The financial aspects of songwriting

Pro Songwriting Masterclass | Lee Dannay (John Mayer, Train, Brandi Carlisle, Americas Got Talent, Warner Chappell, Sony, Shawn Mullins, Five For Fighting...)

So more than ever, it’s really, really important to understand  the pathways that do exist to earn revenue as a songwriter. and,  you know, on the, on the business side, now more than ever,  collaboration, is probably more active and, and more creatively, you know, potentially interesting, today because you can write from home on your computer the way you’re all sitting right now, and you can reach a, a, a larger proportion of songwriters and artists  in any way that suits you creatively.

so that, that’s sort of the upside of, of what’s happening right now. and, you know, and, and probably you guys are all doing that and, and, you know, I hope you are, because it, it, it, you know, the process of collaboration, it’s always been an exciting part of the music publishing industry, to help artists to create new, more cross pollinated sounds, and, and ultimately to, you know, help strengthen artists who, who, you know, historically would write on their own, but maybe have been blocked and need a little creative change in perspective, being, being part of a collaboration process can do that.

And it’s, and it’s really important now more than ever. Also from the perspective of radio, radio has always been a big driver for mainstream artists and artists of all kinds. but today, more than ever, because touring is not really on the table, the income earned, you know, from being a ra, having a few radio singles, is really, it’s really important.

It’s important to record companies, it’s important to publishing companies, and it should be important to all of you guys as writers to a certain degree, to, you know, just help kind of grow your creative and financial professional career. however, the process of collaboration, by virtue of what it is also  results in, basically kind of having to cut into that income stream, a little bit that you guys are earning because you’re having to share that income stream with your collaborators.

And that’s fair. It’s, it’s, it’s, it is the way it is. but, you know, it’s also something that you guys should understand. And, and that’s kind of how I’m gonna start this, entry point of, of our, of our financial conversation today. Because, having,  having the knowledge behind the way you work and the way you collaborate on the business side, on the financial side, you know, gives you, it allows you a lot more  focus and opportunity to, understand the work you do, but also really protect and, and value and protect that the work you do.

so I am going to, share a little PowerPoint or keynote with you guys today so I can sort of follow, you guys can follow along, a bit on, let’s see,  bear with me on  what I’m about to talk about, which is this.

so let me see. I’m going to play this. Here we go.  So let’s talk about this. It really is kind of the great mystery of the music industry, and the, the financial aspects of songwriting. and, and also historically, this bears mentioning, songwriters have always kind of gotten the short end of the, of the financial deal, in the way that the business works.

And, and, and there are advocates on all sides of the industry constantly fighting for fair payment and, and, and, you know, fair compensation and, and fair shares of the business, of their business of songwriting. but, but for whatever reason, even though the entire music industry is based on the concept of songs, really, you know, albums and artists and publishers, everything revolves around a song, songs and movies. but, but yet sometimes it seems like songwriters are getting paid less.

So, so let’s talk about how ways that we can,  you know, mitigate that. the first, the first thing, and maybe maybe many of you know this, but the, the first thing that we really should talk about is, is the music publishing business, is really the construct in, in the music industry that, initially from the beginning of the publishing business created the concept of, of paying for a song, paying for the use of a song, and, and that the way the music publishing business works, you have to sort of suspend your disbelief.

There’s, they, the song songs are referred to in a very abstract way. and the way we talk about income streams that I’m gonna dig into in a moment, it, it’s a bit abstract. So, I, the most important thing, I, I’m gonna do a real overview today ’cause it really does get complex and, and, and detailed, and this is not a math class, so we’re not gonna be doing calculations, but, but understanding the, the, the sort of broad strokes of how a song  is, is viewed on the business side, and then how the, how the income streams are sort of split up and then collected, will hopefully help empower you guys, a bit as, as you continue along on your career.

so for the purposes of today’s conversation, let’s talk about a song. As you’ve probably all heard this, a song is kind of a pie. Every song is split into sort of two halves of a pie. There’s the writer share and the publisher share. and for those of you guys who are more visual learners, which many of you are, there’s a picture of that, of what it looks like.

So, in the publishing business, your song is split between 50% of the, of the song being the writer share, and 50% being the publisher share. If you write the whole song, you are a hundred percent writer, you’re the sole writer, and you are also the sole publisher of your own work. you own and control a hundred percent of this song pie. So, hopefully  probably you guys have seen,  you know, visuals like this before, but it’s really important because when we talk about the different income streams and how they flow, the money you earn comes through, you know, the writer share and the publisher share and, and into your accounts, you know, as you build a writer career.

so I would like to, let’s see, lemme go to the next slide. you know, as, as I was saying it  in, you know, if you are a working songwriter, if you are a developing songwriter, it is, it’s hard to do all of the  work yourself as that a hundred percent writer.

You probably are going to need, the assistance of either a publishing  relationship, a publishing deal, an admin deal, or you are going to, you know, need a team of people that are going to help you, manage and, and build that sort of financial career a around you. and, and especially if you are collaborating, there are gonna be those shares of songs, you know, kind of every step of the way that are gonna, and, and potentially income streams that come from a  lot of the different writing you do.

So, that kind of collaboration, it’s, it’s as far as I can tell you, and, and I’m sure that you guys tho those of you that are doing it already, it’s essential to collaborate, it, it on, on every level creatively and financially. but, but sharing in that revenue, you know, can also be a little financially daunting.

So, so let’s talk about,  get to the next slide,  the main income streams generated by songs.  We’re gonna talk now about  mechanicals performance and synchronization, in the music publishing business. Those are the three kind of main and, and really important income streams, that  potentially you guys have heard of. But, and, and, and if you have, great, if you haven’t, I will try to demystify the, the concept of, of each of these.

it is the music publishing industry’s job to, you know, identify, measure, and collect and pay songwriters, these and other, you know, income streams, whether or not you were a sole publisher, you know, collecting on behalf of yourself, or, or your own company, or whether you were aligned with a publishing company in a, in a different, you know, kind of publishing relationship.

So let’s talk about  mechanicals as a, as a starting point.  So, every time a song is mechanically reproduced onto some kind of media, you know, whether that’s CDs final, digital downloads, when you actually purchase a song digitally, that Is considered a physical unit sales. and then there is also a mechanical payment made for streaming, and that’s a whole different calculation, which I’ll talk about very briefly.

from the United States point of view, our, on the way, our mechanicals work, our rate is regulated by, by the government, and the mechanical rate is currently 9.10 cents. that’s, per song, unit per song sold. So that’s pretty small. But compared to streaming, it’s actually not so small. in the old days where albums sold in the multiples of millions, 9.10 cents, you know, per sale could turn into a whole lot of money.

That’s, you know, nine, you know, times 10 songs are, you know, on an album essentially times millions of sales. you know, you could earn a lot of money in mechanicals, and mechanicals are paid for by the record labels or the master owners to the publishers and to the songwriters. So, that is the license that is issued, which enables someone else to use your copyright, to use your intellectual property.

so, you know, the rates and the, and, and the methodology behind how mechanicals, exist are, are different in every territory. you know, here it’s per unit, per sales. some are based on percentages, not on, you know, sort of the fixed amount of, of one sale. The percentages of of, of sales, percentages of revenue.  

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