needs is for a publisher to sit on a valuable song and fail to live up to his end of the agreement.
It’s not always necessary to have a publisher. Certain subgenres can self-publish and generate great revenue.
There are several ways to contract with a publisher. A band may contract to have a single song published. You may sign on to write songs exclusively for a publisher. Plenty of fantastic songs have been written by individuals other than the band performers.
Bands and/or publishing companies may also grant a mechanical license to record companies or other artists in order to grant permission to record a song. Bands that own their own songs may grant themselves mechanical licenses when sending CDs for manufacturing. Mechanical licenses are unique in that they are governed by federal law. Find out more about these rates here.
When an artist creates a song and sells it, the market determines the sale terms and conditions. Subsequent to the first recording, mechanical rates are set by law. Mechanical licenses do not provide the right to use a song in a video. That requires a synchronization license which is generally held by the publisher.