In our earlier blog Assignment or Licence, we discussed the two models available to brands when engaging vendors of bespoke music (aka Original Music in the US). This blog will focus on the Assignment model which offers additional ROI opportunities by way of Public Performance Royalties.
In most global markets, Performing Right Organisations (“PROs”), aka Collection Societies, grant blanket licences to broadcasters and online platforms for the right to “publicly perform” or make available musical compositions and songs owned by their members. The PROs’ members comprise songwriters, composers, lyricists and music publishers. In respect of broadcasters, the public performance right can be considered as the right to transmit music, whether audio-only on radio, or within audio-visual content on TV. Note that the blanket right of public performance, which applies across all member repertoire, is different from the synchronisation right which is usually licensed on a title-by-title basis directly from copyright owners, not the PROs.
The broadcasters who buy blanket licences from PROs pay substantial annual blanket licence fees for the privilege, often in six and seven figure sums. When broadcasters report the music used in each piece of audio-visual content on their channels, the PROs allocate royalties to the songwriters, composers and publishers of the specific pieces of music which have been transmitted. These sums are public performance royalties. Where a song or composition has been assigned to a music publisher, typically the songwriter or composer receives 50% of the royalties direct from the PRO (the “writer’s share”) and the music publisher receives the other 50% (the “publisher’s share”).
Across most western markets, with a few exceptions, PROs pay public performance royalties for music within broadcast marketing communications on TV and Radio (aka commercials, ads or spots).
This presents an opportunity for brands to make money from music.
Let’s remind ourselves of the transaction:
Once the copyright in the bespoke composition has been assigned to the brand advertiser, it takes on the role of a music publisher. However, most brands are not in the music publishing business, so they need to appoint a music publishing administrator to perform the functions of a publisher in return for a commission. Those functions include copyright registration, income tracking, royalty collection and distribution.
In UK and Europe, each market has one PRO that manages the public performance rights on behalf of songwriters, composers and music publishers. In the chart below, we see:
PRS for Music UK
This chart represents the flow of the publisher’s share of public performance royalties in UK & Europe.
By contrast, in the US, there are four PROs: ASCAP, BMI, SACEM and Global Music Rights (“GMR”). US TV and Radio broadcasters need to have blanket licences in place with all four to cover repertoire written by songwriters and composers who will be represented by any one of the four PROs.
This chart represents the flow of the publisher’s share of public performance royalties in the US.
It’s important to remember that this process does not cost the brand any money in UK, Europe and the US. The blanket licence fees received by PROs are paid by broadcasters not the brand. Furthermore, appointed publishing administrators are solely paid commission on the monies they collect, not up-front fees.
Many large US advertisers have been operating the above model for decades, often earning annual six and seven figure sums for national network TV campaigns. It’s a natural extension of the work-for-hire model when engaging composers of bespoke music.
In the UK and Europe, historically it’s been less common but is perfectly possible. My previous business Leap Music did exactly this in the 2000s at a time when many in the music production community, and their trade body PCAM, wrongly claimed it would never work.
Music publishing administration is a niche subject with considerable complexity and much jargon. Smart brands create mandatory protocols to take assignment of copyright in bespoke music and run competitive tenders to appoint publishing administrators.
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