Given changes in the music industry in recent years — particularly direct distribution platforms that enable creators to work directly with streaming services, download stores, and physical retailers — there can be a lot of uncertainty about what record labels do for songwriters and musicians, and how that differs from and relates to what Songtrust or another publisher handles.
Here is a simple way of looking at it: Record labels represent specific recordings of songs by artists they have signed. A publisher is responsible for all recordings of a song, including covers by other artists that are released in physical or streaming formats, by their client writers. A single composition can be used in multiple recordings and therefore controlled by several different labels or entities.
Labels & Advances
A label typically controls an original recording’s rights — either partially or entirely — after covering its production costs. It also pays to manufacture physical CDs or LPs and promote the album or single, whether that means radio promotion, publicity, advertising, music videos, or other forms of marketing.
The recording’s advance is generally recoupable, meaning that the record label makes its money back before the artist receives royalties from the label. Costs for promotion, manufacturing, and advertising are sometimes paid entirely by the record label, but costs for certain types of promotion and production for music videos and other assets are sometimes fully or partially recoupable by the artist before they are paid.
Publishing & Advances
Similarly, a publishing deal often involves an advance that must be recouped before the publisher pays royalties to the songwriter. Advances from publishers or labels can be very useful to musicians who need income while they’re writing and recording new material, as well as funding the actual recording costs.
A publisher may incur some unrecouped costs related to creative services — like pitching a potential song to a music supervisor — but the costs of promotion directly to listeners and consumers are usually the responsibility of the record label. In exchange for an upfront advance and creative services, traditional publishers will generally require a multi-year, exclusive agreement, as well as a commission on fees and royalties collected, and often partial or complete ownership of song copyrights. They may also require a songwriter to produce a certain amount of new material over the term.
Labels & Publishing
The rights held by record labels and publishers do not overlap. This means that working with a publisher like Songtrust doesn’t conflict with a record deal for the original recording.
That said, there are some places where they interact. One of these is the mechanical royalties owed to publishers. In the U.S., record labels are responsible for paying mechanical royalties for physical sales and digital download sales. These are received by a mechanical royalty society (such as the Harry Fox Agency in the U.S.) and paid out to publishers based on a rate set by government statute. In other countries, mechanical royalties for physical products and downloads are handled differently.
A streaming service like Spotify pays mechanical royalties as well, but they pay them directly to the mechanical royalty society without going through the record label. So a streaming service pays three royalties: the recording use royalty, which goes to the label; the mechanical royalty; and the performance royalty (which goes to the writer’s PRO).
Another way traditional record and publishing deals intersect is in how they both strive to place sync licenses for a piece of music into movies, television, advertising, and more. With a sync license, payments are made by the licensor to both the original recording owner/representative and the publishing owner/representative. Because they each control rights in the recording, the label, and the publisher must agree on the sync license terms in order for it to proceed.
Do I Need a Label?
Some creators want to forego record deals and self-release their music through a DIY platform like CD Baby, DistroKid, or another distributor. For creators who are also songwriters, this means that they keep all the revenue earned by the recording (minus a distribution fee) and publishing side (mechanical and performance royalties, minus any collection fees). Artists may choose to go this route until they have earned enough sales and revenue that they can secure a more advantageous label deal in the future.
Many songwriters may also want to keep more creative and financial control over their compositions than they would find in a traditional publishing deal. This is where Songtrust comes in. We’re a publishing administration platform that works to ensure that songwriters receive all the publishing royalties that they are owed, with a shorter-term (one year) and lower commission (15%) deal than a traditional publisher will offer. Like with self-distribution platforms, songwriters may develop their careers with Songtrust, and once they have achieved success, sign with a traditional publisher on better terms than they would be offered when starting out. But many clients find they prefer the control over their rights and low fees Songtrust offers to the traditional publishing model and stay as clients even after they’ve hit it big.
The music space offers tremendous opportunities to an independent creator. Just as recording technology is more accessible than ever, the marketplace is wide open for artists who want to get their music out there. Songtrust is a key piece of this puzzle, enabling songwriters and publishers to access the revenue they’ve earned. Make sure you're collecting all your mechanical and performance royalties globally, and register for Songtrust as your publishing administrator today.