There’s so much information online regarding the music industry that it’s tough to determine what’s fact and what’s misleading. Some musicians confuse the differences between a record company and a music publishing company.
To simplify the differences, just imagine a record company as a restaurant with a variety of foods (music) and waiters/waitresses (artists) who present the food (music) to the customers (music lovers). Now imagine a music publishing company as a company that seeks out farmers (songwriters/composers/artists who write their own songs) to create the vegetable produce and/or meat products (songs) that will be offered to the restaurants (record company).
The Record Company
The record company is involved in the production, the manufacturing, the distribution and the marketing/promotion of music recordings and videos. In addition to this, they scout, sign and in most cases, develop new artists with the end results of producing sound recordings. The record company owns the masters and other rights that fall under the sound recording copyright.
Not to be confused with mastering a song to improve the sound quality, song masters or album masters are considered as intellectual property like a car or a house. In the past, the masters were the session tapes that combined all the multi-tracked sounds into a stereo or mono mix. In today’s digital age it’s referred to as session files. The record company usually owns this property because they are the ones who financed the production that became the master.
Sound Recording Copyright
According to the United States Copyright Office, “Sound recordings are defined in the law as ‘works that result from the fixation of a series of musical, spoken, or other sounds, but not including the sounds accompanying a motion picture or other audiovisual work.’ Common examples include recordings of music, drama, or lectures.”
With the record company, a contract is drawn up to explain what percentage an Artist is paid on the net sales. Net sales refer to the amount the Artist is paid after the record company recoups the initial cost of production, distribution, marketing and any other financing provided towards the Artists project.
Music Publishing Company
A Music publishing company enters into an agreement with an Artist, Songwriter or Composer to handle the business side of marketing their works (songs written and owned by the above mentioned) to other Artists, the Record Companies, Ad Agencies and other outlets that will generate income. In turn, the music publishing company will receive 50% of the works. This is separate from the role of the record company because the publisher collects royalties, on behalf of the Artist (through ASCAP, BMI or SESAC), for radio play, internet play and in cases of live performances of other Artists who perform the works owned by the Artist, Songwriter or Composer.
They also handle Mechanical Rights which are royalties paid to the owners of a work but recorded by another Artist. The music publishing company usually has a relationship with Music Supervisors for TV, Film and Commercials. This falls under Synchronization to where the music is ‘synced’ with the visual aspect of a particular TV program or Movie. If Sheet Music involved, the Music Publishing Company ensure that the owners of the works receive their royalties.
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