How To Buy Music Publishing Rights
Master recordings are the actual raw sound waves involved in a song, whereas publisher rights are for things like lyrics, melodies and chord progression. Investors can own both, a portion of both, or a single one of these rights, depending on what the owner (almost always a musician or record label) is offering.
how to buy music publishing rights
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Music and publishing rights have existed for a seriously long time. Musical copyright law came to fruition in England in 1842, and French copyright began in 1829, with the formation of SACD, a French society establishing collective rights management for authors which is still around today.
You are probably somewhat familiar with how copyright protection works for musical properties. An artist records an original song, the label secures the copyright, and then receives royalty and distribution rights based on the contract.
For example, movie studios often purchase the publishing and master rights songs used in films. Electronic & hip-hop artists routinely purchase small sample melodies directly from the label, instead of having to cough up full royalties to the original composer later (I bet The Verve wish they did this).
Savvy traders, investors and composers are able to purchase and sell rights to smaller, older tracks, melodies and lyrics in the hope of gaining a profit. This type of investor generally operates through an online market or by making direct deals with independent artists or publishers.
For those of you willing to invest liberally and in more renowned catalogs, your first port of call would be to simply contact whoever currently owns the rights. As we have discussed, publishing houses and record labels are generally the rights owners, although independent musicians will obviously own a majority stake themselves.
There are also royalty-free music platforms such as Artlist. And of course you can always make direct sales with publishers, artists and whoever else might be clamouring to purchase your savvy ten-year investment.
If you invest in samples, you can also end up selling the rights to library curators and sample pack developers, as these are heavily in demand and becoming more so due to the ease of firing up your laptop and writing songs with minimal if any knowledge of musical theory.
Licensing fees are the most lucrative form of earning for rights holders. You can sell one-time or ongoing licenses to film producers, musicians and whoever else wants permission to use the music you own.
The expense of this will be dictated by the profile of what you own, and the profile of the interested purchasing party. (For example, good luck charging a university student for using your music in a class presentation.)
In spite of the above issues with digital streaming royalties, catalog owners can expect to earn 10-20x annual net royalties upon sale of their rights; a multiple range which has increased over the past decade.
Well, even though each individual royalty pays out less, there are substantially more royalties being paid out as more people have access to a music library that they would otherwise only source from the radio.
A: If you are using a pre-recorded song or another pre-recorded piece of music in your film, there are two rights you need to clear; that is to say, you need to get two different licenses to use the music.
A: If you intend to use these songs on a soundtrack album, you will need to negotiate additional soundtrack rights with the publisher and record label as you negotiate the synch and master use rights for your film.
A: License fees are determined based on various factors, including how the music will be used, the duration and number of times the music will be used and where the film will be performed. In all cases, the fees are negotiable and not all publishers and record labels charge the same amount. Students working on films that are only shown within an educational environment can often negotiate reduced fees. Independent filmmakers planning to show their films at film festivals can also often negotiate a reduced fee called a Festival Use License. These reduced rates are based on limited screenings of the film. Once the film has been sold for theatrical release, the fees will increase based on the significant increase in viewership and potential increased revenues. It is best to negotiate this increased fee in advance. Negotiating in advance for possible future performances in different types of media (theatrical, TV, cable, internet, etc) is often referred to as a Step Deal.
A: U.S. Copyright Law provides that you can be sued by a music publisher and/or record label, for using their property without their consent. Considering that you will work more and more with publishing companies and record labels as your career moves forward, not clearing the rights in advance is not a very professional way of starting your relationships with them. Clearing the rights and having step deals in place will also help you in the event that a distributor is interested in buying your film. If your rights are not cleared, the distributor is looking at an unknown expense tied to your film, and this can be a deterrent in a distributor's interest in acquiring an independent film.
A: Music that is composed specifically for a film, as opposed to pre-recorded music placed in a film, is the film score. You can hire a composer to write this music for you. ASCAP works with film composers and composer agents at every level of experience and can help you find a composer appropriate for your film at your budget.
A: You will be paying a composer an up front fee for writing and recording the music for your film. You will negotiate this fee based on your film budget, the amount of music required, and the film composer's experience in the industry. Again, fees vary significantly, case by case.
A: Based on your negotiations with the film composer, your Composer Agreement will spell out who owns the film score (that is, who retains the publisher share of the music). This will either be the production company or the film composer. If the production company pays the appropriate composer's fee up front, it usually retains the publisher share of the music while the composer retains the writer share. In this case, the production company will need to set up a publishing company through ASCAP. When you call us to do this, we can give you further detail. If the production company is unable to pay the composer an appropriate fee up front (as happens often with independent films but never with major releases), a composer will often negotiate to keep the publisher's share of the music. Regardless, as a filmmaker, if your film will have a broader release than at film festivals, you need your Composer Agreement to give certain Broad Rights to the production company: these may include worldwide synchronization; worldwide free, pay, cable and subscription television; in-context and out-of-context television advertising and film trailer use, including promos on other film videos; theater distribution outside the United States; videocassette and videodisc rights; all future technology rights whether now known or not.
In the current market environment of low yields and interest rates, music royalties are an increasingly attractive asset class. Their low correlation with macroeconomic performance and high income potential have resulted in more investors taking notice of their financial potential.
Streaming has brought greater stability to music royalty cash flows. As we discussed the State of the Music Industry, digital streaming has driven the growth in global recorded music revenues after 15 years of declines caused by piracy and the decline of the physical album. There is now greater confidence in owning music IP assets and the royalty income derived from them.
Music royalties are a source of recurring income. Music royalty income is collected by several different distributors, with income paid periodically to music IP rights holders. Recurring payments are desirable to investors looking for a source of predictable income, typically found in asset classes such as real estate.
Public equity markets provide a couple of examples of music IP asset relationship to the broader market. Mills Music Trust (ticker: MMTRS) has a -0.65 beta indicating MMTRS generally moves in the opposite direction of the market. Hipgnosis Songs Fund (ticker: SONG-GB) has a 0.21 beta suggesting much less volatility than the broader market.
The combination of stability, recurring income, attractive relative yields, and historically less correlation to broader economic fluctuations has made music royalties an attractive asset class for investors.
There are many potential pitfalls to consider when investing in music IP assets. We will narrow these risks to ones we see as most important when acquiring income producing music IP. Notably, we are not considering risks with finding and developing new artists and songwriters.
Napster disrupted music in the 2000s leading to 15 years of recorded music industry declines. The proliferation of smartphones and streaming has reversed this trend and helped the industry return to growth. Technological innovation can have a material impact on music royalties, for better or worse.
Many music royalty rates, especially rates related to the musical composition copyright, are regulated. While most of the recent royalty rate decisions have been positive for music IP rights holders, future changes to rates could have a material impact on music IP cash flows.
Music royalty funds are mainly private, but a few are public. Hipgnosis Songs Fund and Mills Music Trust are two examples of publicly traded companies that own interests in music royalties and distribute the majority of available cash flow after expenses to shareholders. In the private market, Shamrock Capital recently closed a $400 million fund focused on music and other content IP. Round Hill Music has mentioned that it is currently fundraising for its third music IP fund. However, these private royalty funds typically have significant minimum investment amounts ($5+ million), meaning their target investors are institutions and ultra-high net worth investors. 041b061a72