The life-cycle of music recording and publishing is also changing and one must adapt to the changes happening today. Usually, for a single or album to be produced, a lot of things happen that includes the following players:
A composer owns the copyright of a song. They earn from:
- Mechanical production
Permission is granted by a music publisher to mechanically reproduce music onto some type of media (e.g. CD) for public distribution. They earn a royalty of 3% to 7.5% based on the number of recordings sold.
- Performance rights
Music is played live or broadcast on TV, radio, bars, restaurants, etc. The fee collected by Filipino Society of Composers, Authors and Publishers Inc. (Filscap) is distributed to members (composers and publishers) annually. Music users submit playlists or cue sheets which in turn become the basis for paying the composers. Everybody gets the same rate, in effect "more play-more pay". The fee due to Filscap is based on a percentage (1% -3%) of gross revenue of the music user (radio, tv, et al.). It's a negotiated rate so it varies.
- Synchronization rights
Use (reproduction) of a song used as background music for a movie, TV show, or commercial. This is negotiated and dependent on the usage of the song. Usage can be one time or perpetuity. Fees start at P10K and can go as high as 500K. Users will also have to obtain a master usage license from the record label if they want to use the original sound recording. The fee is usually lower than sync fees.
- Print rights
Royalties earned from sales of printed sheet music. Royalty is paid to the recording artist, songwriter, and publisher based on the number of music sheets sold. The rate is the same as mechanical production.
- Digital Performing Rights
They get the same rate as indicated in their mechanical production royalties. For mobile content, the label, artist, and publisher share in whatever is left after deducting expenses (carrier costs and content providers costs). For truetones, ringback and full track, this is usually 30% of the end user price. Rates are computed according to their mechanical production rates.
However, for monotones and polyphonic tones that only plays the basic melody of a song, the full revenue share goes to the composer.
If someone else (arranger) writes the music for a song, then that copyright is shared with that person. A revenue sharing is arrange between the two, usually 50%-50%, for this purpose.
Although in the Philippines, this is no longer the case as arrangers doesn't get any royalty from the sale of the song/album. The arranger is usually paid 8,000 to 15,000 per song depending on their stature.
3. Music Publisher
A composer may opt to assign his copyright to a publisher for a period of time. They will market the song to record labels, television, movie producers, other interested parties. If tapped, publishing deals vary. It can be a limited publishing agreement where you can license all rights to the publisher except digital rights (though publishers rarely agree to this). Revenue sharing can be 50 - 50, 60 -40 or even 70 - 30.
4. Singer, Band, Performer
Singers usually sign-up a contract with a record label and earn from:
- Mechanical production
Payment based on record sales or the amount which the record label collects from its outlet. Royalty base price is usually the wholesale price less vat.
A few years back, artist's royalty rates range from 3% to 19% with an advance of 5k per song or up to 1.5M per album for superstars. However, due to plummeting sales - artists' now agree to reduce their royalty rates. The maximum royalty rate labels give now is 10% and that is for superstar status artists.
The label usually pays the artist an advance for the production and the artist will have to recoup it from royalties due him/her. It is also interesting to note that some artists now agree to record deals without an advance royalty.
Some expenses are also factored in the royalties computation such as:
- Free copies given to media, radio stations, and promo copies are not included in the computation. (limited to 10% of sales)
- Unsold copies are not paid for as music distribution outlets can return them.
- Labels usually hold back 10%-20% of royalty payment to artists as provision for returns/breakage. Music CDs, sold as physical goods, are assumed to be prone to it.
- Expenses are also deducted, full or part depending on negotiation, such as:
- Packaging - industry rate is 10% but hardly practiced in the Philippines.
- Manager fees
- Band fees - for album promo tour, the label and artist usually split the cost.
- Recording cost - have the option to pay for the recording if the artist wants to get the master ownership back after an agreed period of time.
- Digital Performing Rights
- If their royalty rate in their contract is 5%, then they get 5% of all monies received. For mobile content, the label, artist, and publisher share in whatever is left after deducting expenses (carrier costs and content providers costs). For truetones, ringback and full track, this is usually 30% of the end user price. Rates are computed according to their mechanical production rates.
They sign-up performers to manage their careers by getting deals to generate income as such as recording, gig performances, advertising endorsement, among others. Some labels now also act as managers. The usual fee is 25% - 35% of all income.
5. Record label
Upon signing an agreement, they create, market, and distribute the recordings. They hold the sound recording copyright. They cover the major expenses such as promotion, marketing, studio rental, contracting of technicians and musicians, packaging and duplication.
The label shoulders the recording costs and shall own the master in perpetuity.
- However, should the artist opt to pay for the recording, then the master ownership should revert back to the artist after an agreed period of time. The label usually pays the artist an advance for the production and the artist will have to recoup it from royalties due him/her.
- Performance rights
Music is played live or broadcast on TV, radio, bars, restaurants, etc. Labels does not receive anything from Filscap as they only service the composers and publishers.
Music and Video Performance Inc. (MVP), that will soon be referred to as Music & Copyright Administrators of the Philippines (MCAP), is a private organization that has for its purpose the collective administration of the “communication to the public rights” of record producers. The society was formed late last year and is the counterpart of Filscap. It shall also handle the collection of mechanical production, synchronization, and print rights. (for further validation)
It is the collecting agent of Philippine Music Public Performance Society, Inc. (PMPPSI), representing music producers, and is looking at charging users the same rate. As of this writing, PMPPSI, will still have to meet with MVP to formulate the implemeting guidelines. PMPPSI will also handle the remittance of the artists' share collected by MVP/MCAP. (for further validation)
- Master use license
The use of a song used as background music for a movie, TV show, or commercial.
For recording, they charge on a per track basis with a minimum of 2 tracks if you opt to hire them. Rates differ as they depend on the stature of the musician. Top musicians charge 2.5K - 3k per track.
- Most musicians are members of Asosasyon ng Musikong Pilipino Foundation, Inc. (AMP) This is an organization formed with the intentions of professionalizing the Filipino musician and providing benefits that will help the individual cope with the daily rigors of being a musician.
- Mechanical rights organization (the right to record a song)
- Filipino Society of Composers, Authors and Publishers Inc. (FILSCAP)
A non-stock, non-profit association of composers, lyric-writers, and music publishers established in 1965 to administer the public performance, mechanical reproduction and synchronization rights granted by law to creators and owners of original musical works. It represents the rights of both local and foreign composers, lyric-writers and music publishers. FILSCAP’s role is that of a unified body of music copyright owners to which application for a permission/license may be made by a person or organization intending to perform, authorize the performance of, mechanically reproduce and/or synchronize copyrighted music in any manner or by any method, for profit or otherwise. (for further validation)
- Music and Video Performance Inc. (MVP) / Music and Copyright Administrators of the Philippines (MCAP)
MVP or MCAP is a private organization that has for its purpose the collective administration of the “communication to the public rights” of record producers. It shall also handle the collection of performance rights. (for further validation)
- Performing rights organization
- Performing Rights Society of the Philippines, Inc. (PRSP).
PRSP acts as the collecting society of performers, such as actors, singers, musicians, dancers and other persons who act, sing, play in, interpret or otherwise perform literally and artistic work. It seeks to protect their common interests and welfare, promote cooperation and collective action in the pursuit of their similar goals and objectives. PRSP guarantees them their benefits, including the collection, distribution and application of royalties on their behalf.