Many of you who write music may have questions about the business side of things.
You’ve probably heard the term “PRO” bandied about. In the music biz, it’s not a short reference to the degree of talent of a musician or other music creator.
So, what’s a PRO? It’s a performance rights organization. It administers part of the copyright in music. Music is a different kettle of fish from other kinds of creative endeavors. When you write a novel, you submit it to a book publisher, who then prints up a lot of copies and sells them in stores or on-line. Royalties payable for the novel are administered and paid to you, the novelist, by your publisher as a general rule.
A movie, as another example can have many aspects of it which generate royalties or payments, however, there is, as to the movie as a whole, only one copyright and the royalties paid attributable to that copyright are usually administered by the distributor of the film or their assignee. From there the money can go to a number of payees depending on individual contracts or master contracts (like with the Screen Actors Guild or other such organization), and ultimately, in theory at least, the money reaches the individual artist (like an actor in a film).
With music, when you create music you also create a copyright embedded within. However, under the law, you cannot protect that copyright unless you register it with the Registrar of Copyrights in D.C.; at least under the U.S. Copyright Law. This is the first thing people don’t understand: yes, the copyright comes into being along with the original creative work, but you cannot protect it legally without registration with D.C. Why? The law says so. How do you protect copyrights? In the final analysis, you sue people if they infringe (or stomp) on your music and its embedded copyright. And you can only file that lawsuit in a United States District Court. Why? Again, the law says so. And if you do file a lawsuit you have to put it right there clear as day right in the “allegations” of the lawsuit that you registered a copyright in the work in question with the Registrar and “here’s the registration number and the registration date.” Why? Again, the rules for filing lawsuits in federal court say so. On top of that, there’s a rule that says you have to give notice of your copyright infringement lawsuit to the U.S. Copyright Office. Okay, that’s copyright law in a nutshell.
So what is it the PROs do? Well, look at the copyright in your music like a multi-layer cream pie. And you can slice and dice that pie any way you want.
PROs administer a piece of the pie called the performance royalty. That’s only a piece, not the whole pie. And what do they do with that? They sell a license (a right contained in that slice of pie to something like a broadcaster: a radio broadcast station or network, TV or cable broadcast network or station or now, a webcaster with a website on the world wide web; what they’re really selling is a “do not get sued” card when that broadcaster broadcasts (or in some way, “uses”) your music to the public.
Here’s the trick: if there’s no registration of the copyright with D.C., you (the copyright owner) cannot sue the broadcaster anyway for infringement (i.e.: broadcasting your music without your consent). So, one of the great illusions about how PROs operate: not all of the musical selections they administer in their repertories have been registered with D.C. So, this is rather sneaky: the PRO is selling something to a broadcaster it doesn’t have. But, everybody seems to go along with it anyway because everyone assumes that if the PRO says it’s in its repertory, then all assume that the PRO has all the rights necessary to effect the license.
So, that is, in a nutshell how copyright dovetails with how PROs work.
Do PROs administer all of the copyright? No, only a specific slice of the copyright pie. There is another big slice called a “mechanical” which is usually the rights you have in a sound recording made of the music you created. That royalty is usually administered by the record label on which the recording was made, or its assignee, which could be the Harry Fox Agency for the United States. Mechanical royalties are the kinds of royalties made when a copy of the music on a sound recording is sold, usually at retail, either in the form of a physical disc of some kind, physical tape of some kind, or, these days, by way of a download of the music over the internet from a provider to a consumer.
This is all a rather simplistic explanation, but essentially this is how the copyright pie is split.
It becomes more complex when you’re looking at the international distribution or broadcasting of music since some countries, like France, have something called a broadcast-mechanical which is a little bit of a performance royalty and a little bit of a mechanical royalty. Here’s how that can work: broadcaster plays your music over its network. Broadcaster pays a license fee to SACEM (the French equivalent to ASCAP). SACEM splits it up. The performance royalty ultimately payable to you is, finally, after a time period, paid over by SACEM to your PRO here in the USA. Let’s say, ASCAP. ASCAP doesn’t get any part of the mechanical. ASCAP doesn’t even know, so I’ve been told, what the gross amount of the royalty paid by the broadcaster was. ASCAP gets a net payment from SACEM, takes its cut off the top and then pays you the rest, theoretically.
Where does the mechanical go? SACEM pays that directly to the “sub-publisher” of the music in France who represents the USA domestic publisher of the music and that sub-pub pays the mechanical to the USA pub. And here’s a kicker: the USA pub pockets the money and doesn’t report it to anyone else--like you.
No wonder your head swims when someone wants to discuss the business side of the music business.
And things are going to get more complex. Those who perform music get a piece of the action when a webcaster webcasts music (the webcaster pays a royalty to SoundExchange which then supposedly pays artists but SeX doesn’t represent artists, it represents its constituent labels, the big record labels). Music performers now want a piece of the action on revenue from radio broadcasts of music.
Now, my head is swimming and I’m exhausted.
Anyway, that’s it for now. More in the future.
BRIAN LEE CORBER is an attorney practicing law in Los Angeles, California for nearly 30 years. He has been emphasizing music business matters since the late 1990s and follows the news in the music world, which is constantly changing, daily.