As a songwriter, you have likely heard talk of self-publishing your compositions. You’ve likely noticed, while perusing the fine print in the liner notes of your favorite albums, that nearly all major artists have created their own publishing company.
This means that they’ve incorporated a publishing company, through which the publisher’s share of income flows.
The other half of publishing revenue, known as the writer’s share, flows directly to the individual writers, and cannot be assigned or transferred to a publisher.
So: why do major artists self-publish and should you do the same?
The “why” is fairly straightforward: for tax and liability reasons. When your songs are earning enough revenue, it makes sense to incorporate to allow the publisher’s share of revenue to flow through a company rather than you individually, and thereby be taxed at a much lower corporate rate. From a liability perspective, god forbid you are ever sued for plagiarism, the party suing can only go after the corporation’s assets, not your house and car.
The “when” is not so clear. I say “when” rather than “if”, as all songwriters incorporate a publishing company at some stage. When is the right time for you? 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. As long as you’re registered as a writer with SOCAN in Canada and ASCAP/BMI in the USA, you will receive 100% of the publishing revenue, as an individual.
There are 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. This entity would then be the contracting party to the above agreements.
Another scenario is if you want to act as a publisher yourself and sign other writers to your company. This involves administering the rights of these writers, including issuing licenses, collecting revenues and distributing royalties.
Once you establish that you’d like to self publish, call your performing rights organization (PRO). They will perform a name search, and let you know if you have the green light to register the business name with the government. You will likely need to be creative in selecting your company name because any name that is identical or too similar to an existing music publishing company will be rejected in order to avoid confusion and the potential of payments being issued to the wrong company.
Once you’ve successfully incorporated and have a business bank account set up and confirmed with your PRO, you complete an application with the PRO, sign a publishing agreement (consult with an entertainment lawyer), and you are in the business of publishing.
Remember, being self published and being a successful publisher are two different things, so you may still want to partner with a publishing company when the right opportunity arises. For more on this topic, email me.