Notes on Songwriting Summit

Campbelltown Art Centre, 20 September, 2014.

(Disclaimer: This is a simple guide for or those that want to navigate the complicated issue of copyright and collection agencies in the music industry. It is specific to Australia but equivalent bodies with different names exist overseas. Sources not quoted, these are rough notes for the talk with myself, Lindy Morrison (AO, PPCA), Wayne Connolly (prolific producer and artist), Toby Martin (Youth Group, songwriter and author) and Maree Hamblion (Sony ATV))

The file.

These days it’s a pretty wonderful world, with any creative idea you might have being able to be broadcast around the world in an instant after having recorded it on your Mum’s computer in the form of a file. A file could be a book, a photographic image, a play, a song or a movie. This has completely changed the way music has been consumed, shifting it away from a physical object that couldn’t be copied, like an LP or a book, to a digital object that can be copied and shared a million times over.

We’ll talk about copyright which the creator of the work owns and some of the ways that the work can be protected and ways the work can be used to make an income through various bodies such as music publishers, record labels, AMCOS, APRA and the PPCA.

What is copyright?

Copyright exists to reward individuals for their creative endeavour in expressing their ideas as, for example, a piece of music, a painting, a play or a novel. A song with lyrics consists of both a musical and literary work, thus it has two copyrights.

Copyright comes into being automatically, as soon as the creation is somehow recorded or written down, and lasts 70 years from the end of the year of death of the work’s creator.

Copyright is an essential part of making money in the music industry. By and large recordings have been the main source of copyright royalties, however in today’s climate of declining record sales, and with digital sales still yet to truly prove themselves, are artists losing their main source of income? Or are other uses of music, such as in film, broadcasts and live performances, sufficient to fill the void? What about live concerts and the festival scene (which, in contrast to record sales, are thriving)? Here we will look at the different types of copyright that exist in music, and discuss how songwriters and other musicians can earn royalties from exploiting them. We will ask how these royalties are affected by a newly emerging music industry, one increasingly based around live performances rather than studio recordings.

Jim’s exclusive right to communicate his work to the public means that he can make money by having his song played on radio. His exclusive right to reproduce his musical work means that he can also make money if anyone wishes to record a cover of his song.

Jim’s permission is not needed for someone to cover his song, unlike for the exercise of other exclusive rights. The cover artist must still pay Jim royalties, but the permission is automatic because of a statutory licence – a right granted by the Copyright Act. It would be very hard for Jim to stop someone covering his song unless it was previously unreleased (because composers have the right to release their work first). He would need to prove to a court that the particular cover version would significantly lower the integrity and value of the musical work itself.

If someone legally downloads Jim’s song, he is entitled to both A. reproduction royalties (the work is reproduced in electronic form on the downloader’s computer), and B. public communication royalties (the download is considered electronic communication to a member of the public).

Reproduction royalties AMCOS

AMCOS! AMCOS stands for Australasian Mechanical Copyright Owners Society. Mechanical royalties are the royalties earned as a result of reproducing a musical work. Reproduction includes making physical or digital recordings of a musical work (or a ‘substantial’ part thereof), such as manufacturing CDs or making digital ringtones. AMCOS issues licences to anyone who wishes to exercise this right in a musical/lyrical work. It collects royalties on behalf of its member songwriters and distributes them accordingly, subtracting only its administration costs.

Public performance royalties APRA

Another way that songwriters earn royalties is by exploiting the public communication exclusive right. This includes broadcasts and electronic communications (e.g. Jim’s song being played on radio or aired on a television advertisement). Another exclusive right is public performance, so whenever Jim’s musical work is performed in public, again royalties are payable.

Whilst it is only songwriters who earn APRA fees from these live performances, that is precisely why copyright exists. It rewards the creative endeavours of individuals who have expressed their ideas in crafting music. bars, concert halls, cinemas, gyms, and schools.

In many cases, APRA issues ‘blanket’ licences based on a percentage of gross income. For example, a cinema pays APRA 0.462% of its gross box office receipts. APRA then looks at the list of films played and determines which musical works were communicated to the public, and therefore to whom the royalties must be paid.

Even if Jim performs his own original music live at a pub, he will receive royalties. The pub pays APRA fees because it is responsible for music being performed to its patrons (the public). Jim (like you) should make sure he is an APRA member, and submit an APRA return at the end of each live performance.

A publisher usually gives its signed songwriter an advance. Until this advance is recouped, the publisher is entitled to the songwriter’s royalties to put towards paying it off. But APRA fees are an exception. APRA pays at least 50% of royalties directly to the songwriter to keep. So starving songwriters who are unrecouped to their publishers can still earn a living.

Usually where copyright music is performed in public or communicated to the public, a licence from APRA (Australasian Performing Rights Association) is required. APRA collects fees from these licences and distributes them to the relevant copyright owners. Licences are required not only by radio and TV stations, but also by most businesses where music is played, such as shopping centres, live music venues, nightclubs,by gigging and submitting APRA returns.

So song writing can potentially be very lucrative. Provided you have not signed a bad deal with a publisher, record company or anyone else surrendering your rights, you can earn decent royalties from having your work downloaded, reproduced, broadcast, performed, played in public, recorded, etc.

For this reason, bands must be very clear about who has written each song. It must be clearly agreed on, documented and communicated to your publishers. Some collaborative, jam-orientated bands agree that all songs coming out of the jam room will be split evenly across band members. Some song writing duos, such as Lennon and McCartney, split everything 50/50. In other bands there is one songwriter and there is a mutual understanding that the other members do not own any copyright in the musical/lyrical works. Whatever the case, get things clear from the outset to avoid messy disputes down the track. In my experience…its better to have 20 percent of something than 100 percent of nothing…

Sound recordings PPCA

The Phonographic Performance Company of Australia (PPCA) issues licences for the broadcast and communication to the public of sound recordings and music videos. PPCA is overseen by record companies themselves, so naturally it fights hard to secure better licensing fees from parties such as radio broadcasters.

PPCA collects royalties and divides them amongst the relevant record companies, which then work out how to distribute royalties to their artists. Your entitlement will depend on your record deal. It may be that the record company keeps all or some of the royalties. It may be that you are entitled to it, but only after the record company has recouped its advances (this is a likely scenario).

The owners of copyright in sound recordings (made from 2005 onwards) are all the performers on the recording, plus whoever owns the master at the time of recording (often the record company). Each will own an equal share of the copyright, and all must consent to the granting of any licences. So if a cover band records Jim’s song, the cover band will actually own the copyright in their sound recording! (But Jim must of course be paid for the reproduction of his musical work).

What about non-songwriting band members? Can they only make money from CD sales, merchandise and gigs? Not necessarily. There is a type of copyright that they might be entitled to.

Sound recordings themselves also attract copyright protection. This is in addition to, and separate from, copyright in the musical/lyrical work being recorded. This is good news for musicians who perform on records. The law recognises their creative endeavour, i.e. their performance expressed and captured on record.

Recording contracts can also exclude you from owning the copyright in a sound recording! Many specify that the record company will own 100% of the copyright, rather than splitting it with the performers. Artists should try to negotiate for shared ownership of recordings at the time of signing with a label, although this can be difficult. Recording copyright can be a useful source of income, particularly for non-songwriting band members who do not receive musical work copyright royalties.

Exclusive rights for copyright in a sound recording include making copies of the recording and communicating the recording to the public (e.g. broadcasting). As with musical works, this usually means that licences are granted for a fee, so that the copyright owners are exploiting their asset in order to earn income.

Royalties arising from the public communication of sound recordings are valuable because (a) they can apply to non-songwriting band members; and (b) in today’s world where record sales are on the decline, they are a good way of generating income! Radio and TV are certainly not playing any less music, but it is important to realise that these royalties are much less valuable than those paid by APRA and AMCOS. One reason for this is the Commonwealth law which caps radio stations’ fees for broadcasting copyright recordings at 1% of the station’s gross income! This has been a controversial topic for decades, and is currently the subject of a High Court challenge ‘PPCA takes appeal to the High Court’

Owners of copyright recordings can also make money through having their recordings synchronised with films or advertisements, as discussed above. Licence fees can be generous, but will depend on the size and bargaining power of the artist. Again, the performers’ share of the income will usually go towards recouping the record company’s advances before they actually earn any profit.

There’s earning potential earning potential of having your musical/literary work or sound recording in which you own copyright sampled. The sampling DJ will need licences from the owners of copyright in both the sound recording, and the musical work if a ‘substantial’ portion of the song is used’..The Verve Bittersweet Symphony 50% to Andrew Loog OLDHAM.

Copyright royalties in today’s music industry

We have seen that income from copyright is based around records to a large extent, but, whilst songwriters do gain a lot from record sales and downloads, they also earn income from their musical works being used in ways unrelated to records – i.e. having their music broadcasted, sampled, adapted, printed, played in public places, synchronised in films and advertisements, and performed at gigs and concerts. These continue to be lucrative sources of income despite low record sales.

Non-songwriting musicians, on the other hand, do not earn royalties from musical works. They might own some copyright in sound recordings they performed on, but this is hard to negotiate for, and even if it is achieved, PPCA royalties are significantly less than those earned by songwriters.

With streaming services and file sharing and people less willing to pay for music, the financial interests of all musicians are hurt significantly by decreased record sales. Many people don’t join the dots here because there’s a flow on as many recording studios are closing with rising rents and the fact musicians cant afford to use them. We have new DIY ways to make music like protools. Although songwriters may have secondary income sources to fall back on.

But demand for music has not declined. The market has just shifted. Hard-working bands can earn exceptional income from touring and gigging. In contrast to times when concert tickets were cheaper than albums, today we see festival ticket prices exceeding $500 and selling out instantly. There is certainly money to be made in live music.

Of course certain types of artists benefit from the festival boom more than others. But the art of the studio album is far from dead. Live acts often sell great quantities of CDs and t shirts at their gigs. Peter Noble, the director of Bluesfest was recently quoted in a newspaper article as saying that tens of thousands of CDs are purchased at Bluesfest each year. These are recordings not only of bands who play at Bluesfest, but also of other artists that the organisers think the audience is likely to enjoy. Admittedly this is an older audience than say, the Meredith Festival. So perhaps it is a matter of the right bands and the right audiences finding each other.