Indie On The Move Breaks Down the Royalty $ Stream

Demystifying The Music Industry: What’s The Difference Between ASCAP/BMI/SESAC and SoundExchange?

Written by: indieonthemove

Posted: 10/21/2013 09:06 am

Category: Performance Rights Organizations

Tagged: ascap, bmi, performance rights organizations, public performance, royalties, sesac, sound exchange

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**Guest post written by Dae Bogan, Music Industry Insider For The Indie Artist, of Dae Bogan Music.

"I received an email this morning from a reader who had read my piece, “Demystifying The Music Industry: What’s This About Public Performance Rights?.” He asked, “If SoundExchange was designated by the Library of Congress as the sole PRO to administer public performance licenses and also collect public performances fees for Sound Recording Company Owners, then why do artists still utilize the services provided by the other 3 US PROs (ASCAP / BMI / SESAC) – is [SoundExchange] not sufficient by itself?”

A lot of indie artists are confused about the difference between ASCAP, BMI, SESAC and SoundExchange. I’ll attempt to break down the most important differences between these groups and elaborate towards the end about other considerations and other royalty collection entities. Feel free to comment with any questions (or corrections).

ASCAP (American Society of Composers, Authors, and Publishers), BMI (Broadcast Music, Inc.) and SESAC are US public performance organizations (PROs) who collect royalties for the PUBLIC PERFORMANCE of musical works as stipulated by the U.S. Copyright Act. This includes fees paid by radio stations, businesses, restaurants, concert venues, bars, nightclubs, sports arenas, bowling alleys, malls and shopping centers, amusement parks, colleges & universities, etc. for performing music in the public (within the confines of their establishment). These monies are paid to ASCAP, BMI and SESAC for a blanket public performance license that grants the licensee (the business) permission to allow music to be performed in their environment (this includes music over speakers and music performed live by an artist). The license fees paid to ASCAP, BMI and SESAC are passed on to the copyright owners in the musical works (song) — PUBLISHERS (50%) and SONGWRITERS (50%) — as performance royalties for musical works.

SoundExchange is a US public performance organization (PRO) who collects royalties for DIGITAL PUBLIC PERFORMANCE of sound recordings stipulated by the Digital Performance Right in Sound Recording Act of 1995 and Digital Millennium Copyright Act of 1998. This includes fees paid by music service providers (MSPs) to stream music over satellite (SiriusXM), internet (Pandora, Spotify, iTunes Radio, Rdio, Rhapsody), cable (Music Choice, Verve) and other digital means as stipulated by law. These fees are paid to SoundExchange for a digital statutory license, under sections 112 and 114 of the Copyright Act, to stream sound recordings. The license fees paid to SoundExchange are passed on to copyright owners in the sound recording (master) — RECORD LABEL (50%), FEATURED ARTIST (45%), and NON-FEATURED ARTISTS (i.e. background vocalist, session musicians, etc.) (5%) — as digital statutory royalties for sound recordings.

Things to know…

- With some exceptions (mostly political) ARTISTS do not receive performance royalties in musical works (ASCAP/BMI/SESAC) unless they wrote the song. So, Rihanna does not earn performance royalties in musical works when she performs “Stay” or when you listen to it on the radio or in a coffee house.

- With some exceptions (mostly political) SONGWRITERS do not receive digital statutory royalties in sound recordings (SoundExchange) unless they also recorded the song with their vocals. So, Diane Warren does not earn digital statutory royalties in sound recordings when you hear any of the songs she wrote for Whitney Houston, Enrique Iglesias, Faith Hill (and the list goes on) on Pandora or iTunes Radio. [Update: However, Diane Warren does earn public performance royalties in the musical works (ASCAP/BMI/SESAC) for these transmissions (Thanks Professor Surmani of the Masters of Artists in Music Industry Administration program at CSUN for catching this misleading omission!).

- Pandora, Rdio, iTunes Radio, Spotitfy, etc. must pay both ASCAP, BMI, SESAC public performance fees for musical works and SoundExchange digital performance fees for sound recordings. Clear Channel radio stations, such as KISS FM, only has to pay ASCAP, BMI, SESAC public performance fees for musical works, but not SoundExchange digital performance fees for sound recordings because of special stipulations in the US Copyright Act for broadcast radio. This is part of the reason why Pandora wants to reduce the royalties it pays.

- Royalties collected by SoundExchange can expire if the artist does not register to collect them!!!

There are lots of other sound recording royalties (besides the digital royalties collected by SoundExchange) that are collected on behalf of featured recording artists, non-featured artists (ie. background or session vocalists), instrumental musicians, etc. They include:

- sound recording revenue (also known as DART royalties, which stands for Digital Audio Recorders and Tapes) generated from the U.S. Audio Home Recording Act of 1992 (AHRA). Manufacturers and importers of audio home recording devices (such as tape recorders) and audio home recording media (such as black CDs) pay a royalty to the Copyright Office;

- sound recording revenue generated from reciprocal Private Copy agreements with numerous foreign collectives in countries that also have legislation providing these royalties such as: Japan, the Netherlands, Hungary, Spain, Portugal, Greece, Germany, Latvia, and Estonia, just to name a few;

- sound recording revenue from record rentals remuneration from Japan, where sound recordings are rented in much the same manner DVDs are rented here in the U.S.;

- sound recording revenue generated digital public performance from the Digital Performance Right in Sound Recordings Act of 1995 (DPRA) and the Digital Millennium Copyright Act (DMCA) paid to SoundExchange (as discussed above);

- sound recording revenue generated from a treaty with AIE, Sociedad de Gestión – the Spanish Rights Collective. The Audiovisual Division of the AFM & SAG-AFTRA Intellectual Property Rights Distribution Fund (established in 2010) distributes payments collected from any television show or motion picture that is broadcast on Spanish television and contains the performance of an AFM or SAG-AFTRA vocalist;

- sound recording revenue collected by the Symphonic Royalties division of the AFM & SAG-AFTRA Intellectual Property Rights Distribution Fund, which are royalties for performers on Symphonic sound recordings, including musicians and singers of an orchestra.

- sound recording revenue from master use licenses between record companies and film/TV production companies (TV shows, movies, and web series), advertisers (commercials and products), video games; and

- sound recording revenue from compulsory mechanical licenses for sample use in other songs, copies and re-distribution, and ringtones.

There are lots of other musical works royalties (besides the public performance royalties collected by ASCAP/BMI/SESAC) that are collected on behalf of songwriters, music producers and publishers:

- publishing revenue from synchronization rights of music to film/TV, video games, or commercial. (Collected by publisher);

- publishing revenue from lyric print rights used in music apps, books and magazines, apparel, websites (like the lyric websites), or sheet music (such as MusicNotes.com. (Collected by publisher);

- publishing revenue from compulsory mechanical licenses for record labels or indie artists to record and distribute music works (such as going a song placed with a major artist or an indie artist doing a cover of a song previously performed by a major artist) whether posted on YouTube or sold on a CD. (Collected by Harry Fox Agency);

- publishing revenue from DART royalties from Audio Home Recording Act of 1992 distributed to the Music Publishers Subfund and Writers Subfund (collected by Copyright Office);

- publishing revenue from public performance via ASCAP, BMI, or SESAC (Note: A songwriter can only be registered to one of these guys);

- publishing revenue from foreign monies via sub-publishing agreements and other licensing arrangements in foreign territories. (Collected by PROs, publishers and other collecting entities depending on the nature of the royalties and legislation);

- publishing revenue from hundreds of other licensing sources (collected by PROs, publishers and other collecting entities depending on the nature of the royalties and territory)

- See more at: http://www.indieonthemove.com/blog/2013/10/demystifying-the-music-industry-whats-the-difference-between-ascap-bmi-sesac-and-soundexchange#sthash.jAecaWh4.dpuf

Royalties For Songwriters: The real skinny...

Some postings from Chuck Cannon's Facebook page for all you would-be songwriters out there hoping to make it rich...

Here is a breakdown of the royalty payment system for songwriters...

The compulsory rate (which is not negotiated, but set by the copyright tribunal at the behest of congress) is 9.1 cents. In other words, when you purchase a cd, each song earns 9.1 cents.

So, more simple math:
Let's say a cd sells for $15
Let's say it is commercially successful and 1 million units sell.
15 million dollars.
Let's say there are ten songs on the cd.
Each song earns $91,000
Let's say there is one songwriter on the song.
She is likely signed to a publishing deal.
She and her publisher spilt that $91,000=$45,500

Again, the songwriter did not get to negotiate this deal in any way.

Let's say our songwriter wrote the song with the artist at a 50-50 split.

Now we are at $22,750 for our successful songwriter.

But wait ... the songwriter is subject to the record label's "controlled composition" because of writing the song with the record label's artist. They only pay 75% of statutory rate.

Now she gets $17,062.50

IF the label pays accurately. 

In all my years (over 30 of them) as a pro songwriter, I have audited record companies numerous times. NEVER ONCE have they over-paid. EVERY audit has revealed they underpaid me - typically by about 30% - and then, instead of paying what they know they owe, they offer 50 cents on the dollar for what the audit reveals. And every single time, I take their offer because the expense and years of lawsuits are simply not worth the hassle.

CONVERTING "SOCIAL LIKES" INTO SUPER-FANS:

CONVERTING "SOCIAL LIKES" INTO SUPER-FANS:

The Importance of a Mobile Community

If you are just starting out, or have been around for years as an artist, now more than ever, controlling the way you communicate and engage with fans has become vitally important.

In the old paradigm of the music industry, if you were lucky enough to get signed on talent alone, your label would take control of your marketing and branding for you. In the NEW music industry, major labels rarely even consider an artist who doesn’t already have 50,000+ fans on social media and a solid email list of “Super-Fans.”

So how do you build fans on your network pages, and how do you convert those “likes” into Super-Fans? 

I’m going to first assume that you already have a strong website where fans can go to read a bio, see photos, listen to your music, find out where you’re gigging and watch videos. Your website should be a “hub” of all things “music”. It must be easy to navigate and have easy to see tabs, that fans can click on to get right to the information they are looking for.

Once your website is structured and formatted for mobile access you are now ready to engage your fans to action. The first thing to remember is fans don’t want to be “sold”, they want to engaged with you as a friend would, so be personal but cautiously so.

The three most important network sites on which to grow fans are Facebook, Twitter and YouTube, hands down.

Use Facebook for a quick story, Twitter for sharing pictures, brief thoughts for the day, or a quick link to a newly posted video, and YouTube for organizing music videos and personal interaction videos for fans. 

Do remember though, what you share on the “branded band accounts” should be managed and not be a free-for-all. The value in this cannot be overstated. If a fellow band-member posts an entertaining personal moment on their personal Facebook page, you may want to consider reposting it on the band page as well, but posts should be entertaining or informative about the music. Post something a fan can ultimately relate to on a personal level or find personally entertaining and you'll keep their attention. But keep it about "the band." By engaging the fans in this way, you will be encouraging them to feel the emotional responsibility of helping you be successful in your music career. 

Make an effort to include your fans whenever you can, but don’t bore them with every little moment of the day. Choose the important, funny, beautiful or exciting moments, and share those. Just remember, share what you yourself would want to know.

Many potential new fans now live by their Smartphones and are no longer sitting at their computers in order to stay informed. So keep it brief but engaging. A video message is opened 75% of the time and viewed 85% to completion depending on the content so use video whenever possible.

I encourage artists to upload a short video at least once a week, be it a one minute backstage video, a two minute “meet my dog” video or a three minute acoustic or acapella performance. By regularly posting on YouTube your fans will grow to trust your friendship with them and start checking in on your website/app and YouTube page more regularly. A loyal fan is a profitable fan.

So now you have social network “likes,” how do you convert those “likes” to loyal, Super-Fans?

Get their personal contact info!

Give them something for free, and fans will freely give you something in return; their email address or cell phone number. 

The importance of personal contact info can’t be stressed enough! 

The statistics state that out of 50,000 “likes” on social media, a 4.5% conversion rate is the average, which means 2,250 potential ticket, CD and swag purchasers. It only takes 1000 true fans to make a good living. If you target those fans, and encourage them to purchase CDs, T-shirts, gig tickets or even contribute to your Fan Funding page on Kickstarter, and engage them to spend just $100 a year on your offers, you will be earning $100,000 a year simply off their loyalty alone. Not bad for an artist that may be sleeping on friends couches and eating Top Ramen.

MailChimp reports that 30% of subscribed newsletters are opened on average. That means that 70% of your Super-Fans may never read your email but the 30% that do, want the info! 

But think about this... connecting with fans in the same way that they connect with their world is not only strategic, but also highly effective. Statistics show that 97% of people receiving a text message, will read it within the first 4 minutes! …and 33% of Facebook members use a phone as their primary way to access Social Networks. If a fan gives you their mobile number in exchange for a free download or the like, they are willingly “opting in” to receive texts from you as a way to stay connected. Remember, woven into their desire to stay connected is a sense of responsibility to help you succeed and they want to be called to action. So a Mobile Fan Club is a major asset.

By announcing your Mobile Fan Club at a gig, and giving something away for joining (i.e. a free download or Meet & Greet after the show.) You have an opportunity to make joining your mobile community an event! 

Give your mobile fans the feeling of being a part of a very elite group and you’ll have the ability to engage them as such, by offering specific giveaways or discounts just for them.

While planning your strategies, remember research firms are expecting 300 million NEW Smartphone users to be online, with mobile interaction in the next couple of years! If you want to be ahead of the curve and connect with fans in the same way that they connect with their world, mobile interaction is where you need to be, and having a strategic Mobile Fan Club will give you a major edge.

Behind The Song: Carrie Underwood “Blown Away” « Country Music News, Artists, Interviews – US99.5

Behind The Song: Carrie Underwood “Blown Away” « Country Music News, Artists, Interviews – US99.5

I love hearing where songs come from in those recesses of a songwriter's mind and this article shares a bit of that.

DIY Radio Promotion for Independent Artists

DIY Radio Promotion:

Many an Independent Artist have heard at least one story of a band being "ripped off" by unscrupulous promoters, saying they will get radio airplay once you hand over thousands of dollars to their company. But what they don't tell you is that independent artists rarely get enough airplay to make a song a "hit" and the life of the record will meet it's maker, usually before it's even had a chance to grow wings, with little sales or download increases to monetize the expense. So how does an artist, on a budget, go about getting radio airplay that leaves a little meat on the bone?

First things first, it must be a well recorded project, well mastered, and be in broadcast quality format for radio to even pay attention. Assuming all that is in place, you now need to decide who your target audience is. A well defined concept of who you are as an artist/band will naturally define your audience. Are you a vegan who loves the outdoors and sings acoustically from mountaintops? Are you a hard driving rock band with heavy electric guitar rifts and pounding down beats? Are you sentimental and heartfelt with lyrically driven songs? You catch my drift, right? Chances are, if YOU like your music, then wherever you like to shop, eat, vacation, drink etc... you will find like minded fans. Even a frequented favorite hardware store may allow you to put up a poster of your next gig.

As mentioned in previous blogs, artists are, in this day and digital age, and even since the first phonograph record was pressed, responsible for building their own fan-base and engaging those fans to support their career. Building your fan-base will be part of your job until the day you put down the mic, so from the beginning, embrace it, and love it, or get out of the business.

Your own hometown is an obvious place to start. Many radio stations save spins for local bands and a quick phone call to your favorite station's receptionist should give you an idea if that station is worth pursuing. If not, go to the station broadcasting just outside of your area and try again. Once you get a "yes, we spin local artists," find out who to address your package to and send off a copy of your CD along with a personal note and a One Sheet (see hyperlink for ideas) informing the programmer about who you are as an artist, who your fans are, etc... Once the station has been serviced it's time to engage your fans, make announcements at live gigs, post on your social media networks, create personal videos and any other means necessary to help raise awareness that you are going for radio airplay. The Smartphone camera is as good as any for making a 30 second "shameless self promotion" video while engaging your fans with a behind the scenes view of your world. Keep them wanting more... and never forget to ask for their help. Don't assume they know what to do, be the leader and tell them what you need, and again, ask for their help!

Request lines are generally always open at a station, (with 24/7 access on a station's website,) and fans can help push an artist by simply requesting that their favorite station play the record. Be careful that your fans don't solicite stations outside of where they actually live, unless it is an internet station, programmers know when this is being done and they will black-ball you quicker than you can blink an eye. Programmers want to hear from their actual listeners, not every fan you have. Some fans may need to be reminded to not be too over zealous about their "love" of the band... a once or twice a week call-in request is usually enough to get a DJ or Programmer's attention. Calling in every day will be considered annoying and can work against the artist instead of help. Using the radio station website to request songs is another story... once a day is more than acceptable online, and in fact encouraged, as it adds traffic hits to the stations website, and helps promote their advertisers. Find your niche and stick with it until your fan base is firmly in place; target, engage and connect with them, and then branch out from there.

But what if a fan lives out of town and the station doesn't have the record, you may ask? The chances of a staff member seeking out how to get the record is slim to none. It is the artist's job to ensure the record is readily available, in broadcast quality, as a digital download or on an industry compilation disc that the station is known to receive. A small number of stations will accept an MP3, usually when it's a student programmer or a single person staffed station. Most larger stations won't risk viruses and will automatically delete email with attachments.

Creating a Digital / Electronic Press Kit (DPK/EPK) is a good first step and choosing host servers for the DPK that have strong broadcast radio station memberships is a good idea. A built in broadcaster audience increases results when wanting radio programmers and music programmers to listen to you music and subsequently leads to downloading for airplay if they like what they hear. Many college and corporate stations are only allowed to download from specific servers, if at all, so you want to choose a hosting platform that your target stations utilize. If all the station accepts is hard copies, then make your package stand out in the pile of unsolicited material that they get daily. Like anything else an artist does in this business, you must always be thinking of your competitive edge when creating a press kit or packaging your mailout. You have to look smarter, look more professional, more popular and more engaging than the other 2000 artists wanting the same spins.

There are many services that independent artists can take advantage of, depending on their genre, budget and willingness to invest in a campaign and RadioMavens can help navigate the mine field with guidance and expertise while remaining mindful of budgetary limitations.

Once you find out a station is spinning your record, find that station on Facebook and Twitter, Like and Follow them, leave a thank you on their page and then make an announcement on your own page asking your fans to link over to that stations page and do the same. Nothing in this world goes further than a simple thank you and reciprocation. Never forget that your music is your calling card but YOU are the product. Getting your name out there in strategic ways is highly effective and by helping a radio station attract new listeners, you will be a welcomed addition to their playlist.

RadioMavens has a plethora of DIY links to services and sites that can help you to help yourself, and of course we welcome the opportunity to introduce and expose you to our 4800+ radio stations always looking for new music. No matter what, two hours a day of social networking, radio station hookups and brainstorming marketing ideas with friends and fans will take you much further faster, than sitting around aimlessly wondering what you should be doing. The creation process is only a small part of the business of music, so be sure and set aside a budget of time and money after all is mixed and mastered, and invest in the marketing and promotion of your project. It won't get to radio by itself.

Abby Montgomery
http://www.RadioMavens.com
615-491-0918

I lost Dorothy Mae this year

Dorrothy Mae was an incredibly vibrant and dear partner on my dog walks. Every morning or afternoon, when I walked the dogs I would pass her house and she would be out walking as well. She wore a white sun hat (big) and white chandelier earrings (long) and had an 80 lb frame only 5 ft tall. She talked and talked about the day, not so much about her life. It was the sun, it was the wind, it was the cold it was the dark, but her life was not nearly as important to her beyond that moment.

One day I was walking my dog and I saw 5 cars in front of her house, I knew something was wrong... and I had felt it coming for a few weeks. A week went by before I finally cornered a relative in his car, napping, and I asked him "is everything OK with Dorothy?" and he said "No, we don't expect her to make it." I knew that none of her family knew me, but I knew her...  But I also knew, this was a private time - one delegated to family members, not casual aquaintences, but OH, I wanted to be there - I wanted to hug her and thank her and embelish on those small moments, walking the dogs, that were ours. I wanted to share with her how her white hat and white earrings always brought out beauty in her. She knew they did, and that's why she wore them. I wanted to remind her of that - I wanted to give her a hug, goodbye. I wasn't invited, there for I didn't, but I wont make the same mistake with Wanda.

She lives across the street from Dorothy Mae. She heard what happened but is suffering from dementia and forgets things. But she now walks with me and the dogs. And she knows she's the next one to go on the street. She said to me, as I walked her back up her driveway, "I''m going to see my husband again - it won't be like this, but it will be better. We'll all be happy again."  And I know she's right, and I want to give her that hug before she goes, and I want to ask her to look up my grandparents, my father, my friends and my aquaintences, and let them know, I too am coming. Maybe not this year, maybe not this decade, but I'm coming...

Best Christmas Lights Display (HD)

Best Christmas Lights Display (HD) simply had to share...

I had the honor of volunteering for ARC on their rescue here in Nashville and witnessed first hand what an amazing service this organization provides - please give what you can to help this group continue their work, closing down the puppy mills and hoarding situations, and rescuing animals all over North America and Canada!

Capitalizing On Radio Airplay And Promotion

It's important to understand a very basic principle; radio is a PARTNER in your career as an artist! Although most partners will voice opinions about how to operate your business, radio rarely does. On top of that, you only get one chance to make a great first impression. Radio wants to know you are actively trying to increase their listener-ship by actively building your own fan base, and that is the symbiotic relationship that they rely on when deciding who gets their spins.

Given that information, and assuming you are ready to embark on radio promotion, there are several steps that need to be taken in order to have the best shot at getting royalties and downloads.

#1: Embed your metadata in the mastering process. CDs will carry a layer of metadata about the recordings such as dates, artist, genre, copyright owner, etc. The metadata, not normally displayed by CD players, can be accessed and displayed by specialized music playback and/or editing applications. It is all too common for radio to receive a CD, they put it in their computer, the track name comes up as Track 01, with the artist and album columns blank (unknown). What that means is when they get ready to report their playlist to the PROs or Sound Exchange, it will show segments of airplay with the report "Artist Unknown." If you expect the MD or PD to type in your info by hand, take off your rose colored glasses and put yourself in their shoes. They don't care if you don't care, plain and simple.

#2: Register with Sound Exchange and the PROs as an Artist, Label and Publisher. If you are not registered how will they know where to send the royalty check? It's your job to sign the forms, assign a SS# to your accounts and instruct them on how you wish to be paid. Trust me, they aren't going to seek you out - they make interest on the money that is not distributed so why would they? Don't wait, go register!

#3: Fan Base, Fan Base, Fan Base! As a solo artist, "1000 True Fans" equals on the average, $100,000 a year in income. If each of those True Fans spends $100 a year on your concerts, CDs, T-shirts, Hats, DVDs etc... you will achieve a decent living from those sales. There are close to 7 billion people on the planet earth and all you need are 1000 of them to Tweet about you, Facebook you, come to your gigs and buy whatever you put out that is new, and you are making a living. The key challenge is that you have to maintain direct contact with your 1,000 True Fans. Maybe they come to your house concerts, or they are buying your DVDs from your website. This small circle of diehard fans, which can provide you with a living, is surrounded by concentric circles of Lesser Fans. These folks will not purchase everything you do, and may not seek out direct contact, but they will buy much of what you produce. The processes you develop to feed your True Fans will also nurture Lesser Fans. As you acquire new True Fans, you can also add many more Lesser Fans. If you keep going, you may indeed end up with millions of fans and reach a hit. I don't know of any artist who is not interested in having a million fans.

#4: Put those fans to work. Tell them what you need them to do. Tell them to tell their friends to "like" your Facebook page, "fan" your ReverbNation site,  call their local radio station and request your song, email their favorite internet station and rave about you, play your music on LastFM and "scrobble" it, repost your gigs on their pages, etc... etc...

#5: Create a promotion for radio that ties into their favorite charity or local non-profit. Give radio a reason to spin you, other than the obvious - that "they LOVE your song!" Royalty from radio is directly related to how many spins you are getting from terrestrial radio and how many streams are picked up on internet radio. Your fans can make all the difference in how much airplay you get, but by partnering with radio on a "Good Will" project, this gives them even more incentive to support your music.

#6: Submit your music to as many online music libraries as you can find - Start up your own personal radio playlists on as many sites as possible - Slacker, LastFM, Cloud, etc...  Be actively played as often as possible.

Although there are many ways to build a music career, let's face it, even if all you get the first year is enough money to replace the bad transmission in your overworked touring van, you're ahead of the game...