Music publishing agreements series; (part 15) How do publishers work with the royalty collection societies? (Performance royalties)

In the UK, public performance royalties are, like mechanical royalties, prescribed by industry agreements between representatives of radio and TV stations and the performing rights societies (PRS). In South Africa, the position is different. Some examples of PRS performing rights rates are as follows: –

United Kingdom

• 3 minute “play” on Radio 1 = £46.10

• 3 minute “play” on BBC TV = £175.12

• 3 minute “play” on Capital FM = £13.16

South Africa

In South Africa, the position is more complex. The royalties are computed out of the total distributable revenue that SAMRO gets from license fees. The financial income is a result of funds invested in the intervening period between the collection of license fees and the distribution of royalties. The amounts therefore vary in every payment period, and depend on what is received by SAMRO. The publisher’s job is to monitor this very carefully on his own and the composer’s behalf.

In all markets, radio stations account to the local performing rights society (e.g. PRS, SAMRO or ASCAP), who will deduct its standard fee before accounting to the publisher and paying the royalties over. The PRO’s rely on returns (stat sheets) from users to calculate the royalties, and publishers should be vigilant in ensuring that users are complying (and indeed, that the composer himself, where he performs his own compositions) is vigilant in supplying stat sheets. (With major radio broadcasters, it is generally a computer system like “Dalet” that not only reports the songs, but can also select them).

Performing rights societies usually insist, however, on paying directly to the songwriters, their due percentage of the public performance income. This percentage is commonly referred to as the “composer’s share” and it is usually 50% (or six-twelfths) of the overall fee. The publisher cannot (or certainly should not) do anything to prevent a composer receiving his composer’s share of public performance income directly from the PRS or SAMRO.

Consequently, a composer in this scenario will have two “royalty streams” for his royalties – the sources of which are the SAMRO (assuming the composer belongs to this society) and the publisher. To achieve an overall sharing of the public performance income which, equates to the sharing of other categories of income (such as mechanical and synchronisation income), a publishing agreement will sometimes provide that the composer receives: –

• 50% of his public performance income directly from the PRS or SAMRO; and

• 50% of the publisher’s public performance income from the publisher so that, at the end of the day, the composer, on this example, receives R75 of every R100 public performance income paid out by SAMRO.

On this deal, which is very common, the royalty rate for public performance in the publishing agreement is 75/25 at source, therefore the publisher only takes 50% of the publisher’s share. In other words, 50% of the whole performance royalty is paid directly from the collection society to the author and 50% directly from the collection society to the publisher, the publisher will keep half of what he receives from the society and remit the other half to the composer. Thus, 75% is paid to the author overall. This system greatly helps the composer’s cash-flow, because, in addition to the publisher’s advance, the author knows that 50% of public performance income will definitely be received even if his account with the publisher is not recouped.

Collecting societies, and the manner in which they collect and distribute income (and charge for doing so) are vitally important to publishers and composers. Most countries have local collecting societies and there is a network of reciprocal arrangements between these societies throughout the world intended to ensure that if, say, a song written by a South African composer is performed on Australian television, the public performance royalties will (eventually) be paid to the composer when APRA, the Australian PRO, collects and pays SAMRO, which then pays the composer and publisher.

This stream can lead to significant delay in the actual receipt of money by the composer and the deduction of several collecting fees. The same principle applies when a composer and his band tour internationally and perform the compositions in various territories. The speed and accuracy of payments for such performance will depend on the efficiency of the PRO in each territory.

If you or your publisher is a member of SAMRO, you have the right to designate whether SAMRO should appoint either ASCAP or BMI to represent you in America, or the PRS to represent you in Britain, and so on. You are entitled, by CISAC rules, to split territories and be members of various PRO’s. Your publisher should guide you through this.