Benefits of Licensing Indie Music

Benefits of Licensing Indie Music.

The payments you receive in exchange for letting people use your intellectual property are called Royalties which are the cornerstone of an indie musician’s income. In exchange of royalties, the Copyright holders can grant licenses to others for use of their music. There are regulations of fixed royalty rates for certain licenses that have to be explicitly given or those that are compulsory to be granted, as determined by law. You can read about this in detail in my blog Publishing Income for Indie Artists.

Whenever your song is copied or reproduced for sale, streamed or downloaded online, a mechanical royalty must be given to you; even if the CDs of reproduced music do not sell.

A sign up with mechanical rights societies is required for writers and publishers in order for the societies to issue mechanical licenses on their behalf and administer, collect the owed funds and account back to the right holders. The mechanical societies take a percentage of gross revenues in exchange of this. This is usually 7%. Most publishers have an existing deal with an MRS, so you get an MRS representing your repertoire from the moment you sign a publisher and he registers it with them.

If your music gets many sales, downloads and streams, your mechanical royalties are high and this maximizes your income if the deal is tightly represented. Registration, followed by diligent accounting and administration is key here. As mentioned before, this is best done by an engaged publisher that works closely with a MRS. It is important to note that MRS’ usually pay out at the close of each calendar quarter.

‘Broadcasting’ or ‘public use’ of your composition, including transmissions over normal and internet radio, interactive online streaming services, network and cable TV and live performances, also entitles the songwriter and publisher a right to receive royalty. All entities that benefit from the use of your composition have to pay the royalty, namely, the live venue, broadcaster, event management company, etc. The ‘public performance license’ is given to them in exchange of the royalty that they pay. The twist here is that there is no ‘compulsory license’ for public performance royalties. So the benefiters need to get a license directly from the composition’s copyright holders to be allowed to broadcast or publicly use it.

In case of writers and publishers, they can have their public performance rights represented by a ‘Performing Rights Society (PRS)’. In exchange of an annual fee, these societies administrate, police income and issue licenses for the public usage of your repertoire after it has been signed up with them.

While understanding music copyright, publishing and licensing is quite difficult and totally out of league from what an artist has entered the industry for, it is important to understand in order to establish alternative means to generate revenue. I have written more about copyright laws in my blog Alternative Income for Indie Artists. Because of the constant changes in the non-universal laws and treaties as well as music regulations, copyright becomes an incredibly dense subject. Like this was not enough, every country does it differently from another, adding to the difficulty of understanding the subject.

The PRS’ offer ‘blanket license’ to the users which basically acts as a free pass to use all the material in the PRS’ catalogue, for a fee. These fee are then divide and sent to the writers / publishers as their deserved share. Interactive streaming services such as Spotify, contribute a share of their streaming income to the PRS’. This covers broadcasting networks and public performance licenses, which are scanned by automated systems of the PRS’ for their usage of works. Sometimes even ‘playlists’ and ‘usage sheets’ are required to delivered by broadcasters to the PRS’ for proper administration.

As mentioned before, PRS’ pay out directly to the publisher and the writers. To make sure that publishers do not get full control over the writer’s money, the PRS’ separate these payments. This also ensure that publishers do not get too much power over writers. Payments are typically made at the end of each quarter, about a year after the royalties were originally collected.

I am going to write more about licensing and royalties in my next blog. Please share your experiences in the comments section and I will add them in my future blogs.

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