Business Musician. How and where does the money come from
Many novice authors believe that it is not necessary to develop business skills and explore the commercial side of things. They say: “I am an author, not a seller, I wrote a song – let someone else take care of how to sell it.” The reality is that what we do is called the music business. The best song in the world will never be a hit unless it was promoted as a demo and if it was not shown to the professionals of the music industry. This can be acceptable if you write solely for your own pleasure, but if you want to succeed in the music business, you should pay equal attention to music and business.
Before continuing, it will be helpful to understand the difference between a music publisher (publisher) and a record company. The music publishing house (in other words, the publisher) has many functions, the main of which is to provide income from the songs of the author. Typically, this income comes as a result of recording songs by performing artists, or as a result of including songs in movies or TV shows.
The record company is producing, distributing and selling albums (i.e., CDs and tapes). The record company signs performers: singers, female singers, groups, instrumental performers. If the artists themselves do not write songs, representatives of record companies usually turn to publishers in order to find songs suitable for their artists.
The basis for obtaining author’s remuneration for the use of their copyright is the Law of the Russian Federation “On Copyright and Related Rights”, dated 1993. Any author who is serious about his work is strongly recommended to study this law, since it is rather concise and available in most bookstores and on the Internet.
The income of the author comes from various sources. First of all, authors earn royalties for mechanical reproduction, royalties for public performance, synchronization licenses. If the author is also a recording artist or producer, he receives additional royalties that are completely separate from the payments received directly for the songs.
1. “Mechanics” (payments for mechanical reproduction).
For each mechanically reproduced copy of the work (that is, for each disc and cassette with a song) that has been sold, paid for and not returned, the author receives payments, which are called mechanics in the industry. A record company that produces audio media containing your songs is required to pay a certain amount due to the author. If you transfer the right to collect mechanics to the organization for collection of mechanical payments (for example, RAO, which is also an organization for the protection of performance rights), then such an organization first receives payments from the record company, and then after deducting its commission (on average from 10 to 20 %) pays them to you. You can also transfer the right to collect mechanics to the publisher, who will work in the same way as the organization for the protection of performance rights.
Mechanical rewards can be calculated at author’s remuneration rates (from $ 0.12 to $ 18 per CD and, on average, $ 0.06 per CD). It can also be calculated on the basis of the selling price and the percentage of the author’s fee (say, 10%). Remuneration is paid in accordance with the number of author’s shares. In each work there are two author’s parts – the share of the author of words and the share of the author of music. Suppose there are 10 songs on a disc, you have written words for two of them, and for three – music and words, which means you have 8 authorial parts. The size due to all authors for one disc is divided by the total number of shares (2 shares * 10 songs, ie 20 shares), then multiplied by the number of your shares (8) and the result is the amount due to you for one sold disk .
2. “Publicity” (payments for public performance).
When your song is played on television, on the radio, played in a disco, performed at a concert, etc. you as the author are entitled to receive payments from such public use of the song. Such payments due to you are called public. In order to collect them, there are organizations for the protection of performance rights. In order to be able to receive remuneration for public performance, the author or his publisher must become members of such an organization, or conclude an appropriate agreement with it, and also register in this organization the copyright for their works. Organizations for the protection of performance rights due to the possibility of wide coverage and control, have the ability to track where, when and how the public performance of the song took place. They receive from television companies, radio stations, concert organizers and owners of clubs and discos a certain amount for the use of works, calculate them and pay to authors and / or publishers, after retaining their commission.