From DRUM! Magazine’s January 2018 Issue | By Kurt Dahl
You’ve likely noticed, while perusing the fine print in the liner notes of your favorite albums, that nearly all major artists are self-published. That means that they’ve incorporated their own publishing company, through which the publisher’s share of income flows. The other half of publishing revenue, known as the writer’s share, flows directly to the individual writers, and cannot be assigned or transferred to a publisher.
So why do major artists self-publish and should you do the same? The “why” is fairly straightforward: for tax and liability reasons. When your songs are earning enough revenue, it makes sense to incorporate to allow the publisher’s share of revenue to flow through a company, and thereby be taxed at a much lower corporate rate, rather than go to you individually. From a liability perspective, heaven forbid, if you are ever sued for plagiarism, the party suing can only go after the corporation’s assets, not your house and car.
All songwriters incorporate a publishing company at some stage, but when is the right time for you? If your songs are earning under a few thousand dollars a year, it doesn’t likely justify the costs of incorporation and maintenance of the company. As long as you’re registered as a writer with SOCAN in Canada and ASCAP/BMI in the USA, you will receive 100 percent of the publishing revenue as an individual.
A few scenarios might indicate that the time is right to incorporate your own publishing entity. For example, when you find yourself licensing music internationally, entering a sub-publishing deal with a foreign publisher, or being offered a co-publishing deal from a third-party publisher. This entity would then be the contracting party to the above agreements.
Another scenario is if you want to act as a publisher yourself and sign other writers to your company. This involves administering the rights of these writers, including issuing licenses, collecting revenues, and distributing royalties.
Once you establish that you’d like to self-publish, call your performing rights organization (PRO). They will perform a name search, and let you know if you have the green light to register the business name with the government. You will likely need to be creative in selecting your company name because any name that is identical or too similar to an existing music publishing company will be rejected in order to avoid confusion and the potential of payments being issued to the wrong company.
Once you’ve successfully incorporated and have a business bank account set up and confirmed with your PRO, you will need to complete an application with the PRO and sign a publishing agreement. (Be sure to consult with an entertainment lawyer.) Then you will be in the business of publishing.
Remember, being self-published and being a successful publisher are two different things, so you may still want to partner with a publishing company when the right opportunity arises.
Kurt Dahl is a renowned entertainment lawyer and full-time touring musician with his band One Bad Son. You can find legal and career advice based on his experience in the music industry over the last 15 years by visiting his website, lawyerdrummer.com.