If you’re a songwriter, it‘s important for you to learn as much as possible about music publishing. Whether you’ve signed a publishing deal, administer your own publishing, or work without any publishing entity, you need to ensure that you know how to claim all the royalties that are owed to you.
Signing a deal with a publisher
There are many obvious advantages to signing a deal with a music publisher: they can constantly, actively seek licensing opportunities for your music, on a full-time basis; they strive to get the most monetary mileage out of your songs, whether it’s through recording, live performance, or synchronization (or “synchs,” placement in commercials, TV shows, films, videogames, digital platforms, etc.); while doing so, they can negotiate fair market value for synch placements, and know what license fee a song should command in any given medium based on terms, use, and territory; they can arrange co-writing sessions with other songwriters, or participation in song camps, including some co-writers or camps that you might not be able to attain without them; and a publishing deal allows you to focus on making music, rather than having to do the labour-intensive business of exploiting your own songs.
Furthermore, music publishers can provide music-industry market intelligence to help develop a songwriter’s career. They can further that career by championing the songwriter – talking them up, getting them on panels, in showcases, included in articles, and so on. Publishers can track the writer’s income, a task likely too time-consuming for the writer to do on their own. A publisher can ensure that the writer’s songs are registered in every territory where they’re showing activity (e.g., being played on radio, performed live by other artists, etc.). A publisher can obtain, and submit to SOCAN, cue sheets when a writer’s song has been licensed for audio-visual use in a film, TV, or other screen production, whether domestically or internationally.
Working without a publisher
Singer-songwriter Alysha Brilla has taken the indie route, after spending time with a major publisher and deciding to do it herself.
“I’ve gotten some synchs and some licensing deals on my own,” says Brilla, now working on her fifth album. She adds that one of the advantages is autonomy. “I don’t have to ask anyone’s permission for anything. I can sign off on everything myself, and I get to solicit and approach people myself. There are pros and cons to it, but for me it’s been the better choice.”
Among the disadvantages of working without a publisher is the fact that the songwriter likely won’t be able to actively seek licensing opportunities for their music on a full-time basis. They’ll have to spend their own time and effort chasing those deals, which takes time away from writing songs. And to go it alone, the songwriter also needs to be able to negotiate effectively when licensing their music, in order to ensure that they’re fairly compensated for their work.
In Brilla’s case, she’s dealt and consulted with artists, managers, and other publishers, so she has a good handle on negotiations. “I have a good idea of what the range is, and all the different variables when it comes to licensing,” she says. “I’m never worried about not getting an adequate amount for my music because I don’t have a publisher: I always ask for what I think is competitive.”
The value that’s potentially generated by a song placement can be substantial – and if you’re a writer, being a novice negotiator can bite you in the butt, as singer-songwriter Donovan Woods discovered all too well when he initially self-published under his own Meant Well imprint.
“I was just writing songs on my own and I had very little understanding of anything,” says Woods, who recently signed with Concord Music Nashville, after spending three years at Warner Chappell Nashville. “I remember I licensed something to TSN to be used during the intro of a Grey Cup game for something like $104. I didn’t know what I was doing. I had no idea. I was kind of doing it alone.”
Starting your own publishing company
Woods says it can be an advantage to have your own publishing company in order to conduct business with a larger publisher. “When you have a co-publishing deal with a publisher, you own 50 percent of your publishing and 75 percent of the song,” says Woods. “You have to form your own publishing company to hold that publishing stake.”
“Having their own publishing company makes it easier for the songwriter to assign a publishing administrator, or a publisher,” says Michael McCarty, CEO of Kilometre Music Group, and former Chief Membership and Business Development Officer of SOCAN. “If the songwriter has an administrative deal with Publisher A, and their publishing reverts back to them when the deal expires, it makes it easier for them to newly assign the administration to Publisher B. And if the songwriter is earning significant money from publishing, then it could be tax-advantageous having half of that money flow through a business, splitting the income to pay less tax.”
“If your company is incorporated, your tax rates are only 12 percent,” explains Phil Goldband, a Managing Partner at Toronto-based Gold Entertainment Accountants. “Had you not incorporated, you’d be roughly at the 40 percent tax rate.”
But you have to ensure that your publishing company runs as an above-board business. “You’ve got to open up a separate bank account, and you’ve got to keep track of your expenses. Anything you pay on credit, you have to keep the invoices,” says Goldband. If you do start your own publishing company, you’ll also need to ensure that when you claim expenses, those expenses remain within the confines of business. For example, if your dog is your company mascot, don’t claim the food it takes to feed him as an expense. “If you get too aggressive, you’ll be double-taxed – both on the corporate and personal levels,” Goldband advises.
Goldband’s colleague, Oksana Bernatonis, says that if your songwriting income is fairly low, it might be prudent to wait before you take the step. “If you’re saving more than $3,000 to cover [the] costs [of incorporating the publishing company], then it’s worth it,” she says. She also says that in order to apply and receive certain large grants, being incorporated can sometimes give you an edge: “Some grants that people apply for require a corporation. To get $50K or $100K in grants, you have to incorporate.”
Your songwriting income will determine whether you’re ready to start your own incorporated publishing company. “If your songs are earning under a few thousand dollars a year, it doesn’t likely justify the costs of incorporation and maintenance of the company,” says entertainment lawyer Kurt Dahl. “There are a few scenarios that might indicate that the time is right. If you find yourself licensing music internationally, entering a sub-publishing deal with a foreign publisher, or being offered a co-publishing deal from a third-party publisher, the time is right to incorporate your own publishing entity.”
You don’t have to go the incorporation route: another alternative is being a sole proprietor.
“Sole proprietorship is the same as being self-employed,” says Bernatonis. “So instead of filing a corporate tax return, you would file just the regular personal tax return at a graduated rate. You’d have to report everything, so there is no tax deferral.” While there are no fees to establish your sole proprietorship, you’d also lose any potential tax breaks you’d receive by incorporating your music publishing company [such as tax deferral from one year to the next, in a high-earning year].
“And once you reach $30,000 in income, you have to pay HST and register for a business number with the Canadian Revenue Agency,” Bernatonis adds. “Royalties are usually zero-rated, so there’s no HST on royalties. But you still might want to register, because you can claim HST back on any expenses you’ve paid.”
Another big difference is that if legal issues pop up, you may have more protection if you’ve incorporated your company, and be more vulnerable as a sole proprietor.
Whatever path you choose, rest assured that SOCAN will be there to collect your royalties and ensure that you get paid.