Back in early 2019, we embarked on a unique adventure with the Music Entrepreneur Club and its co-founders, Damien Ritter and DJ Pain 1. The goal: to bring specialized topics and expertise to creators around the country that don’t typically receive the resources needed to succeed.
The first leg of the tour included stops in Phoenix, Denver, Las Vegas, Berkeley, and Los Angeles. On the second leg, the focus shifted to the East Coast, with stops in Atlanta, Washington D.C., Philadelphia, New York, and Boston.
Our team shared our expert knowledge of music publishing — arguably the most misunderstood topic in the music industry. Hundreds of producers, artists, and managers that joined us on the road also learned about building momentum in the music business and the importance of networking.
Every time we go to an event, we meet with local creators to learn more about their music publishing experiences and see which additional resources we could provide to help them be more successful. We also gain valuable insight into misconceptions that creators often have about music publishing.
Below are a few common creator misconceptions we noticed while on tour.
1. Your Performing Rights Organization (Pro) Collects All of Your Royalties.
We learned that a lot of creators weren’t aware that the collection of mechanical royalties is sometimes separate from the performance royalties that their collection society pays out to them. While Collective Management Organizations (CMOs) based outside the U.S. may collect your mechanical and performance royalties, domestic PROs like ASCAP and BMI do not collect on the mechanical side.
Instead, these royalties are collected by mechanical agencies such as The Harry Fox Agency (HFA), Music Reports, and The Mechanical Licensing Collective (The MLC), which focus solely on the licensing and collection of mechanical royalties. The catch? Some of these mechanical agencies don’t allow independent songwriters to collect their royalties without a publisher. This means there is a totally separate revenue stream that many creators don’t have access to if they are only affiliated with a collection society. And The MLC, which is by law mandated to license and collect all mechanical royalties from DSPs, only does so in the U.S., so without an administrative partner, songwriters can be losing out on royalties.
2. Labels and Publishers Have the Same Purpose.
Labels offer a lot of important features to creators, but they don’t provide publishing administration and collection. Labels and distributors deal with the recording side of your song, leaving the composition for the publishers to administer.
Having both is an ideal situation for a creator and can ensure that you’re collecting all of your song’s revenue streams, royalty-wise. It’s important to note that labels or distributors will sometimes offer a publishing agreement in conjunction with the recording agreement; in this case, they are acting as publishers as well. While this is not necessarily a bad idea, it’s important to be careful when granting both types of rights to the same entity.
3. Your Royalties Will Wait for You.
We learned that a lot of creators don’t know about unallocated royalties, a.k.a. “black box royalties.” This refers to unclaimed royalties that have essentially been sitting around at collection societies, waiting to be collected by their rightful owners.
After a period of 2-3 years, these royalties are considered not distributable and are paid out to the top earners based on market share. The realization that artists like Drake could be paid out your unclaimed royalties is an eye-opening insight for many creators.
The positive side is this usually urges creators to get their music publishing in order as soon as possible. And we don’t blame them; why would you want to give away your hard-earned royalties to millionaires who didn’t do the work?
4. You Don’t Need to Register Your Works Globally Because Your Collection Society Will Do It for You.
It’s very important for every creator to be affiliated with their home territory’s collection society. However, while some societies have reciprocal deals with other societies in the world, it’s not a guarantee that your CMO/PRO will register your work globally and collect the international royalties your work earns.
Their focus is to register, track, and collect on works for their membership base in their local territory first and foremost. Because every society has different rules, regulations, and requirements, having a publisher ensures that creators are fully covered with global registration in order to access all of their royalty revenue streams.
While we encounter a wide range of misconceptions like this on a daily basis, it only adds to how important it is to provide creators with valuable and impactful educational resources. We are proud of the resources we have created so far, but we know that we still have a lot of work to do — not only to demystify the fundamentals of music publishing, but also to change the landscape for future creators.
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