The Basics of Forming A Music Publishing Company
The Basics of Forming a Music Publishing Company
Posted about 1 year ago. 1 helpful vote, Comments (0),
Written by: Barry Neil Shrum
Attorney licensed in Tennessee
In America, the industry of music publishing has its roots in New York's Tin Pan Alley. Since that time, it has grown into a worldwide industry. But the simple truth is, almost anyone can form a basic music publishing company with a little planning.
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Form a music publishing company
A business entity may take one of many forms: the most prominent are sole proprietorship, corporation (Subchapter C or S), partnership, limited liability company. That decision will, in part at least, determine what type of documentation you need to submit to the state in which your company’s principal place of business is located. One factor that weigh in favor of forming either a corporation or limited liability company is that these business entities offer a form of protection against personal liability (i.e., your house, car and other personal possessions)
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1. Check with your state to see what steps are required
In most states, the Secretary of State is the department that handles the formation of business entities or the registration of fictitious business names. If you choose to be a sole practitioner or partnership, chances are there is very little the state will require, other than perhaps the filing of a “D/B/A” or fictitious name form and a business license. On the other hand, if you select either a corporation or a limited liability company, you will be required to pay an annual filing fee and submit a form to the Secretary of State who will then assign you a control number. You should probably seek the services of an attorney to draft and file the appropriate documentation and advise you as to the business governance.
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2. File with the IRS for an EIN and file any additional local paperwork
Once you’ve met all the state requirements, you should obtain an employee identification number. This number is required to open a bank account in the name of the business entity. In addition, other filings may be required in your particular locality: in addition to a possible business license, as mentioned earlier, you may also be required to register the corporation or limited liability company with the Register of Deeds in the county in which you will be conducting business.
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3. Register with the Performance Rights Organizations
This step is unique to business entities involving music publishing. In order to “publish” music, you should register with the performance rights organizations (PRO’s) ASCAP, BMI and SESAC, at least for starters. Foreign registration may be required in certain circumstance, but that is a topic for another guide. For starters, just register with the three U.S. performance rights organizations. Each organization has a website (identified below) which contains all necessary
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applications and explanations. Basically, you will need to have a work that you anticipate will be performed in the near future and may be ask to identify that work. You will need to select three names for each PRO in order of preference. These should be different for each organization. Then, submit the application along with the fee.
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4. Start building your catalog
A music publisher’s catalog is its major asset. Some catalogs are valued at billions of dollars, depending on numerous rating factors. As a start up company, your goal will be to enter into agreements with songwriters in order to build your catalog. One type of agreement used to accomplish this is know as an Exclusive Songwriting Agreement, in which you as the publisher pay the songwriter a salary to produce a certain number of songs per year, the copyright in which is assigned to you. Another type of agreement is the Single Song Agreement, which basically accomplishes the same feat on a song by song basis. You might also consider purchasing an existing catalog, which is a much faster way to build a repertoire.
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5. Administer your songs
Once you have registered with the PROs, each song that belongs to you for which you anticipate a performance should be cleared with the PRO to which the songwriter belongs. For example, if writer “A” writes a song and is a member to ASCAP, and you have obtained the rights to that song, and that song is about to receive significant airplay on a local radio station, then you should file a Clearance Form with ASCAP identifying the publishing splits, i.e., how much belongs to the songwriter and how much belongs to the publisher. ASCAP will then use that form to track performances and will compensate each accordingly. As a music publishing, you are also responsible for administering the songs, i.e. making sure the copyrights have been registered, making certain the royalties have been properly accounted for, and accounting to and paying the writers.
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6. License your songs
Another source of income for music publishers is licensing, whether is be mechanical licensing, synchronization licensing, or other more specific types of licensing, such as ring tones for example. When things start going well for you, you will also want to seek out and enter into agreements with foreign subpublishers to exploit your music worldwide. Your job as a publisher is to find these equitable opportunities and bring in the cash for you and your writers.
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7. Consider hiring an agent such as Harry Fox
A major source of income for music publishers is mechanical royalties, royalties paid for the mechanical reproduction of music. The Harry Fox Agency is the premier agent for mechanical licensing in the US. Harry Fox charges a fee to collect and pay mechanical royalties on your songs.
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8. Consider hiring an entertainment attorney.
No matter how self-sufficient you are, you are probably better off in the hands of an experienced entertainment attorney. He or she can assist you in developing agreements to be used for various purposes, and in making certain that your business entity is formed with its purpose in mind. Make sure that the attorney you select is knowledgable in the area of entertainment law and is not someone who merely dabbles in the area.
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Additional Resources
You can find additional information about music publishing at my blog, Law on the Row, in the "Songwriter's Corner." Also, each of the PRO's have sections that detail the music publishing business. If you're really a gluton for punishment, you can buy the book Kohn on Music Licensing, which will give you in great detail much of what you need to know about licensing issues.
Law on the Row (Songwriter's Corner)
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