Posted by Mr. Q at 6:00 AM Monday, December 17, 2012
Performance royalties refers to the money collected by performance rights organizations like BMI and ASCAP and paid to songwriters and publishers. It's revenue derived from charging a license fee to businesses -- radio stations, stores, and taverns -- that publicly play your music. As we explain in our book -- Music Law: How to Run Your Band's Business -- even if you set up a system whereby everyone (songwriters and nonwriters) shares equally in song income, it’s still possible that a credited songwriter will receive more money from BMI. That’s because in the case of performance royalties, BMI and ASCAP split the revenue for each song and make separate payments to music publishers and songwriters. In other words, with performance royalties the songwriter’s portion is paid directly to the songwriter and does not pass through the band’s publishing company. Therefore, if a song is a big hit on the radio or in a TV show, a credited songwriter will probably receive more money than a nonsongwriter. It is possible, as you suggest, that your agreement among the band (or between the band and the publisher) could deal with this share. For example, you could create a music publisher, register that with BMI and the publisher would receive half the income. Then, the songwriters getting checks could kick those into the pot as well. Alternatively you could forget the publisher and just have the members contribute their BMI income. These alternatives require some diligence and bookkeeping which is why it's often overlooked in band situations.