Keen on Music Publishing

I recorded a CD which contains other writers' songs. What are the licensing issues?

If you are creating a CD you must obtain the permission of the copyright holders to record and distribute their music EVEN IF YOU ARE GIVING THE CDs OR DOWNLOADS AWAY. An exception would be if you are recording any songs that are in the Public Domain, commonly referred to as PD. Public Domain songs are songs that are old enough so that their term of copyright protection has expired. These songs are very old, almost 100 years. The US Library of Congress is the authoritative source to discover whether or not a song is PD. Be careful to note that even some songs in the Public Domain still have arrangements that are copyrighted.

When you are planning to record and distribute songs that still retain copyright term protection, you are required to contact the publisher of every song you are recording to acquire what is called a Mechanical license before you distribute any copies. When you send royalties to the copyright holders (often they will be a publisher), they are responsible for compensating the writers based on the contracts they have with their writers. Sometimes a songwriter also acts as their own publisher. In other words, if the songwriter is also their own publisher, your payment goes directly to them. If they have a publisher, your payment goes to the publisher and the publisher pays the songwriter.

Many publishers are represented by an agency of the National Music Publishers Association (NMPA) called, The Harry Fox Agency (HFA). Several other popular Christian catalogs and songs are represented by a company called, Music Services. They can assist you in obtaining permission and the subsequent license needed to record the song(s). Start there to see how many of the songs you are using are licensed by HFA and Music Services. The website addresses are; www.harryfox.com and www.musicservices.org. Then proceed to contact the publishers of the remaining songs on your project. The U.S, Copyright office and performing rights organizations like ASCAP also have websites to help you locate publishers. They are; www.copyright.gov and www.ascap.com. The Gospel Music Association's (GMA) Christian/Gospel Industry Directory has a lengthy list of other music administration companies who represent Christian publishers in the licensing of their works and the publishers themselves.

Many songs are co-written by two or more songwriters. In that case the writers may or may not have the same publisher. If they do not, then the situation arises where a song is not only co-written, but it is co-published. That is, more than one publisher co-owns the rights to a song. If a song has more than one publisher, you are only required to get the permission of one of the publishers to record and distribute it. However you must compensate all of them fairly in proportion to the share of the copyright owned by each. Think of it in terms of a bowl of your favorite soup that was made by three people. Let's say one of them owns the recipe, one contributed the main ingredients and one provided the spices. They were separate contributions but now make up an inseparable whole. You can eat the soup if you get permission from one of them but in the process you have to get a license from all three that represents their contribution, their ownership or "split". (No known Soup Licensing Agency currently exists:-)). They can only license their share of the whole to you. Then you pay them in accordance with their share.

So when it is time to pay royalties for a song owned by more than one publisher, you will need to know each publisher's share and where to remit the proper royalties to them, either directly of through their administrators like HFA or Music Services.

The Copyright Act requires payment on any music "distributed" without respect to whether it is sold or given away. If you plan to give away the CDs, the publishers may agree to waive their fee the, "Mechanical royalty". They do not have to and some won't but it doesn't hurt to ask.

If you plan to produce a small number of CDs either to sell or give away, many publishers will request that you remit a flat fee up front based on the statutory Mechanical rate. The Harry Fox Agency has a service called, Songfile that will assist you in this process on-line. Songfile is available if you are ordering the manufacture of 500-2,500 CDs or offering 150-2,500 downloads.

The Mechanical royalty rate is set by the U.S. Congress and as of January 1, 2006 it is $0.091. That means that the user (you or your church) pays a royalty of 9.1 cents per song for every copy you sell or give away unless the copyright owner(s) have agreed to waive the fee. So if you create a CD with ten copyrighted songs on it, you need to set aside 9.1 cents x 10 (songs) or 91 cents for every CD you sell or give away. Those royalties must then be dispersed to the copyright owners.

For example, if you record a song which has only one publisher, your task is simple. Every three months or as it is known in publishing, "quarterly", compute how many CDs you've distributed and multiply that number by 9.1 cents. That is the amount you then send to the publisher. You must do that for every song on the project.

If a song you've recorded has more than one publisher, then the task is a little more complicated but it's definitely doable. Let's say a song has two publishers and you have contacted one of them to determine that they each own 50% of the song. When you compute the royalties for that quarter you would divide the amount for that song by two for the two publishers and send them their respective royalties. Here's an example of how it would look;

CDs distributed	1,000
Song A earned (9.1 cents x 1,000)	$91.00
Song A has 2 publishers
Publisher A earned ($91.00 divided by 2)	$45.50
Publisher B earned	$45.50

If the song had three publishers and their ownership, called "splits" was not equal it could look like this;

CDs distributed	1,000
Song B earned	$91.00
Song B has 3 publishers
Publisher A owns 50% and earned	$45.50
Publisher B & C own 25% each and earned	$22.75 each

If you wish to calculate by song, here is a formula you can use to calculate the royalties due each publisher of each song you wish to use. For purposes of this formula, percentage of ownership is expressed using a decimal point. In other words 50% = .50, 33% = .33, etc;

FORMULA

Mechanical rate multiplied by % of ownership = royalty for that song multiplied by CDs sold = total due that publisher for that song.

So, for example if a publisher owned 33% of a song and you distributed 2,320 copies of a CD with that song on it, it would look like this; .091 X .33 = $.03003 X 2,320 = $69.66

Do not be surprised if the communication between you and the publisher lags a bit. Publishers of popular songs can be overwhelmed by requests for Mechanical licenses and have a very difficult time handling the workload expediently. If you are planning to pay the statutory mechanical rate (currently $.091 per song, per unit distributed) common industry practice is to proceed with the project knowing that in all but the rarest instances, the publisher will agree to the request. In fact, under the law, once a song has been published (here defined as previously distributed to the public with the consent of the owner) you cannot be denied a license to use the song unless your use will devalue the song. An example of devaluation would be if a user planned to use a sacred song in a profane way.

If a publisher were to deny you a Mechanical license for a song that was already available to the public and you felt that there was nothing inappropriate about your planned usage, you could proceed by notifying the publisher in a certified letter that you planned to use what is called a Compulsory License to record and distribute the song. Under the terms of a Compulsory License you are required to distribute royalties to the publisher every month as opposed to quarterly and to provide certified annual accounting for the royalties also. It would be best for you to read Section 115 of the US Copyright Code at www.copyright.gov. This section describes the very technical process that must be adhered to in the course of using a Compulsory License. Again, the instances of having to pursue this tactic are very, very rare.

Common industry practice, usually agreed upon in the Mechanical license, is that Mechanical royalties are due to the publisher forty-five days after the end of each quarter. So, as the first quarter of every year ends on March 31, royalties are due by May 15. Here is a table;

1st quarter ends	March 31	Royalties due	May 15
2nd quarter ends	June 30	Royalties due	August 15
3rd quarter ends	September 30	Royalties due	November 15
4th quarter ends	December 31	Royalties due	February 15

Most significant publishers have websites that will assist you in contacting them for permission to use their copyrights and remit royalties. As was mentioned earlier, if you need further assistance finding them, CCLI is an excellent source of contact. Also, ASCAP and the GMA can be a source for the information you need.

Copyright 2007 Dan Keen. All Rights Reserved