Music in Movies, TV and Advertisements

Any time a song is used in a movie, tv or advertisement there are two licenses required:

Synchronization (synch) License: This license must be obtained from the songwriter or publisher (if the writer has assigned his/her rights to a publisher) of the composition.  A Synch License gives the movie or tv producer the right to synchronize the composition (not the recording of the song, but the underlying composition – lyrics and melody) with the moving images in the movie, tv show or ad.  The fee for a Synch License is negotiated between the movie or tv producer and the songwriter/publisher. 

            Master Use License:  The movie or tv producer also must obtain a license from the  person that owns the copyright to the sound recording (the version of the composition found on a CD).  Typically, a record label owns the sound recording copyright and thus holds the master use rights.  If there is no label, the recording artist usually owns the master use right.  The fee for a Master Use License is negotiated between the movie or tv producer and the label/recording artist. 

So, for an artist/songwriter who has not assigned their publishing rights and self-releases their own record (without a label), the movie or tv producer negotiates “both sides” - the Synch License and Master Use License - with the artist/songwriter directly.  If the artist has a publisher and a record deal, the movie or tv producer negotiates with the publisher for the Synch License and the label for the Master Use License. Either the master use rights holder or the publisher/songwriter can refuse to grant a license and the recorded song then cannot be used. 

The license fee paid by the movie or tv producer is typically split between the publisher/songwriter for the synch rights and the label/recording artist for the master use rights.  When the movie, tv show or advertisement containing the licensed song is publicly performed (broadcast on tv), a performance royalty is generated for the publisher/songwriter, typically paid by ASCAP or BMI.  There is no performance royalty from public performance in movie theaters.

What Are ISRC and ISWC Codes?

I’ve talked about how ASCAP and BMI pay publishing royalties when a composition is publically performed.  And that Sound Exchange is the organization that pays a digital performance royalty when a sound recording is played on internet or satellite radio.  But, how do these organizations know when a song (composition and sound recording) has been played.  Traditionally it was done by surveying and referring to music industry charts.  But now technology is playing a big role.

            When a song is played on the internet, satellite radio, and even traditional radio, that play is tracked by reference to a digitally encoded number in the metadata of the song.  That is, a unique number that is given to a song, that is not seen or heard, but within the digital coding, and that can be identified and referneced electronically.

            The digital reference systems becoming common in music are the ISRC and ISWC numbers.

            ISRC means international standard recording code.  ISRC numbers identify sound recordings.  ISRC numbers allow radio stations and digital broadcasters to automatically credit a label or publisher with a play and download sales sites to track sells.  An ISRC number can be thought of as being an electronically encoded bar code.  You can get more information at www.usisrc.org.

            ISWC means international standard music work code.  ISWC numbers identify musical works – the composition or underlying song.  ISWC numbers are a unique and permanent reference number for the identification of musical works.  ISWC numbers are used by to identify when a composition has been publically perofmed.  For more information see www.iswc.org.

            Use of ISRC and ISWC numbers is growing in importance.  Songs without ISRC or ISWC numbers are much less likely to be credited for being played.  Labels and artists should ensure that all versions of their sound recordings are properly coded.  ISRC and ISWC coding is supported by most mastering software. 

What Does Sound Exchange Do?

I’ve described how a song contains two different legal elements: 1) the underlying song or composition; and 2) the recorded performance of the song.  Whenever a song is performed a royalty is owed to the songwriter (or the songwriter’s publisher) for the use of the underlying song or composition.  ASCAP and BMI collect and administer that royalty.

So how does a recording artist get paid when the record performance gets played?  Traditionally, when a sound recording gets played on the radio or in a business, no royalty is owed for the use of the sound recording.  That is, the sound recording artist (the band) and its label do not get paid for the use (playing) of the sound recording.  Only the songwriter gets paid a royalty for the use of the composition.

However, the Digital Performance in Sound Recordings Act of 1995 and the Digital Millennium Copyright Act of 1998 granted a performance right for sound recordings.   But it only applies to digital transmissions – internet and satellite radio must pay the sound recording owner (label or band) for the performance of the sound recording.

Sound Exchange is a private, non-profit organization authorized to administer and collect the performance royalty for digital plays of the sound recording.  Sound Exchange issues licenses to internet and satellite radio and collects a fee.  Sound Exchange monitors play of songs on internet and satellite radio.  Sound Exchange then pays the sound recording copyright owner (label), the performing artist (the band), and even featured performers, a royalty based on the number of plays a song receives.  And although the royalty rate is fractional, many plays can add up to significant revenue.

Because the performance right for sound recordings only applies to digital transmission, traditional radio and businesses do not have to pay a royalty for use of the sound recordings they play.  This was traditionally seen as good promotion for the artist.  But most songs receive the majority of its play on traditional radio and in retail, restaurants, bars and clubs.  A major war is going on in Congress between record labels and artists against corporate radio over the Performance Rights Act, which would apply the royalty for use of the sound recordings to traditional radio and others.

Next time:  What is an ISRC and an ISWC?

Who Is Harry Fox?

Last time I discussed how Mechanical Royalties are moneys a songwriter receives when another artist records their song.  When an underlying song (composition) is recorded and reproduced a Mechanical Royalty is owed to the owner of the underlying song (publisher and/or songwriter) for the use of the underlying song.  The Mechanical Royalty is typically paid by the record label to the song writer or publisher for use of the underlying song in a recording.  The same mechanical royalty applies for digital downloads (internet) or physical (cd or album) reproductions of a song. 

If you are recording a song that you wrote, your label owes a Mechanical Royalty to your publisher (more on this in the next issue).  If you record a cover version of a song that has already been recorded, you or your label must obtain a mechanical license and pay a Mechanical Royalty to the publisher/songwriter of the underling song. 

            Harry Fox Agency is a private company that issues mechanical licenses and collects mechanical royalties.  Publishers or songwriters sign up with Harry Fox Agency.  When a recording artist wants to record a song represented by Harry Fox Agency, the artist or label contacts Harry Fox Agency, who issues the mechanical license.  The Harry Fox Agency then collects the Mechanical Royalty, for the use of the underlying song, and pays the publisher or songwriter.

            That is how a songwriter gets paid for the use of his/her song when it is recorded.  The Harry Fox Agency coordinates issuing Mechanical Licenses and collecting Mechanical Royalties.  To record a song not listed with the Harry Fox Agency, a recording artist must contact the publisher or songwriter directly and obtain a mechanical license. 

            In the next Night Light newsletter I talk about what happens with Mechanical Royalties when you record your own songs. 

What Do ASCAP and BMI Do?

As we have talked about before, a song contains two distinct legal elements that implicate different rights, different royalties and different revenue streams: 1) the underlying song or composition; and 2) the recorded performance of the song.        The composition is embodied by the notes on a page of written music but exists in a more metaphysical sense as the thing created by the songwriter.  There can be many recordings of a song, but only one composition.  ASCAP and BMI are only concerned with the composition, and the rights, royalties and revenue generated by use (performance) of the composition. 

ASCAP (American Society of Composers Arrangers and Producers) and BMI (Broadcast Music, Inc.) are private, independent organizations that are owned by their member songwriters and publishers.  Congress has granted ASCAP and BMI the right to administer royalties for use of compositions.  Almost every time a composition is performed – live, on the radio, television, internet or other media, the songwriter is entitled to a royalty for the use of the song, which is usually called a performance royalty or publishing royalty.  (17 USC 106)  So how does that work:

Songwriters usually sign with a music publisher (or can be their own music publisher), giving the music publisher the right to administer some or all of the songwriters compositions.  Music publishing deals are historically 50/50 between the songwriter and music publisher, but there are many different types of deals. 

The music publisher then associates with ASCAP or BMI and tells ASCAP or BMI what songs the music publisher controls and who the songwriters are.  ASCAP and BMI issue a blanket license to the venues, bars, restaurants, radio, television, internet broadcasters for the use of the compositions in ASCAP and BMI’s respective catalog.  (A download is treated like a sale and does not generate a performance royalty.  An internet stream is a performance and generates a royalty.)  The blanket license fees are set by ASCAP and BMI, who consider the size of the audience, among other things, in setting the fees. 

ASCAP and BMI then survey the number of performances of each composition.  The songwriter gets paid for performance no matter who the recording artist is – Lennon/McCartney get paid a performance royalty when the Beatles recording of Help is performed and when the Deep Purple, Dolly Parton and Tina Turner recording of Help is performed.  A fraction of a penny is paid for each performance of a composition.  But with the huge number of venues, bars, restaurants, radio, television, internet broadcasters playing a popular song, the composition can generate a large amount of performance royalties.   ASCAP and BMI then pay the music publisher who controls the composition.  The music publisher then calculates the royalties owed among the compositions’ songwriters (if more than one), and pays the songwriters their share.  (Music publishers do other things also.)

Next time:  How does a recording artist get paid when their recording gets played?

What is a Song?

Music and lyrics?  Melody and harmony?  Rhythm and groove?  Yes to all.  But legally a song contains two distinct elements that implicate different rights, different royalties and different revenue streams. The two parts of a song are: 1) the underlying song or composition; and 2) the recorded performance of the song.

            The underlying song is embodied by the notes on a page of written music but exists in a more metaphysical sense as the thing created by the songwriter.  There can be many recordings of a song, but only one underlying song or composition.  For example, the song Help was written by Lennon/McCartney – they are the only songwriters and only Lennon/McCartney (or their publisher) will always own the underlying song or composition, unless sold or licensed to a music publisher.  Every time the underlying song is performed, live on the radio, television, internet or other media, the songwriter is entitled to a royalty for the use of the song, which is called a performance royalty or publishing royalty.  (17 USC 106)  The performance or publishing royalty is typically collected by ASCAP or BMI, usually through a publisher who pays the songwriter.

            The recorded performance of a song is a different copyright and different royalty.  Unlike the underlying song, there can be many recorded performances of Help by many bands, including the Beatles.  The recorded performance of the song is usually owned by the person paying for the recording – a music label or the recording artist if no label.  The label pays the artist who records the song a royalty based on the sales of the recording, called a sales royalty or artist royalty.  The amount of the sales or artist royalty is negotiated between the label and artist. 

            There is also a royalty owed by internet, digital or satellite broadcasters who play a recording of a song for use of the recording, usually called the Digital Royalty.  The Digital Royalty is collected by Sound Exchange.  The Digital Royalty is paid to the recording owner (usually the label) and is based on a statutory amount.  (14 USC 114(d)). 

            Lastly, there is the Mechanical Royalty, which is a royalty paid by the record label to the song writer or publisher for use of the underlying song in a recording.  The amount of the mechanical royalty is $.091 for songs 5 minutes or less, based on each recorded copy of the song.  (17 USC 115).  The same mechanical royalty applies for digital (internet) or physical (cd or album) reproductions of a song. 

            That is just the basics.  Over the next several Night Light newsletters I will address the many details and sub-issues raised by each of these royalties and begin to paint a picture where the art, business and law of music combine.

How Does a Songwriter Get Paid When His/Her Song is Recorded?

Last time I discussed “what is a song” and explained that a song contains two distinct legal parts: 1) the underlying song or composition; and 2) the recorded performance of the song.

            The underlying song is notes on a page of written music, the composition or that thing created by the songwriter.  There can be only one underlying song or composition.  Every time an underlying song is performed the songwriter is entitled to a royalty, which is called a performance royalty or publishing royalty, typically collected by ASCAP or BMI, usually through a publisher who pays the songwriter.  The recorded performance of the song is usually owned by the person paying for the recording – typically he label - who pays the performing artist a royalty based on sales of the recording.  There can be many recorded performances an underlying song. 

            So how does a songwriter get paid for the use of his/her song when it is recorded by artists?  This is the often misunderstood Mechanical Royalty. 

A bit of history:  Before recorded music, in the 1900s songs got popular on the vaudeville circuit.  Musicians would buy the sheet music to perform songs.  The sheet music was published by music publishers, who then paid the songwriter a percentage of the sheet music sales.  Then player pianos were invented.  Player pianos used a thick piece of paper punched with notches that caused the piano keys to play the song – a mechanical process.  Live piano players were no longer necessary and sheet music wasn’t being sold as much.  But the underlying song was being reproduced or performed by the piano scrolls used by player pianos.  The publishers lobbied Congress and the Mechanical Royalty was created.  The Mechanical Royalty was a royalty that the manufacturers of the piano scrolls were obligated to pay to publishers for use of the underlying song.  When albums and tapes were invented, the mechanical royalty was extended to those formats, which were also mechanical reproductions (a needle in a groove and electrical current from tape to tape head).  When cds were invented there was no mechanical process involved (only digital code), but in the 1980s, after much debate, the mechanical royalty was extended to cds.  And the same thing happened with digital downloads.

            When an underlying song is recorded and reproduced, in any format, a Mechanical Royalty is owed to the owner of the underlying song (publisher and/or songwriter) for the use of the underlying song.  The Mechanical Royalty is typically paid by the record label to the song writer or publisher for use of the underlying song in a recording. 

The amount of the mechanical royalty has increased over time and is now $.091 for songs 5 minutes or less, based on each recorded copy of the song.  (17 US Code 115).  The same mechanical royalty applies for digital downloads (internet) or physical (cd or album) reproductions of a song. 

            The Mechanical Royalty is somewhat difficult to grasp, but first understanding the different rights and royalties for an underlying song or composition and a recorded performance of a song is the first step.  This is just a basic outline.  Over the next several Night Light newsletters I will address more about Mechanical Royalties and other royalties that can provide revenue to songwriters, publishers and recordings artists.