Wednesday, June 3, 2009
Dividing Music Income
Dear Rich: I have read your book, Music Law: How to Run Your Band's Business, but there is an issue that still confuses me. My bandmates and I are at a loss as to how to divvy up the various possible income streams (MP3 sales, CD sales, TV sync license fees, and royalties, etc.). I am the sole songwriter in the band. We record music and are trying to market it through various means (online and brick and mortar). If there is no record company to take a share of sales income, how, generally, is that income split up? What about songwriter royalties and publisher's royalties? What about SoundExchange royalties? Who gets a cut when we sell something? Any help you can give would be greatly appreciated. I'm so glad you asked. One simple way to look at things is to divide up the revenue sources into two groups: music publisher/songwriter income and band (or non-songwriter) income. Your band has a few choices for dealing with songwriter income (as discussed in the book). The main decision is whether the songwriter keeps it all, or divides it among band members -- for example, you can create a music publishing entity and split that income based on an agreed-upon percentage, perhaps rewarding the songwriters with a higher share of the pot. As for band (non-songwriter) income, that's usually split equally after deducting expenses and payments to the usual suspects (manager, tour manager, agent, etc.) In the new edition of Music Law, I'm going to break down the sources of music income into more detail. Since that won't be out until August 2009, the Dear Rich staff has prepared this table that summarizes the common income sources based on whether it is songwriter or non-songwriter income.