We already know that every song is broken down or divided into two major parts, The Composition/ Music Work (which refers to the unique qualities and properties of that particular song, such as its lyrics, melody, structure, etc.) and The Sound Recording/Master Recording (which refers to a specific recording of the song and it’s composition). Each of these parts of the song constitute the 2 copyrights a song has, Composition Copyright and Sound Recording Copyright respectively. They are both owned differently and are both responsible for different streams of income or royalties that can emanate from a song.
Some of the revenue streams that can be generated from the sound recording copyright are Record Sales (physical and digital), Streaming Royalties, SoundExchange Revenues (from non-interactive digital radios), Master Use License, Neighboring Rights etc. These revenues are owned by whoever owns the Masters of a song, which is mostly a Record Label for signed artists, or the artists themselves if they are independent. They are collected by distribution companies and/or the necessary authorities.
Composition income opportunities include Public Performance Revenues, Mechanical Royalties, Synchronization Licensing Fees, Print Royalties, etc.
Composition royalties are owned by anyone who partakes in the creation of the song composition, or better still, the Songwriters. Anyone who writes or co-writes an original composition or song, and/or any owner of an original composition or song, is due royalties when their music is used. For this to happen however, the copyright of the songs have to be registered duly for the income/ revenue to be properly credited and accounted for. The whole process or business of making money from the music you write as the copyright holder is called and referred to as Music Publishing.
When a song is written, the songwriter is automatically the publisher of that song. He or she is saddled with the responsibility of registering the copyright, finding users, issuing licences, collecting royalties and paying the writer (in this case, themselves). This is usually done when the songwriter is not in a publishing agreement or deal, or doesn’t have an administrator to handle these aspects of the business.
But to be honest and frank, most songwriters can’t do all of those things, handling the business. As a songwriter, you will rather just focus on writing and have somebody or a company handle your business. This usually comes at a fee and is handled by the Publishers. In most cases the writer signs over some of the copyrights to the publisher. This is known as the administration rights. When a publisher makes a publishing deal with a songwriter, it takes on the obligation to perform all these duties, so that the songwriter can focus on writing music.
A publishing company is very different from a record company. A record company has far more moving parts than a publisher. To operate a publishing, one only needs An Administrator (who handles the registration of song copyrights, collecting revenue, paying writers and co-publishers), A “Plugger” to who finds people to use the songs under the publishers administration, and A Creative Staff to find writers and work with them.
Traditionally, all income made by the composition (with exception of a specific few) is split 50/50 by the publisher with the writer. 50% of the income is regarded as the publisher's share. This covers for the publisher’s overhead and profit. The rest of the revenue is called the writer’s share. This however is subjected to agreement. Some publishers may insist on getting some of the writer’s share, to accommodate for the risks taken by the publisher and to offset the advance provided to the songwriter. Some songwriters also go into agreements where they share the publisher's share with the publisher.
There are different frontrunners in the publishing industry. There are the bigwigs, Major Companies who are mostly associated with record companies. Some of them include Sony Music Publishing (Sony/ATV/EMI), Warner Chappell Music, Universal Music Publishing, Kobalt, etc.
There are a number of independent companies that are affiliated to these major companies. These companies have their administrations handled by a major. They may be affiliated with them for the world, or for just some territories in the globe.
Some independent companies do their own administration and don’t rely or affiliate with majors to do their work. They may be described as Stand-Alone companies. There are also many writers who own their own publishing. They are Writer-Publishers. They hire people who do their administration for them.
In terms of publishing deals, there are various types as well. The most common type is the Traditional Agreement. In this deal, the songwriter forfeits 100% of their publisher’s share (equating to 50% of the composition rights) to the publishing company in return for the services the publisher offers. There are also the Co-Publishing Agreements, in which the songwriter only gives out 50% of the publishing share (equating to 25% of the composition rights). These deals may come with some side notes, such as the number of years it will last for, number of songs required, advances given to the songwriter and how it will be recouped, etc. All of these are incentives for the publisher to give better attention to the song and get more money off it. Some of the percentage shares can tilt in either direction, depending on the leverage each party possesses.
There are also deals called the Administration Deals. In these kinds, the songwriter keeps 100% ownership of their composition copyrights and pays an admin fee instead. This is usually just regarded as a commission, as it is a small percentage of all income made from the song. They do everything that a traditional publishing will do at a smaller fee. But they would most likely not go out to seek users for the songs registered with them.
There are also the Work For Hire Agreements, where a publishing company finds a writer to write songs for their catalogue for a flat fee. All the rights to the songs written, except otherwise negotiated, are transferred to the Company who use it as they wish. In work for hire scenarios, the songwriter is not entitled to any royalties unless it is negotiated in the agreement beforehand.