Making Money With Your Music in New Media

By: Deborah Hrbek

September 2009

(c) 2009 Hrbek Law. All Rights Reserved.

The music industry is changing – and while sentimentalists, major labels and record stores may be less than pleased, there is a silver lining. Never have there been more opportunities for independent artists and independent labels to get their music heard. Never have there been more there been more outlets and revenue streams for independent and unsigned artists. The ascendancy of the Internet and other new media as platforms for the distribution of music has led to, for musicians, an unprecedented accessibility to the marketplace.

1. Selling your CD online (CD Baby, the Orchard – fulfillment & downloads)

   Essentially an online mail-order business, these companies retain a small inventory of your CDs and handle the administrative side of selling your records online. They bring news of the existence of your music to a wide audience of potential buyers, they accept payment and handle shipping on your behalf. They take a $ per unit fee, you keep the balance of the marked up sale price of the record.

2. Selling your tracks via digital download (iTunes, LaLa, Amie Street, genre based sites – beatport & via aggregators)

   Online distributors of digital tracks and albums. Here, they dictate the sale price and pay the label (or the artist if there is no label) a fixed percentage, usually in the region of 70% of gross.

3. Making your tracks available to subscription services (eMusic, Rhapsody)

   Customer pays subscription fee (usually monthly) for a certain number of downloaded tunes.

   Usually a licensing fee payable, plus the musician and publisher are paid compulsory royalties through Harry Fox.

4. Licensing music for film and TV; shows, commercials and videogames (PumpAudio, Rumblefish)

   You submit your music and they make it available for placement. You get 50% to 80% of the gross licensing fees paid.

5. Internet radio / streaming (Pandora, LastFM)

   Subject to compulsory license administered by SoundExchange. License fee distributed 50% to copyright holder (usually record company), 45% to featured artist, 2.5% to non-featured vocalist(s) and 2.5% to studio musicians. Composer and publisher also get performance royalties.

6. Ring tones; video games (Zingy, Jamster,Thumbplay, individual carriers & handset manufacturers)

   Often flat fee per tune. May be supplemented by additional volume-related fees.

7. Revenue streams:

   a) Composition / song – generate performance royalties for composer and publisher

   b) Sound recording – generate master use royalties/compulsory license fees for copyright owner, featured artist and other musicians.

8. Traditional Performance Rights Organizations – collect & distribute performance royalties generated for composer and publisher (ASCAP, BMI, SESAC)

   Fees for artists generated every time record is played – now includes Internet radio stations (though covered by compulsory licenses). Songs used in popular TV shows and commercials can generate long-term royalty payments. 50% for composer, 50% for publisher. If you’re putting out your own record, that means you are the composer and the publisher and you get 100% of the performance royalties, traditionally the most valuable form of income for a musician.

9. Harry Fox – collects & distributes mechanical royalties for composer and publisher

   Compulsory royalties now payable for digital downloads. 50% to composer, 50% to publisher.

10. SoundExchange – collects & distributes performance royalties for sound recording copyright owners, featured and non-featured artists from compulsory licenses taken by non-interactive streaming services that use satellite, cable or Internet methods of distribution --- www.soundexchange.com

This represents a new kind of royalty payable to featured artists, backing vocalists and musicians who perform on the track/album. Even if you’re not a composer, be sure to register with SoundExchange.