Ep. 42: How To Collect All Your Music Royalties

​[00:00:00] Stephen: Welcome to Secrets from the Scene. My name is Stephen Helvig and I'm your host. If this is your first time checking out the podcast, Thanks for joining me. I am excited to have you here. This podcast is aimed to help local musicians. Now, I'm a music producer here in the Twin Cities, and this podcast is pretty much local based. All the guests are from Minnesota, the Twin Cities. the services are the same for the most part. However, I know that there are listeners, some of you in other states, even other countries, [00:01:00] and pretty much all the information does. apply anywhere. However, today's episode is going to be a little bit based on us artists, just because when we talk about royalties, it does depend on what country you're in for how to collect them. But I'm getting ahead of myself a little bit. Thank you so much for checking this out. If you're a repeat listener, thanks for coming back. today's episode, we're going back to a I have not done a solo episode since episode eight, I think. honestly they're just a lot harder to do, talking to a camera versus talking to another human being. However, I have so much information that I just know that this one needs to be done solo. So we can go through all of this tactical information. Today's episode is how to claim all of your royalties. First things first, I made a guide for this episode and I would highly recommend going and grabbing that, when you are getting ready to register your stuff, you can listen to through this I'm not going to do all walk through stuff in audio only version. I [00:02:00] know some of you are watching on YouTube and I could have done screen sharing and stuff like that, but because so many people are going to be just streaming, the way I'm going to do this episode is I'm going to talk. through the process and kind of the overall, questions and concerns and complexities of getting this set up right from the stuff that you have to decide even before you start entering in your song information. And then when it comes to the actual entering in of the information, I've made individual walkthrough videos for Each of those steps and they're all linked in the guide. So if you want to listen and follow along with the guide at the same time, you can go grab your free guide at secretsfromthescene.com/42. Sign up, the guide is free. It'll have everything we talk about in this episode plus all those extra videos, the walkthrough tutorials, which will make things super easy. this is pretty much the guide that I would have loved to have gotten when I was first trying to figure this out. So, I'm excited to give this away and help people out., [00:03:00] a couple things before we dive into the whole episode one, just a disclaimer, I'm not a music attorney. I did my absolute best doing all the research on this. but if you have a really complex situation, maybe you're coming out of an old deal, there's strings attached, there's weird problems, then, definitely consult a music attorney. My advice is aimed at, Independent musicians that are getting their first registrations done. They don't know where to begin. This is really gonna be awesome for you, if that's your case, or people that have definitely released music and they've, they're collecting royalties, but they know that maybe there's a few things missing and they want to be a little bit more comprehensive on their next release or to go back and maybe fix some registrations. We can talk about some of that, but overall, just know that I'm notthe definitive expert in this area. So, if you require that kind of help, go talk to a music attorney. And also just keep in mind that this is really for us based artists. If you're in a different country, there's different collection societies. There are [00:04:00] different laws. There's different ways of doing this. A A lot of this would be similar, but not exactly the same. So just keep that in mind. Okay. How to claim all of your royalties. I'll say that there's a long answer to that question and there's a short answer to that question. And I think it's worth taking a second to talk about the short answer, which is simply that if you are more along the lines of a hobbyist and. want to collect royalties that come in, but aren't necessarily concerned with collecting every single potential penny that might be out there for you. there is an easy way to do it, which is simply to. Use a distributor like CD Baby, a distributor that has additional collection options. There are a few out there. CD Baby does it. TuneCore does it. I know that there's a few others, but CD Baby is the one that I recommend. It's also the distributor that I have a guide for. And you'll see that in this walkthrough guide, you'll see a tutorial about how to upload your music through CD Baby. They [00:05:00] offer a service called boost. That's going to collect some additional royalties beyond the CD Baby. Just the streaming royalties. so if you sign up with a distributor like CD Baby, opt into their boost option, and then create a writer's account with a PRO like BMI, and register your songs there, just with a writer's account with BMI is all you would need. You can claim both halves in your publishing. you're done. You do those two things, and you're going to collect Most all of your royalties. And if you're not expecting a large amount of revenue, all the additional time for getting those extra royalties that you would be missing out on may not be worth it. So when I've had this conversation with clients in the past that, you know, they're doing a passion project, they would be happy if they got a thousand streams, 2000 streams, it may not be worth all the extra time of trying to get every last little potential penny out of some of these other places we're going to talk about. Cause the two things that I just mentioned there in the easy method will collect the majority of [00:06:00] most of your average kind of revenue that's going to come from streaming. Your distributor collects pretty much all of that. And, if you landed some sort of sync placement, your PRO collects that. So, you're pretty safe with that and it's the easiest method. However, if you want to go that extra mile, you want to understand the big picture. I applaud you to get all of this in order and we're going to walk through all of that. so let's get to the longer, Second answer at this point. Let's take a step back and think about the overview. There's basically four things that you're going to need to cover. you're going to need to have a distributor. I recommend using CD baby. Most of your streaming income is the recording revenue royalties, and that will be collected by your distributor. Then you're going to need a writer's account with either BMI or ASCAP. I recommend BMI, as I said earlier, if you're not affiliated with one, if you've already signed up with one, then just keep that one. They are basically the same. Just as a side, there's also SESAC that people will often bring up. So if you were wondering, like, what about SESAC? But [00:07:00] SESAC is invite only, so it's either going to be BMI or ASCAP. The third thing is you need a membership with SongTrust. There is a one time 100 signup fee for their collection and administration services. You can also use SongTrust for YouTube monetization, which is nice. And then the fourth thing is, to be a registrant and have a membership with SoundExchange Direct. I'm going to go through all four of those things in more detail. And like I said in the guide, there are walkthrough videos for setting up those accounts and all that. But basically that's it. There's those are your four things. However, before you actually start entering in those song details, there's a lot of stuff you have to think about. And I think this is why royalties get kind of complicated. I was doing the research and putting the guide together and doing all that kind of stuff. And I was kind of asking myself, like, Why is this so hard? You know, I consider myself of average intelligence and I've been doing this a long time yet. There was still like, Oh man, is it this or that? still things that I was getting confused about when I was putting this together. I think part of it is that. [00:08:00] we often don't keep these sort of royalty things top of mind. they come up when you're ready to release music again. And sometimes there can be long gaps between releases. And so you just forget what you might've learned on the last time that you did it. But also I think some of it comes down to that royalties get really complicated when you're dealing with multiple people. You know, if you're a solo singer, songwriter, they are much more straightforward. However, when you have a band or a collaboration of any sort, then you have to figure out who owns what that's step number one of getting all your royalties and ownership splits are.they can be complicated or they can be uncomfortable to discuss if it hasn't been transparent or discussed upfront, but without doing that, you're really, you can't even get your royalties done. probably guess that to some extent, this is what's holding up a lot of people of actually getting things all the way registered is simply because they haven't Done the necessary paperwork to [00:09:00] figure out ownership splits. So let's talk about that first. If you have multiple people involved in a project, you have to sit down and discuss ownership and how you'd like to split things up. There is no right or wrong way to do this, but it needs to be sorted out, agreed on and documented before you can properly get your songs registered. And the first part of this is you have to understand that there are two copyrights involved in a recorded song, one for the underlying song or the composition and one for the recording or the master. So those terms are interchangeable. You have the composition song on one side, one copyright, and then you have the sound recording or master as the other side of the copyright. some people will immediately ask why are there two different copyrights for a song? There are multiple reasons, but one of the easiest ones to comprehend right away is that you can have a songwriter who And then you can have somebody else that makes a recording of it. That's not the songwriter. This happens in the music industry a lot. the person who writes the song has certain [00:10:00] royalties coming to them. And then the person who records it and owns the master and goes out and Marcus it and is the artist behind it has certain royalties coming to them. There are a lot of different ways that can play out, but. It's just important to understand that there are two distinct copyrights. for a lot of indie musicians, they're holding on to both copyrights. They own the song and they own the master, Sometimes that's not the case and things do get a lot more complicated. If it isn't the case, you can make a simple document yourself, or you can use a website like CoSynd. I've got a link to CoSynd in my guide to create splits for the composition and the master, but you have to think about who owns the song and how is that going to be split? And then who owns the master and how is that going to split? Okay. So you might be asking, well, how should we split up royalties? there are basically two schools of thought here. Everyone splits up everything equally or a principal songwriter slash band leader takes control. again, no right or wrong way to do this, [00:11:00] but you have to really think through this, proponents of the let's split everything equally. Camp would say, there's better health and longevity. If everybody involved in this project is just getting an equal cut of all the royalties. And I see that logic for sure. it is certainly the easiest way to go about things. And I think you can point to If everybody's making the same amount of money, there's probably better odds that everybody stays together in this thing. As money starts coming in. However, if not everyone is contributing the same amount of time and energy and work to this project, that starts to get hard. on the other side, you have Any number of different arrangements, I, you know, I pointed out like a principal songwriter taking control, this is where you could have songwriters taking ownership of the composition of the song, and then the band splitting the master or songwriters taking that and a label taking the master or splitting the master with the band or. an infinite amount of combinations over on this side. It gets a lot more complicated, so you [00:12:00] have to really understand where those royalties come from. If you are just collecting on the composition side or just collecting on the master side, understanding that not every use of a song generates royalties for both sides. Some uses are only going to generate money for the song side and some uses are only going to generate money for the master side. So if you're going into one of those deals, You have to understand where that money comes from before you agree to that, which is why splitting everything equally is a lot more simple, but there are good reasons to not do it that way. And that might be more of what you're looking for. Again, I can't tell you how to do this, but I can point you to a couple conversations that are really interesting. to listen to, if you're trying to figure out how to do this with your band, in my guide, there's two links, but essentially. You know, there's just like the pros and cons of everybody splitting things equally pro being that there's longevity con being that if not everybody's doing an equal amount of work, that can [00:13:00] lead to some resentment longterm, especially. But the other thing to keep in mind is that there's a lot of potential different revenue sources from just having a successful group in general. So if You get to the point where you're a touring act. There are a lot of other ways to make money from now your brand versus just the music, outside of royalty collections, for instance, you know, somebody might, be able to use social media to sell courses or lessons or any number of different things. there's so much things that you can sell and ways to monetize your brand that don't involve music royalties. And so just getting to the point of being a successful group could lead to a lot of other income streams that could be good for everybody. A couple of interesting conversations to listen through, if you want to dive into the background philosophy of how some people do this. Now set it up however you want, and you can always switch it on your next release. this doesn't have to be, etched in stone for you forever. however, It is going to be, what you agree [00:14:00] to for this particular registration. When you lay this out and get to the steps of actually entering in this information. [00:15:00] [00:16:00] back to the topic of where royalties come from. As you think about this, I don't know. Did put together a royalty flow chart, basically showing what royalties come from the master side, the master copyright, and then what royalties come from the composition side. it's in the guide. It's super helpful to look at, basically master royalties include recording revenue, which is most of the revenue that's generated when a song streams on. Apple, Spotify, YouTube music, and on social media. Master royalties also include digital performance royalties. These are generated from non interactive streaming places like I Heart Radio and Pandora, Sirius XM, Satellite Radio. On the composition side, those royalties include public performance royalties. This is generated from [00:17:00] public broadcasts. So think traditional radio, TV, film, ads, music played in live venues. and there's a tiny fraction generated from private streaming on this too. The other one is mechanical royalties, and this is generated every time the composition is reproduced. This happens with streaming, again, a smaller percentage on a private stream. But traditionally, this was from physical reproduction of a product. So this was, Definitely a bigger thing at play for major labels in the time of selling CDs and vinyl and that sort of thing. If you're independent, those sales are probably coming directly through your merch. but yeah, the royalty flow chart, just wrapping your head around where some of these royalties come from, because there's some oddities here. Like when a song is played on the radio, let's say you got a big radio hit. songwriters are paid, but people who own the master are not in the United States. Kind of a strange thing. conversely, if it's played a lot on satellite radio, then artists [00:18:00] and Sound recording owners are paid, but song writers are not. Again, for indie artists, the songwriter and the sound recording owner might be the same person. In the cases where not everybody's splitting everything equal, you'd have to think about,got a major sync on a TV show. And now the one or two songwriters that are registered to this are getting big backend royalties and the rest of the band isn't. How's that going to play out? I think as long as everybody understands that ahead of time, then It's likely to play out just fine. But if everybody's caught by surprise when that happens, then there can be some conflict. So take a look at the royalty flow chart and just start understanding. And you can reference it anytime you need to understand where some of these royalties are coming from. the next thing to do before you can start registering royalties is create your accounts. for solo artists, you can just create one account with each one of those organizations and you're done. It's easy. With bands you need to think this through a little bit. Okay, so every songwriter Needs their own writer account with the [00:19:00] pro. I also recommend that each songwriter creates their own SongTrust account simply because If that songwriter has a second band, a second project, leaves the band, any of those things, then they still just have their own individual account for registering songs. All of their songs are in one nice place. It is a little more expensive for every single songwriter in a band to set up a SongTrust account, but over the long run, I think it's the smarter play. There are some ways that you can create like a band account with SongTrust, but if there's multiple songwriters, you're still paying a hundred dollars per songwriter regardless. more on that later, but for now, just know that I recommend that each songwriter creates their own SongTrust account for your distributor account. If you use CD baby, you have to share an account. So I think you should set that up under like a shared email, a band email probably so that everyone has access. And then for your sound exchange account, you have the option of creating individual accounts or using a shared account that claims everything into just one account and then you [00:20:00] manually distribute it. So royalties owed to songwriters will be paid and distributed based on your song splits that you established first, those splits get entered as song's registration. So if you're registering it with SongTrust, you're entering in those splits. That's why you have to have those done before we even get to that point. And then based on those splits, SongTrust is paying out those writers based on those splits. Royalties owed to master owners will be collected in your distributor account, which would be CD baby if you're using them and then sound exchange. So if you choose to use one band account for sound exchange, then both CD baby and sound exchange would be collecting for the entire band. And then those royalties would just be split up manually according to your master or sound recording splits that you set up. So you can also choose to create a band account with SongTrust that would allow you to keep all your registrations in one central place. Then you could invite individual songwriters via SongTrust's access feature. doing this. gives you [00:21:00] the advantage of having one account that you would see all of your songs in the band registered in together, but it's not any cheaper. So, I recommend just setting up individual accounts for SongTrust and following the steps of linking all the accounts and,keeping it there. But just know SongTrust does have something called access that you can use to basically share access to each other's registrations. One of the big questions that I get when it comes to setting up accounts and getting things started is, Hey, we want to register our songs under our LLC, or we want to register it under this fictitious label name or any number of things where, you know, this essence of using a company to, do the registrations. I think there's a fair amount of confusion around this point when it comes to registering songs, but generally speaking, bands create an LLC for Tax purposes, because an LLC would allow you to open a bank account under your band name. That's just convenient for accepting payments, paying for and tracking expenses and then distributing proceeds. With an LLC, you [00:22:00] can file your band's taxes under the LLC rather than one person's personal return. So if you're making decent money, it's probably worth doing. But when it comes to registering your songs, there's less of a reason to use an LLC. for your PRO and SongTrust accounts, you're signing up as a singular writer, not an entity. Each songwriter has their own account, like I've said. For your distributor and SoundExchange accounts, stuff that's on the master side, you do have the option of these shared accounts, and I think using a band email and linking your band's shared bank account all makes perfect sense. But other than that, there's really not any need to use an LLC for the sake of song registrations. Remember, ownership is dictated by the song splits that you've already done. It doesn't have anything to do with this LLC. All that being said, going back the disclaimer, I'm not your tax or legal advisor. So there might be some other reasons people want to use an LLC to do this. And if that's you, then be my guest, but, talk to somebody that knows more about it than [00:23:00] me. At this point, you should have your song ownership decided. You should have accounts created, Some of these accounts take a day or two to like fully get set up. For instance, if you just signed up with BMI, it'll take 24 to 48 hours before you'll get your full account established. each of these accounts are going to ask for ID verification, tax information, all kinds of stuff. So I recommend getting the account set up and created a day or two before even bothering with song registrations. Once you've got all that done. Now you can actually start registering songs. Now, I'm not going to walk you through how to do every part of it. I'm just going to give you the top level and then you can follow the guide and the walkthrough videos once you're ready to do that. First thing is choosing that distributor. I recommend CD Baby. That gets you uploaded and that's going to claim your recording revenue royalties, which is the bulk of royalties for most independent artists. If you're not sure who to use, I always recommend CD baby. I've got a nice walkthrough tutorial for them. It'll make the process very easy. The second [00:24:00] thing is you want to register your music with SongTrust. They are going to collect your public performance royalties and your mechanical royalties on your behalf. Again, you have to already set up your writer's account before you can do this. And I also think you should wait for the song to be released before you do this registration process, which step one is get the distributor out. Wait for that to come out. You can be out, you're not going to miss out on anything. Once it's been out for a couple weeks, then go to SongTrust and do this registration. SongTrust will send your info to your PRO and all the agencies collecting mechanical royalties like the MLC, the Mechanical Licensing Collective. If there are multiple writers on the registration, All the writers have to be added to the registration to ensure it's a hundred percent accurate and complete. There are multiple ways for this to happen. I think it's really boring on a podcast to walk you through all of that. So I'm gonna skip it, but it's in the guide and there's two different videos. One, if you're a solo singer songwriter, and then one if you're registering multiple songwriters, The third step is to then register your music with sound exchange. They collect your digital performance royalties. Again, I'm not going to walk you through how to do it in a podcast, super boring. You can go get the [00:25:00] guide and watch the YouTube walkthrough tutorial videos where I answer every single question of creating the account and how to register and what it all means. All right, let's just recap quick. So big picture, Is there is a quick way to do this, which is simply to use a distributors, extra publishing features if they offer them. So CD baby calls their offer boost. And with that, they collect some of these extra royalties, so that you don't have to use. Go to sound exchange directly. You don't have to go to SongTrust directly. You can just go to CD baby, opt into boost, sign up as a writer with BMI. You're done. That's the fast way. after listening to all of this, if you're like, yeah, I don't care. I'm just going to do it that way. I don't blame you. because again, if you don't think your royalties are going to be, in the thousands or something, you know, then, maybe it's not worth the extra time nothing wrong with that. You will be collecting most of it if you do it the easy way. However, if you want to do all of it, then go get this guide and it'll walk you through all of those steps. And then you can feel good that you [00:26:00] know how the whole thing works, but also are collecting every Royalty, you can. The most important thing is to make sure that you have your ownership splits wrote down somewhere you can use CoSynd or you can just create a simple document of your own But decide who owns the song who owns the master if you're not sure how to split that up I do have a couple really interesting kind of conversations that will get you thinking about the pros and cons of Splitting up ownership. they're linked in the guide. The next big thing is to create those accounts They do take some thought. So set that aside separately when you're getting this thing set up. Plus you're going to need a valid ID. You're going to need your tax information ready, and you're going to need a couple of days for them to fully get set up and created so that you have all the information you need when you actually start registering your songs. And then when it comes to the final thing, registering your songs. The big one is your distributor, which you have to pretty much use anyways to release your music anywhere. And theSongTrustst and then sound exchange. And you do those three things and you're all good to go. All right. [00:27:00] I think we did it. I know this was a really tactical episode, but I wanted it to be that way. And I hope that this is helpful. I definitely recommend to go get the guide. It's free and it'll be a lot easier to digest this episode with that. secretsfromthescene.com/42. The link will be in the show notes. Go check it out. if you have any questions. Feel free to shoot me an email and I'll try to help if I can, or I'll update the guide with maybe like a FAQ section if I'm getting a lot of the same question and just make that more useful for everybody in the future that gets it. Thank you so much for listening. I hope this was helpful. If it was, please consider subscribing on YouTube, following on Spotify, leaving a review on Apple podcasts, whatever you can do. but most importantly, just sharing it with a friend that you think this would also help until next time. We'll see you. [00:28:00]