You can say that the music industry is somewhat difficult to understand, particularly in terms of how artists are compensated. There are numerous parties involved, such as record labels and music publishers, each of whom performs a unique function.
Ideally, all of these components should work together. That does not always happen, however. That is why understanding the roles of record labels and music publishers is critical in the music industry.
Today, we'll learn more about what record labels and music publishers do. And we'll discuss what this means for artists and music fans like you who want to invest in music royalties.
Record Labels
A big part of a record label’s job description is facilitating the production and distribution of musical works by artists.
They begin by producing and funding recordings. So, they foot the bill for everything that goes into making an album or single, including studio time, gear, and musicians. Additionally, they collaborate with the artist to ensure the highest quality of sound.
After that, they advertise and support the performers. Making a website, social media profiles, and advertising campaigns are all part of this process.
Afterward, they distribute the music to various platforms. This includes making sure the music is sold in stores and on streaming services like YouTube, Apple Music, and Spotify.
Right about now, you might be asking how record companies generate revenue. Well, they generate revenue in a few different ways:
- They sell physical and digital recordings. (album sales, downloads, and streaming)
- They earn streaming royalties. (paid every time someone streams one of their artist's songs)
- They license music for sync placements. (they allow other companies to use their artist's music in things like movies, TV shows, and commercials, and they get paid for it)
The record company keeps a portion of the profits, but they also give some to the musician.
In an ideal world, the artist and the label would both come out ahead as a result of this collaboration.
Music Publishers
Music publishers help songwriters get the most money out of their songs.
At their core, music publishers look after and defend copyrights. That is, they protect the rights of the songwriter and make sure that no one else can use their song without their permission.
They also make sure that everyone gets paid fairly and keep track of who owns the song's rights.
Licensing songs for different uses is another important part of a music publisher's job. In other words, they let other businesses use the songwriter's music in various ways, like in TV shows, movies, commercials, or even just as store background music.
The publisher then works out a price for using the song and makes sure the author gets paid.
Of course, music publishers also get royalties and give them out. In other words, they collect all the money that the songwriter is owed from different places, like radio plays, streaming, and live shows. They then pay the songwriter their share of the royalties, minus a small percentage for their services.
What kinds of royalties do music publishers handle? There are a few different kinds:
Performance Royalties
These are given out whenever a song is played in public, like on the radio, at a concert, or in a restaurant. The publisher gets these royalties from groups like SESAC, ASCAP, and BMI and then gives the songwriter their share.
Mechanical Royalties
People get these every time someone copies or gives away a song, like when they buy a CD or download a song from iTunes. These royalties come from record labels and other businesses. The publisher then gives the songwriter their share.
Synchronization Fees
These are paid out when a song is used in a specific context, like in a movie or TV show. The publisher agrees on a one-time fee to use the song and then gives the songwriter their share.
Differences Between Record Labels and Music Publishers
How do record labels and music publishers work together? They are both very important to the music business, even though they do different things well.
Music publishers manage the rights to individual compositions, whereas record labels record and distribute music.
Simply put, publishers handle the songwriting and composition as underlying intellectual property, whereas labels handle the actual or digital recordings of songs.
Both have control over it. Publishers control the use of their compositions, and labels control the use of their recordings.
Despite that, labels and publishers still frequently work together to increase profits. For instance, to license a song for usage in a film or television show.
Of course, conflicts of interest do arise occasionally as a result of this type of cooperation.
In 2019, Taylor Swift spoke out against Scooter Braun and Scott Borchetta, the new owners of her old record label Big Machine Records. As part of the deal, Swift said she wasn't given the chance to buy her master recordings. Braun and Borchetta bought them instead.
The record company in this case is Big Machine Records, which also owns the master recordings of Swift's music.
But Sony/ATV Music Publishing, the company that publishes music, owns the rights to the songs themselves.
Braun and Borchetta now own Big Machine Records and can decide how Swift's master recordings are used. Swift, on the other hand, has a separate deal with Sony/ATV Music Publishing that lets her have some say over how her songs are used.
Swift is afraid Braun and Borchetta will use her master recordings in ways she doesn't like, like licensing them for commercials or other projects she doesn't support. This could hurt her career and reputation.
Braun and Borchetta, on the other hand, want to get the most money out of Swift's master recordings, which could cause them to make choices that are good for their own finances but bad for Swift's career.
In order to avoid these disputes, labels and publishers usually need to collaborate closely. Here are some general approaches to resolving these conflicts:
- Negotiate a joint agreement
- Establish clear communication channels
- Prioritize the artist's interests
- Seek mediation or arbitration
In the case of Taylor Swift, she chose to record her songs all over again instead of trying to work things out with Scooter Braun and Scott Borchetta.
She was able to keep control of her music this way and avoid any possible conflicts of interest.
But, this approach might not work or be desirable for all artists. Record labels and music publishers should try to work together to find solutions that are good for both sides and put the artist's needs first.
Ideally, their common objective, though, is to facilitate the distribution and monetization of musical works by artists and songwriters.
Conclusion
Yes, the music ecosystem depends much on record companies and music publishers. The functions of labels and publishers will probably shift as the music business develops. However, their significance in giving musicians and songwriters tools, advice, and support, though, will never change.
Platforms like Royalty Exchange are already changing the way artists and songwriters approach music ownership and royalties. By providing a marketplace for buying and selling royalties, Royalty Exchange is giving artists and songwriters more control over their financial futures and allowing them to tap into the value of their creative work. It is also giving savvy investors and people looking to grow their wealth the most premiere platform to earn passive income from buying music royalties. Sign up as an investor today and learn why so many people are looking for the next best music catalog deal to add to their portfolio for passive income in 2024.
Frequently Asked Questions (FAQs)
What is the role of a record label in the music industry?
A record label is responsible for producing, distributing, and promoting an artist's music. They provide financial support, marketing, and industry connections to help artists succeed.
What is the role of a publisher in the music industry?
A music publisher is responsible for managing and protecting the rights of songwriters and composers. They license songs for use in various media, collect royalties, and distribute them to the songwriters.
What are publishing royalties in music?
Publishing royalties are payments made to songwriters and composers for the use of their songs. These royalties are typically collected by music publishers and distributed to the songwriters.
What's the difference between a record label and a music publisher?
A record label focuses on the recording and distribution of music, while a music publisher focuses on the rights management and licensing of songs.
What is the difference between recording and publishing rights?
Recording rights refer to the ownership and control of a specific recording of a song, while publishing rights refer to the ownership and control of the underlying composition (the song itself).
Do record labels pay publishers?
Yes, record labels typically pay publishers a percentage of the royalties they collect from the sale or use of a recording. This is because the publisher owns the rights to the underlying composition, and the label is using that composition in their recording.
