How the Music Industry Works
How the Music Industry Works.
We break it Down so YOU can Understand
This page was updated 9/15/2016 to reflect changes in the music industry.
People tend to think the music industry is a tricky place. Perhaps it’s because all the years of deceit from con artist managers, and back stabbing lawyers, but the music industry is not as much confusing as it is shady. In this post we aim to break down how the music industry works. From writing to composing, copyrighting, publishing contracts, licensing agreements, royalties, and pay day.
Writers and Composers
There are two parts to music, the instrumentation and the lyrics. In the business each part is worth an equal 50 % meaning whoever writes the lyrics owns half of the song and whoever produces the music owns half of the song. If there is one person doing both parts that person owns 100% of the song. If there are multiple people involved they will decide among themselves what percentage each person deserves.
Copyrighting means protecting your work. If your music is copyrighted then legally, no one can use your song without your permission. Your music should be copyrighted before allowing anyone to hear it. Copyrights can be obtained through http://copyright.gov/
Performance Rights Organizations
The writers and composers become part of a PRO whose job is to track the use of the copyrighted material. The two most popular Performance Rights Organizations are ASCAP and BMI.
Licensing and Collection
The copyrighted material gets played by radio, online streaming, as well as licensing for commercials, movies, etc. The use of your material is tracked and money is collected by the publishing company.
Royalties (or money) is collected for each license and use of the copyrighted song.
Royalty money is then distributed to back to the copyright owners every 3 months (or quarter). As payment for tracking use and collecting money for your song the performance rights organization will take half of what it generates. Seem like a lot? Maybe, but you try to keep track of who, where, and how many times your song is played throughout the entire world.
As we mentioned in our last post (which you can find here) it is very important to keep your publishing rights. Why? Because if you forfeit your publishing, you forfeit the ability to make any money on the back-end in royalties. Our last post breaks down the importance of remaining independent, check it out if that peaks your interest. Also, if you are interested in diving deeper into being a successful independent musician check out our independent artist handbook that comes with 102 business contracts every musician needs.