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Lee Obringer

One might wonder where,exactly all that money is coming from.How much does the artist make from CD sales? Bars,clubs and coffee houses across the country are overflowing with fresh,talented musicians who want to join the ranks of these performers.But really,what are the chances of it to stardom and retiring from royalties? Making money in the music industry is tricky.recording contracts are notoriously complicated,and every big recording artist should have a legal representitive to translate and negotiate these deals.In this article,we'll look into the world of music royalties and see how is actually made in this industry.
Who gets what 
The first thing we need to do is distinguish between recording-artists royalties and songwriters/publisher royalties. In The Internet Debacle-An Alternative View, Janis Ian, a singer/songwriter states:if we're not songwriters,and not hugely successful commercially,we [recording artists] don't make a dime off our recordings. She's referring to the fact that artists and songwriters do not earn royalties in the same way.Recording artists earn royalties from the sale of their recordings on CD,cassette tapes, and in the good old days,vinyl.Recording artists don't earn royalties on public performances (when their music is played on the radio and TV or in bars and resturants). This is a long-standing practice that's based on Copyright law and the fact that when radio play the songs,more CDs and tapes are sold.Songwriters and publishers,however, do earn royalties in these instances-as well as a small portion of the recording sales. The only current instance in which artists earn royalties for "public performances" is when the song is played on the digital arena(like webcast or on satellite radio),is non-interactive(meaning the listner doesn't pick and choose song to hear), and the listner is a subscriber to the service.
  Song Copyrights
  Copyrights are very important because they identify who actually owns the song and song recording and who gets to make money from it.When songwriters write songs, the songs are automatically copyrighted as soon as they are in a tangible form (like a recording, or fixed as printed sheet music).In order to sue for copyright infringement, however, the song should be registered with the copyright at the Library of Congress. Registration should always be done before the song is set loose in the public domain (available to hear on a Web site, etc.). As copyright owner, you have the right to reproduce the copyrighted song, to create derivatives or variations of the song, to distribute it to the public, to perform it publicly, and to display it publicly. (Although we're not sure how you "display" a song.) If you have recorded the song with yourself as the artist, then you also hold the sound recording copyright (a different animal entirely) and have the right to publicly play or "perform" that recording by means of a digital audio transmission.
  Copyrights license
  By giving someone a license, you are giving him permission to use your song. Once the song has been recorded and publicly distributed, however, compulsory licensing kicks in and everyone who wants to cover (record) the song can do so without your specific permission. They are required by law to pay you a statutory royalty rate, however, as well as notify you that they're going to release it, and send you monthly royalty statements. They are NOT allowed to make any changes to the words or melody or change the "fundamental character of the song" without the copyright owner's approval. If the song is changed, it is considered a "derivative work." Record companies rarely use compulsory licensing because they don't want to have to provide monthly royalty statements. Instead, they go to the copyright owner and get a direct license so they can negotiate the terms more freely.
  Shared copyrights
  If you write the lyrics to a song and your buddy writes the music, then you each own 50% of the song. You don't own all of the lyrics and your buddy doesn't own all of the music -- you each own 50% of the total song, music, lyrics and all. This means you can't give someone exclusive rights to the song on your own if you have a fight with your buddy. And, if you make any money on the song, half of that money must go to your partner. Other forms of shared copyrights come into play when you or your publisher (typically you give control of the song's copyright to the publisher) sign over a portion of the copyright to another publisher for a sampled composition -- a song that uses a portion of another song.
  Transfer of copyrights
  In most music publishing agreements,there is a requirement that the songwriter assign the copyright of the written song to the publisher. This is known as a "transfer of copyright," or simply "assignment." This, in effect, transfers ownership of the song to the publisher in exchange for the payment to the songwriter of royalties in amounts and time intervals agreed upon in the publishing contract. Typically, song copyrights are held by the music publishers, while sound recordings are controlled by the record companies.
  Major players
  The major players in the recording industry are:
  • Songwriter - The songwriter is the person (or people) who write the lyrics and melody for songs.
  • Publisher - The publisher is the person (or company) who works with the songwriters to promote their songs.
  • Publishers usually get either partial or total ownership of the song copyright, known as "assignment" or "transfer" of the copyright. They pitch the songs to record labels, television or movie producers, or anyone else who may be interested in it. They then license the rights to use the song and charge fees. Those fees are typically split 50/50 with the songwriter.

  • Performer - Anyone who licenses the song in order to publicly perform it is the performer, or performing artist. The performer doesn't have control of the song (it's controlled by the songwriter or publisher) or the recording (it's controlled by the record company).

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