Common Misconceptions About the Music Business
After speaking with numerous artists, I’ve identified several recurring misconceptions about the music business. Below, I’ve clarified these misconceptions to provide valuable insights.
Your PRO Collects All Your Royalties
Many creators mistakenly believe their Performing Rights Organization (PRO) collects all types of royalties. In reality, mechanical royalties are collected separately from performance royalties. While some international Collective Management Organizations (CMOs) manage both types, U.S.-based PROs like ASCAP and BMI do not handle mechanical royalties.
Mechanical royalties are collected by agencies such as The Harry Fox Agency (HFA), Music Reports, and The Mechanical Licensing Collective (The MLC). Note that some of these agencies require songwriters to have a publisher to collect their royalties, which can cause independent creators to miss out on earnings. Additionally, The MLC, mandated by law to license and collect mechanical royalties from digital service providers (DSPs), operates only within the U.S. Without an administrative partner, songwriters might lose out on these earnings.
Labels and Publishers Serve Different Functions
There’s a misconception that labels and publishers perform the same roles. While labels offer crucial services for recording, they do not handle publishing administration and collection. Labels and distributors focus on the recording side, whereas publishers manage the composition.
Having both a label and a publisher is ideal to ensure all revenue streams are collected. Sometimes, labels or distributors may offer a publishing agreement alongside the recording agreement, acting as publishers. Although this can be beneficial, be cautious about granting both rights to the same entity.
Your Royalties Will Not Automatically Reach You
Many creators are unaware of unallocated royalties, often referred to as “black box royalties.” These are unclaimed royalties held by collection societies, waiting to be claimed by their rightful owners. After 2-3 years, these royalties are redistributed to top earners based on market share. This means artists like Drake could end up with your unclaimed royalties.
This realization often prompts creators to organize their music publishing promptly. It’s crucial to claim your hard-earned royalties rather than allowing them to go to others who didn’t contribute to the work.
Global Registration is Not Handled by Your Collection Society Alone
While affiliating with your home territory’s collection society is essential, relying solely on them for global registration can be a mistake. Some societies have reciprocal agreements, but this doesn’t guarantee global registration and collection of international royalties.
Collection societies prioritize their local membership, and each has different rules and requirements. To ensure comprehensive global registration and access to all royalty revenue streams, having a publisher is beneficial.
These misconceptions highlight the need for better educational resources about the music business. At Woolyvard, we’re proud of the resources we’ve developed but recognize there’s still much work to do in demystifying music publishing and transforming the industry for future creators.
