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For example, the songwriter's music publisher
would collect and share certain licensing fees defined in his
songwriter/publisher contract. Most of these incomes are divided
in a 50-50 split of the "gross" that remains after
the publisher deducts a 5-20% off-the-top administration fee.
These license fees may include merchandising license fees, compulsory
license fees, purchase license fees, transcription license fees,
mechanical license fees, synchronization license fees, grand rights
license fees, advertiser use license fees, print license fees,
foreign publishing license fees, and others.
Also, the songwriter's performance rights
society would collect and share all performance license fees (usually
a 50-50 split of the "gross" after
the performance license society/collector/agent deducts a 15-20%
off-the-top administration fee).
Other agents will also be involved and
take their cut and then pay the songwriter's music publisher who
takes an administration off-the-top cut before paying the songwriter
who in turn may pay other co-writers according to their split
As you can see, each right that is assigned
via a license involves one or more middlemen taking their cut
of the income ahead of the songwriter!
And, to make it even more complicated than
just having multiple agents issuing and collecting incomes on
multiple licenses, sometimes one agent may do one licensing while
another might do multiple licensings, while another agent monitors
and audits those agents!
For example, the songwriter's income from mechanical licensings, synchronization licensings, and all foreign licensings, might be handled by the Harry Fox Agency, while his performance licensings are being handled by BMI, while his folio licensings are collected by his music publisher, while his merchandising licenses are handled by his publicity and promotion agent, while his juke box licenses are monitored by the Copyright Office, while his domestic mechanicals and controlled compositions are handled by his label, while his songwriter association audits his music publisher, while his attorney audits his label and other agents, while his CPA audits his attorney and while the IRS smiles down from above auditing everybody under the sun! And so goes the music business.
See Cross-link: SONGWRITER ROYALTIES, MUSIC PUBLISHER, INCOME under "Gross Income," ROYALTY, TAX LAW, CONTRACT-SONGWRITER/PUBLISHER CONTRACT clauses #22, #23, #24, COPYRIGHT LAW under "Compulsory License Fee."
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