What is the difference between record deals and music publishing deals?
As an entertainment and music lawyer, I'm commonly asked by songwriters, music artists, and bands about the misconceptions or differences between music publishing deals and record label agreements. In this AVVO guide, I will address the common misunderstandings and differences between the two.
The Two Copyrights, the Song & the Sound RecordingThe first type of copyright is the copyright of the song itself. This copyright includes the lyrics and main melody. The copyright of the song is owned by the songwriters or creators and any music publishers of the song. The copyright of the song is usually assigned to one or more music publishers prior to the song being recorded by an artist or band with the goal of getting the song recorded and released by a music artist or band in order to generate "publishing" revenues from the song.
The second type of copyright is the copyright of any sound recordings of the song. The copyrights of sound recordings of a song are also often referred to as masters or master recordings. The copyright of any sound recordings of a song can be owned by a record label, any creators of the sound recordings, including artists or producers, or can be owned by a music publisher. Music publishers however, typically only create and own the copyrights of demos or demonstration sound recordings of the song which they use to pitch the song to labels and artists. Record labels or artists and bands (or their producers) typically own the sound recordings that are released to the public and that you hear on Spotify, the radio, iTunes or other digital downloads, film and television, and more.
The two copyrights of the song and the sound recording are distinct and different from each other, however the right to create a sound recording of the song must be granted by the owner of the copyright of the song, which is done in the form of a license. Once the initial license is granted and the song is recorded and released however, any other party who wishes to record the song can easily get a license to record and release the song without the permission of the song's copyright owner. This is referred to as a compulsory license.
The Role of Music Publishers & Publishing DealsA music publisher or music publishing company will sign agreements with songwriters in order to be able to exploit the future songs that the songwriters create or have already created. The music publisher typically pays the songwriters an advance that is recoverable from future earnings or royalties of the songwriter's songs, and in exchange owns or licenses the copyright in the song. The music publishers then attempt to generate revenues off of that song by getting the song recorded by music artists and used or manufactured for the sale or distribution of the artist's album or singles, potential movie or television shows, advertisements, etc. In doing so, they issue licenses to allow those parties to record, use, and release for sale or broadcast the sound recordings or masters of the song.
In turn, the music publishers and songwriters are paid anytime the song is used by outside parties. These payments include 1. a royalty for each album or download of the song sold by record labels or artists who record and release the song; 2. a royalty for any public broadcasts or performance of the song on radio, at live events, etc., which are monitored, tracked, and paid by performing rights organizations such as ASCAP, BMI, or SESAC; 3. a royalty for any stream of the song by a streaming company such as Spotify or Apple Music, etc.; 4. a fee and/or a royalty for the use of the song in any movie, film, television shows, advertisements, video games, etc., also known as synchronization or sync licensing; 5. a fee and/or a royalty from the licensing, use, or exploitation of the song through any other mediums by outside parties.
In addition to pitching the songs to artists, labels, and record producers, and issuing the necessary licenses to generate revenues from the song, music publishers also ensure that the songs are protected by copyright law, properly copyrighted and registered with the U.S. Copyright Office, etc. In addition, they see to it that the proper royalties are being collected and paid on time to the publisher and its songwriters, as well as attempting to prevent or collect appropriate payments or damages from any unauthorized uses or infringement of the song. Finally, they operate on the creative side by working alongside their songwriters and lyricists to setup co-writes and ensure that the best songs are being created.
The Role of Record Labels & Label DealsAt a basic level, in terms of the creation of music, a record label signs artists and then funds and assists artists in the creation of sound recordings or masters of songs performed by the artist to be manufactured and sold on albums, distributed for digital download, streaming, radio play, etc. In doing so, they typically own the masters or sound recordings. The label then receives revenues for the sale of each album and digital download that include the sound records, as well as royalties or revenues from streaming services for the use or streams of the sound recordings, and royalties or fees from the use of the sound recordings in any movies, films, televisions, advertisements, etc. The label often pays the artist an advance against future royalties, including paying for the costs to record, the producer's advances, etc. They then pay the artist a royalty or percentage of the revenues generated after key deductions for costs to manufacture, distribute, market, and more.
On the creative side, they often assist the artist in finding and selecting potential songs to record, introductions and finding and selecting the right record producers to work with and produce their albums or projects, and work with music publishers to setup co-writes between songwriters and artists in the event the artist is also a songwriter. They also pay for, create, or assist in creating the marketing materials and creative assets and content needed for the artist, such as photos, music videos, etc.
Similarities or Overlaps of Record Labels & Music PublishersMusic publishers and record labels often both are involved or take part in what's commonly known as "artist development" on the creative side, and on the business or legal side, variations on so-called "360 deals".
"Artist development" on the creative side often involves assisting the artist to learn to write and perform songs, and learn how express themselves creatively while maintaining a commercial or marketable musical "appeal" to as large an audience as the artist wishes to attempt to reach. This also includes creating and developing the artist's brand, image, and marketing materials, etc. While labels still fund and assist with this aspect of their artist's careers, there's been a significant decline in artist development on the label side, and often the labels expect a large portion of this to be accomplished prior to a record deal being offered. Music publishers will take on this responsibility for artists early on in an artist's career if a music publishing deal is in place. If not, often this falls to an artist's manager, or many times, the artist themselves, at least until they have a manager, or a publishing or label deal.
A "360 deal" is a term used to refer to a deal where a record label or music publisher participates or takes a percentage of the artist's revenues from touring, merchandise, and any other income or revenue streams that are not directly from music publishing or album sales. This is usually justified due to the amount of resources, opportunities, money and investment artists often receive or need from both record labels and music publishers, and on the label side at least, the decline in digital download and physical record or album sales. Publishers are also now often participating in some or all additional revenue streams of their artists who are also songwriters, due to the decline in artist development being done by labels early on in an artist's career, as well as most artist's need for development, and the risks and costs of artist development. Typically however, the percentages and revenue streams music publishers participate in are less the amount that labels take part in.