*This article focuses on the composition royalty ownership breakdown and examples for Non-European countries and territories. In Continental Europe, these examples will vary, which we’ll touch on in an upcoming article.
While publishing is a vital piece to a creator’s career, it can also be tricky to understand all the nuances that come with it. We’ve talked about the two halves of a song, the difference between royalties earned, and shared our glossary on common music publishing terms, but another important part of publishing is understanding how royalties are broken down at the collection level.
Publishing royalties from collection societies are typically separated between a 'writer's share' and 'publisher's share'. However, this depends on what kind of royalty is being generated. In the publishing world, these are mechanical and performance royalties. In order to collect both, you’ll need to register yourself as a songwriter and a publisher with different collections societies and pay sources.
First, performance royalties are split into two equal halves: writer’s share (50%) and publisher’s share (50%). These are two separate revenue types that performing rights organizations (PROs) or collective management organizations (CMOs) collect and account for separately. Mechanical royalties are slightly different -- these only generate the publisher’s share. Should your home society not collect both types of royalties, then these are either collected from your CMO or via a different society called a mechanical rights organization (MRO). To learn more about collection societies, check out this blog article. Let’s break down the different shares a bit more.
What is the writer’s share?
The writer’s share makes up half of the performance royalties. The other half goes to your publisher. These are generated by ‘public performances’ of the composition (i.e. digital on-demand streaming, live concerts, terrestrial radio). A specific share of performance royalties is allocated to each writer of a given original composition, based on the writer’s ownership (out of 100%)*.
The writer ownership is determined by an agreement, known as a split sheet, between the writers of a song. For example, if you’re playing in a four person rock group and each member contributed to the song equally, the ownership split is often 25/25/25/25. Once a writer registers their song title and their ownership, each given society will collect your writer’s share of performance royalties based on that registration (25 percent, per the example above). In the end, you’ll be collecting 25 percent of half of the performance royalty pie (the other half going to your music publisher) for any performance generated royalties.
*It’s important to note that at some societies, such as BMI, they record these shares at a 200% level, meaning your writer’s share would equal 100% and the publisher’s share also 100%. This can be confusing, but here at Songtrust, we work off the typical 100% scale (50/50 split).
How is it collected?
As a writer, you’ll need to affiliate with a performing rights organization (PRO) or collective management organization (CMO). These are societies and pay sources that are in charge of licensing, tracking, and paying out performance royalties, and occasionally mechanical royalties, to songwriters and music publishers. You can only be affiliated with one collection society at a time, as having multiple affiliations can cause issues with your royalty payments, so make sure to explore your options and choose wisely. This collection society represents you and pays your writer’s share to you directly. Normally this collection society is located in the same country/territory as you, but not always.
Your collection society will then work with others based outside of their country to retrieve your global collections. For example, if you own 25 percent of the composition, you collect 25 percent of all writer’s shares directly from your collection society for worldwide and domestic use. Based on the registration details provided by you to your PRO and other collection societies, the remaining percent collected (75 percent, in this example) is allocated and distributed to each additional co-writer.
Here’s another example to help explain: If you are affiliated with ASCAP in the US, and your music is used in another territory outside of the US, the society in that territory will pay your writer's share (and publisher's share, if you do not have a publisher) to your home society, i.e ASCAP. If ASCAP does receive both the writer’s and publisher's shares, they will split them up themselves. If you have a publisher who registered the song at a society outside your home territory, that publisher will receive the publisher's share directly from the foreign society and then pay it out to you based on your agreement with them.
Therefore, a writer typically receives their entire writer’s share of performance royalties directly from their society. However, in order to receive payment from all territories, you need a publisher, like Songtrust, to register your compositions directly with collection societies globally. This is often because collection societies require you to be a citizen of their country or they won’t allow you to register if you’re already affiliated with a PRO or CMO. Instead, other societies will send your generated writer’s share to your affiliated society for you.
What is the publisher’s share?
Complementary to a writer’s registration of a song is a publisher’s registration. It’s important to note that automatically, when you finish a song, you and any co-writers on that song own the publishing on that song, meaning you are technically your own publisher. Until you sign a publishing agreement or deal, you maintain the entire amount. However, this doesn’t mean as an independent songwriter you’ll be able to collect this share easily. In order to collect your publisher’s share, you have three options: joining a publisher, creating your own publishing entity, or remaining an independent songwriter. Let’s review each below.
Joining a Publisher
Publishing companies or administrators can become members of collection societies, such as ASCAP, similar to songwriters. The difference here is that publishers can collect two separate types of royalties, mechanical and performance royalties, as opposed to just one, like songwriters. Another important distinction between songwriters and publishers is that any affiliated publishing entity can register at any given society—meaning they can affiliate with multiple societies. This allows publishers to work with songwriters who are affiliated with any PRO or CMO, for example, one publisher can work with writers at both ASCAP and BMI.
Creating your own publishing entity
A writer can affiliate their own LLC, or given entity, at their society, in order to act as their own publisher and collect their publisher’s share. However, for a publisher to collect their mechanical and performance royalties, they’ll need to register at the appropriate societies globally. This can be a long and tedious process, because each country or territory can have one or more collection societies.
Remaining an independent songwriter
Some societies allow writers to take the capacity of a publisher and claim a publisher’s share, even if they don’t have a publishing deal, but it’s important to note that that’s not always the case. However, by choosing this route you’re missing out on your mechanical royalties. This is because only publishing entities can collect these types of royalties.
How Is It Collected?
Each publisher claims a percentage out of 100% for each composition according to a split sheet and/or contractual agreement between songwriters and publishers. It is how both collection societies and mechanical rights organizations determine the amount of royalties to allocate to each publishing company or entity. Usually, a publisher will claim the same amount as the writers share. Using the example above (25/25/25/25 split), your 25 percent share on the song will be mirrored on the publisher side as well. That means that you’ll be collecting 25 percent of the publisher’s share for performance royalties and 25 percent of the mechanical royalties being accrued on the composition.
Publishers are allocated 50% of performance royalties from collection societies (split between writers and publishers), as well as the 100% of publisher’s mechanical royalties. These mechanical royalty sources include Harry Fox and Music Reports in the US, where globally some societies collect both the performance and mechanical royalties in one society (known as collective management organizations, CMO). In addition to mechanical rights organizations, and unique to the US, labels will sometimes pay publishers directly their mechanical royalties from sales and downloads.
What does this mean for me as a creator?
Understanding how your ownership is broken down and collected by societies around the world is vital to you as a business person. If you’re still a bit confused, you’re probably not the only one. If you need more clarification, register for one of our monthly Music Publishing 101 virtual workshops.
As a publishing administrator, Songtrust represents and collects the 50% (remember, it’s split evenly between writer and publisher) of publisher performance royalties and 100% of mechanical royalties on the composition from all mechanical societies directly in exchange for a small administrative fee. You, the creator, will keep the entirety of your writer’s share and maintain 100% of your ownership. This is income you miss out on if you don't have a publisher to do this legwork for you.
Want to make sure you’re fully covered and collecting all the royalties you’re earning globally? Register with us today.
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We created this guide to answer a simple question: How do songwriters support themselves?
The answer is not as simple as we’d like, but our goal is to make it as clear, transparent and understandable as we possibly can.
Songtrust is more than just a rights management platform and publishing administrator - we’re a team of experts in the music community who strive to educate, support, and provide thought leadership to creators, representatives, and businesses across the music industry.
Our hope is that you’ll finish this guide with an better understanding of the business behind songwriting and have actionable resources to help you be successful.