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Songwriter's Guide
by Gary Schuster
Self-Publishing
More and more these days, writers are trying to hold on to as much of the
publishing rights in their songs as possible. This not only permits them to
receive some of the publisher's share of royalties, but may also increase their
control over the way their songs are used. But self-publishing involves
trade-offs. On the down side, you may lack the contacts required for obtaining
recordings and other uses, and you may be uncomfortable with licenses,
negotiations, royalty calculations and lawsuits. Finally, the time you spend on
business will cut into time you might better spend on songwriting.
Self-publishing is not something that is always right for everyone.
Ultimately, some degree of
self-publishing is desirable
for almost everyone.
Furthermore, there is something to be said for going the route of
traditional publishing, at least at the beginning. A good publisher who acts as
a mentor and editor will help you refine your craft and make your work more
commercial. Publishers with good contacts can get your songs onto albums of
major artists and give your track record (and bank book) a large boost. They can
also introduce you to talented and reputable collaborators, as well as
producers, managers, attorneys and accountants. And simply by doing business
with a publisher and acting responsibly, even if nothing comes of it, you may
enhance your reputation in the industry.
Ultimately, however, some degree of self-publishing is probably desirable for
almost everyone. There are least two forms this can take. In one, you are the
sole publisher and assume all publishing responsibilities. Rather than do the
work yourself, however, you would probably delegate to others such
administrative tasks as copyright registration, licensing and accounting. These
other people are known as administrators, and they are usually paid in one of
two ways. First, you can hire them at a salary or some other kind of flat fee.
This can obviously be quite expensive and is beyond the ability of most
songwriters. The other way, probably more common, is for the administrator to
receive a percentage of royalties, in the range of 10% to 25%. Many attorneys
and accountants serve as administrators, and the Songwriters Guild offers this
service to its members. There are also a number of administrators who are not
attorneys or accountants but who formerly worked for large publishers and have
struck out on their own. These people can frequently perform just as well as
people whose names end with Esq. or CPA. With this kind of administration
arrangement you maintain maximum control over your songs and still have time to
devote to writing. The drawback is that administrators are generally not going
to actively promote your catalog.
The other kind of self-publishing, which does not suffer from this drawback,
is a co-publishing arrangement with a full-time publisher. Like an
administrator, the co-publisher handles administration and receives a percentage
of royalties. The co-publisher, however, is also equipped to promote the catalog
for use in TV, film and similar outlets, increasing both its own and your
income. The drawback in this kind of arrangement is that the co-publisher will
probably want wide latitude in licensing the songs wherever possible, and may
have the songs used in ways you might find distasteful. Nevertheless, it is
probably safe to say that co-publishing has become the norm for writers with
some degree of success, particularly those who also perform and have record
deals. Publisher income is usually split 50-50, but if the writer has sufficient
clout the split may be more favorable.
It should be noted that all types of publishers frequently enter into various
kinds of sub-publishing deals with other publishers. For example, if the song
you publish becomes a hit and you want to sell sheet music, you would not run
out and buy a printing press. Instead you would go to one of the four or five
major print publishers in the country and sub-contract the job to them. They
already have the presses, as well as established marketing and distribution
systems. They would pay you a royalty based on sales. Today very few publishers
print their own music. Virtually all print publishing is done through this kind
of sub-publishing.
In another area, U.S. publishers often make deals with publishers in foreign
countries to collect royalties and further exploit the work in the local
language (new recordings that result are referred to as "local covers").
Generally such a deal is available only where the songs involved have already
had considerable success in the U.S. On the other hand, if your songs are very
successful, foreign publishers may compete to represent you in their foreign
markets. In order to promote songs and make deals, the worldwide publishing
community attends MIDEM, a
gathering held every February in Nice, France.
You can see that even if you act a sole publisher, by careful selection of
administrators and sub-publishers you can achieve world-wide exploitation of
your catalog, keep the bulk of the publisher's income, and still devote most of
your time to writing. Probably, only the most successful songwriters have
actually achieved this, but the goal is not unattainable.
Corporations
When starting your own publishing company, an
initial question to ask is whether or not to incorporate. Under the law, a
corporation is an entity separate and distinct from the people who own it (the
shareholders). Just like a natural person, a corporation can buy, hold and sell
property, enter into contracts, bring lawsuits to enforce those contracts, and
also be sued. It has its own Federal tax identification number, somewhat like
your Social Security number. But it does those things separate and apart from
its individual shareholders. The property of the corporation is not the property
of the shareholders, and the debts of the corporation are not the debts of the
shareholders. This is one of the major advantages of the corporate form of
business. If you own shares of a corporation and that corporation is
successfully sued, only corporate funds can be used to pay the damages. Your
house and car and savings are not at risk. Your losses are limited to your
investment in the corporation. While that investment may be substantial, it is
probably not everything you own. The corporation may lose all of its assets, but
you won't.
It costs money to form and maintain a corporation. You must decide whether
the benefits of doing business in the corporate form will be worth the expense.
As mentioned, one of the major benefits is protection in the event of lawsuits.
For music publishers, the primary legal risk is the claim of copyright
infringement, that is, your song was stolen from someone else. If you feel that
your work is extraordinarily original and infringement lawsuits are unlikely,
then maybe you feel you don't need a corporation. On the other hand, if you
"quote" from other people's songs, or use digital samples in your recordings
without permission, then your legal risks may be higher. Also, the age of the
songs could be a factor. Maybe your company is not for your new songs, but for
your father's songs, which are 30 years old. Generally, songs that are 30 years
old present a low risk, since any copyright infringement lawsuits would have
been brought 30 years ago when the songs were first popular. There are many
other factors that could go into a risk analysis of this kind. Probably the best
advice is to seek the advice of an experienced entertainment attorney.
Corporations have other purposes besides insulation from lawsuits. They are
used to raise large amounts of capital (money) that might be used for building a
recording studio or purchasing touring equipment. They are used by performing
groups to assure that the enterprise continues in the event of the death or
departure of a member. And they are used for tax purposes.
This discussion will not go into how to set up a corporation. You now know
several of the factors that go into deciding whether one may be useful. If some
of these factors apply to you, you should discuss your situation fully with an
experienced entertainment attorney.
The D.B.A.
If a corporation is not required, the form of
company you wish to form is a sole proprietorship (legalese for "one owner"),
also known as a D.B.A., which stands for "doing business as". It is merely
yourself operating under a trade name. For example, Joe Songwriter, doing
business as Really Terrific Music Company. The company is not a separate legal
entity. It does not have a separate federal tax identification number; your
Social Security number is used. The company's income is your income. Its debts
are your debts. Its legal damages are your legal damages. You are completely
exposed, but the company is easy to set up and maintain. Why, you ask, do you
need to formally set up such a company at all? Because the law requires it,
that's why. New York, where I practice, and many other jurisdictions require
that people doing business under a name not their own register that fact with
their county clerk. It's a method of consumer protection, by keeping track of
who is doing business under what names, and it also helps the government collect
taxes on unincorporated businesses. Following are the steps required to set up a
D.B.A. in New York. Local laws and practices may vary, so you should check on
these in your home state.
The first step is to contact either ASCAP, BMI or
SESAC in order to clear a name. This means that they will make sure no one else
is already using that name. The safest type of name would be using your own
name, such as Joe Songwriter Music Company. But songwriters being creative
people, they usually want something with a bit more flash. (Reading the names of
people's publishing companies on album credits can be very entertaining.) The
organizations will ask you for three names in order of preference, and then
advise you which you may use.
Having cleared a name, you must obtain a D.B.A. form from a stationery store
that carries legal forms. It is just a single sheet and probably costs a dollar
or less. You should buy three. The form is very simple to fill out, asking only
for your name and address and the name and address of your company. Once you
have filled out all three, DO NOT SIGN THEM. Take
them to a notary public and sign them only in his or her presence. Then you take
all three copies to your county clerk. All three will be stamped with the
official seal. One is kept there. One is for your files, and the other is for
you to give to your performing rights organization when you register your
company there.
Believe it or not, that is all there is to becoming a company. Once your
D.B.A. is filed with the county clerk you are in business as far as the
government in concerned. That means that come next tax season, you can expect to
receive an Unincorporated Business Tax return!
Your last task is to register your company with your performing rights
organization. ASCAP requires writers who publish their own works to form a
separate company and have it registered. BMI will simply pay the writer the
publisher share of royalties, and does not require a separate company or
application.
Now Start Publishing!
Now that you are a publisher, you had
better start publishing! That probably means issuing a mechanical license to a
record company that wants to release a record with your song on it. Are you
completely at a loss? Can't write a mechanical license? Can't afford an
attorney? Can't find a willing administrator? Do not hyperventilate. A good
place to go at this stage is The Harry Fox
Agency, referred to back in Chapter One. Fox is a middleman, issuing
licenses to record companies on behalf of music publishers. Fox has hundreds, if
not thousands, of music publisher clients, and they are happy to work with the
smallest. There is almost no negotiating to be done with respect to mechanical
licenses, and Fox has a form that everyone in the industry is comfortable with.
If you join Fox, Fox will issue the license and collect the royalties for you,
charging you a 4 1/2% commission. As a small self-publisher, you may find the
services of the Fox agency to be just what you need.
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