Self-Control

Apr 1, 2008 12:00 PM, By Michael Cooper

A whirlwind guide to setting up and managing your own music-publishing company.

BONUS MATERIAL
Learn how to transfer a preexisting copyright from yourself to your company.

Perhaps the most common career-oriented question that unsigned songwriters ask is, “How can I get my songs published?” Many of these same writers have only a vague notion of what it means to be published. In fact, some musicians who want to be published already are, without knowing it!

If you've already sold recordings of your songs to the public, you are a published songwriter. The federal 1976 Copyright Act defines publication (the act of publishing) as “the distribution of copies or phonorecords of a work to the public by sale or other transfer of ownership, or by rental, lease, or lending.” Phonorecords are defined as “material objects in which sounds … are fixed” and include vinyl records and CDs.

There are a lot more ways to make money from the use of one of your songs, however, than just selling your own recording of it. Other artists may cut, or record, the song. It might be used in a movie, a movie trailer, a TV series, a TV special, a music video, a video game, for commercial advertising, for a ringtone, or for myriad other uses. Promoting, licensing, and getting paid for such song uses is the job of a music publisher.

Many unsigned songwriters would love to hand off business-oriented tasks to a music publisher so they can focus solely on the creative task of writing songs. Unfortunately, the moment you sign on the dotted line with a music publisher, you give away your copyrights and half the revenues the songs covered in the contract will earn (unless you're already so successful that you've got the bargaining power needed to strike a better deal). For these and many other reasons, many songwriters choose to keep all the profits and self-publish their songs.

This article will explain the basics of how to start up and operate your own music-publishing company. Some of the topics I'll discuss are copyright registration and transfer, affiliation with a performing-rights organization (PRO), the inventory needed to execute day-to-day operations, demo production, making industry contacts, song promotion, and preparing the documents needed to license your songs.

In order to keep this article to a manageable length, my focus will be on publishing your own songs. Signing other writers or their individual songs to a publishing company typically requires far greater preparation and funding. Writing underscore (background or theme music for film or TV) and jingles for commercial products or services is also beyond the scope of this article. (When they're written for national accounts, they often present few opportunities for retaining copyright ownership of your work.)

Before I get to the nuts and bolts of becoming a music publisher, however, let's examine both the benefits and drawbacks of doing so. As you're about to see, starting your own music-publishing company is not a decision to be made lightly.

All by Myself?

There are many reasons to self-publish your songs. Keeping 100 percent of the royalties and one-time fees a song earns is just one reason. You also retain greater control over how your songs may be used and what those uses will pay. And assuming that you're highly motivated, nobody will promote your songs more than you. If, on the other hand, you were signed to a large music-publishing company with dozens of writers on staff, your songs might get lost in the crowd and never get the promotion they need to get cut. Furthermore, most song-publishing contracts specify that the music publisher keeps all copyrights to songs covered in the contract — even after the term of the contract expires and regardless of whether or not the company ever secures a cut for your songs.

Still, many songwriters sign with a music publisher for good reasons. It is extremely difficult and very time-consuming to make the required industry contacts with record-label A&R (artist and repertoire) staffers, music producers, recording artists, music supervisors, and film and TV studios — contacts that major publishers already have. Being your own publisher also means taking on the financial onus, which includes demo production and replication, potential attorneys' fees, inventory, postage, phone bills, printing, and more. And while all that money is going out, you've got to find a way to have some coming in to pay your overhead. A songwriter signed to a staff-writer deal with a publisher typically receives a monthly stipend to keep the credit hounds at bay. Even before (or despite never) getting their first cut, the staff writer earns a living doing what they love most — writing songs.

An experienced music publisher might also secure revenue-generating uses of your songs that you might not have thought of on your own, including sheet music, karaoke, video jukeboxes, and musical greeting cards. They probably already have the contacts you lack with print publishers and subpublishers. The latter collect mechanical royalties for record sales and synchronization fees for the use of songs in TV shows and films abroad. (I'll discuss licensing the various uses of songs in more detail in a bit.) Many successful publishers hire influential song pluggers to pitch the songs in their catalog, greatly increasing the chance of getting a cut. And many a fruitful collaboration between songwriters has been facilitated by major publishers having strong networks throughout the creative community.

You might be thinking at this point, “Screw the do-it-yourself approach. Give me the publishing contract.” Unfortunately, it's not that easy. As a highly successful producer and friend recently explained to me, the big publishing companies are interested in signing only songwriters who already have a track record of writing hits. Yet it's “almost impossible” (in his words) to get your first song cut — even if you have high-level industry contacts listening — without an influential publisher or song plugger pitching your song. It's a catch-22.

Despite the sobering realities of independent song plugging, I love the business side of music publishing. I find managing my own music-publishing company to be exciting and self-empowering. But as you'll learn, it's also a lot of work.

Baby Steps

An in-depth discussion of the legal requirements and tax consequences of starting your own music-publishing company is beyond the scope of this article, so I'll only briefly summarize them here. As is the case when starting any other business, you should first choose a legal business structure (such as a sole proprietorship or limited liability company) and business name. A sole proprietor may conduct business under its own name or use an assumed or fictitious business name (otherwise known as a “doing business as” name or “dba”). If you want to use an assumed name, check your state's business registry database to see whether it's available or has already been taken by someone else.

You may also need to apply to the Internal Revenue Service for a federal tax identification number (EIN). Go to www.irs.gov/businesses/small/article/0,,id=97872,00.html for a list of circumstances that require an EIN. Also, find out from your state and local agencies what the business-license requirements are for your area. I recommend you consult with a CPA (certified public accountant) for help with all decisions — and their tax consequences — related to starting your new business. State and local governments also offer helpful online resources for do-it-yourselfers.

You'll also need to affiliate your new company — and yourself separately as a songwriter — with a PRO. The PROs operating in the United States are ASCAP (American Society of Composers, Authors and Publishers; ascap.com), BMI (Broadcast Music, Inc.; bmi.com), and SESAC (Society of European Stage Authors & Composers; sesac.com). They collect and disburse to their publisher and songwriter affiliates (or “members” in ASCAP parlance) performance royalties. These are revenues earned from the uses of a song in radio and Internet broadcasts, TV programs and commercials, and movies played in theaters outside the United States. Put another way, PROs are essentially clearinghouses for licensing the performances of a song as opposed to licensing the sale of physical copies or downloads, the synchronization of the song to picture in films and on TV, and other uses. If you don't belong to a PRO, you'll have to individually license, keep track of, and collect payments for performances of your songs everywhere in the world — an impossible task for widely used songs.

ASCAP, BMI, and SESAC all have different requirements for joining and use different payment schedules. You can belong to only one PRO at a time, but you can switch from one to another when your contract with your present PRO is up for renewal. ASCAP and BMI have a much bigger presence in the United States compared with SESAC, a fact that may have a bearing on the size of an affiliate's royalty payments for a hit in this country.

You might also consider joining the Harry Fox Agency (HFA; harryfox.com). The HFA is a licensing clearinghouse and royalty compliance watchdog for the use of your songs in phonorecords and digital services, including downloads and on-demand streaming. The HFA does not issue synchronization and master-use licenses (for film and TV placement), provide sample clearance, or license performance and print (sheet music) rights. It charges an annual membership fee and service commissions per license issued, so many startup companies choose to do their own mechanical and streaming licensing until their level of success justifies the added expense of joining the HFA.

Copyright Registration

Once your music-publishing company is set up, you'll want to protect all the songs currently in your catalog from potential copyright infringement before making any preexisting demos broadly available for other people to hear. Protecting your songs entails establishing a creation date for each with an unaffiliated third party. One way to do this is to register your songs with the Copyright Office.

Registration forms can be downloaded for free (www.copyright.gov/forms). Use form PA (Performing Arts) for registering sheet music with the Copyright Office. Alternatively, you can use form SR (Sound Recording) to register both an audio recording of the song and the underlying composition — melody, lyrics, and arrangement — at once. The recording needn't be the fully produced version of the song; it only has to clearly convey the music and lyrics in order to protect the underlying song.

When you register your new songs with the Copyright Office, make sure you list your publishing company (not yourself) as the copyright owner, noting in the appropriate section of the registration form “transfer of all rights by the author(s)” as the means by which your company procured copyright ownership from the songwriter(s). By registering your company as the copyright owner, you give it the authority to issue licenses and collect revenues for the song's use by others.

You'll also want to transfer to your publishing company any songs previously copyrighted under your name. You may record this transfer with the Copyright Office, but it's an expensive way to go: currently $95 for one song title and $25 for each additional group of ten songs. The only practical reason to record copyright transfers with the Copyright Office, however, is to protect yourself from conflicting transfers (that is, someone else claiming that the song's copyright was transferred to them and not to you). This is moot if you're the only author of the song, as nobody can register a conflicting transfer unless you gave them your contractual consent to do so.

A valid, no-cost solution for transferring a song written solely by yourself to your publishing company is to draw up a simple document — signed by you and listing the title of the song being transferred — that agrees to the transfer (see the online bonus material “From Me to Me” at emusician.com). You may then freely substitute the name of your publishing company in lieu of your personal name on all copyright notices for the song, such as on CDs and lyric sheets.

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