Music Publishing Overview October 2010 Overview of Music

Music Publishing Overview October 2010

Overview of Music Publishing • Music Publishing is the business of acquiring, administering and exploiting rights in musical compositions on behalf of both the composer of the score and the writer of the lyrics • Music publishers earn revenue from licensing the right to use their songs; every time a song is used or performed, the owner of the copyright must grant permission, a license must be issued and a payment must be made: Ø Performing – Television, cinema, radio, music videos, Internet, concerts Ø Synchronization – Advertising spots, film sound tracks, musicals etc. Ø Mechanical – CDs, records, tapes, ring tones, and certain digital configurations Ø Other – Stage, paper based scores • Generally, the right to receive copyright royalties extends for the life of the writer plus between 50 and 70 years following their death, depending on jurisdiction • Royalties generated by the use of a song are split between the writer and publisher, with the music societies paying each their share • In the case of SPE, the net proceeds must be allocated to product and are subject to program participations agreements 2

Performance Royalties • Covers a wide range of uses including when a song is broadcast on radio, television, in a cinema (except in the US) or over the Internet • Royalties from television exploitation are calculated using ratings and ad sales revenue by the Performing Rights Society (PRS) (e. g. ASCAP & BMI) • Royalties from international (outside U. S. ) theatrical exploitation are calculated based on the revenue generated from ticket sales • The PRS collects royalties and forwards 50% to the publisher and 50% to the writer/composer – In some select cases, a publisher may have an agreement with a composer/writer whereby the publisher pays the composure/publisher an additional royalty out of the publisher’s share 3

Synchronization Royalties (Licensing of Music) • Licensing of songs for use in television programs, advertisements, videogames, films, etc. – SPE generates such revenue when songs for which SPE is the publisher are exploited outside of the original product (e. g. a song from a TV show is used in a radio commercial, a song from a movie is used in a video game, etc. ) • The publisher is paid directly by the party licensing the composition for synchronization – The publisher pays the writer/composure an agreed upon amount (typically 50%) 4

Mechanical Royalties • Each time a record is sold, the publisher gets paid – The pace of growth of mechanical royalties is driven by the growth rate of the overall recorded music market • In the US, mechanical royalties are a fixed rate of 7. 6 cents per song – Internationally, royalties vary from region to region but on average, mechanical royalties are roughly 8. 5% of the retail price of a record • The responsibility for collecting the monies from the record companies that ship the albums lies with third-party, non-commercial organizations known as collection societies (e. g. Harry Fox) • The collection society keeps a small fee and forwards 50% of the royalty to the publisher and 50% of the royalty to the writer/composer 5