Lost Money

Dec 07

I’m not big on scare tactics.

But every once in a while, it’s not bad to get a sudden glimpse of the darkside– just enough to jolt you from the stupor of complacency with the sudden realization that “Hey, it’s a jungle out here!” Yup. Always was, always will be.

In the middle of the flurry of holiday merry-making that constitutes the last month of work (?) in the music industry calendar year, I received one of those jolts of reality– from a songwriter friend of mine just recently returned from a sudden plunge into the abyss. As we caught up on the year’s activities at the BMI Holiday party, he recounted to me a horror tale that served to remind me that some of those music business weasels surrounding us that evening, as charming and harmless as they might appear (which was not all that charming or harmless really), were still predatory and dangerous beasts.

Two years ago, my friend had a song on an album that became a sizeable UK hit– needless to say, it promised a significant windfall for a songwriter who had achieved some success, but never quite had the good fortune to score a major US single. (Obviously, the names here have been omitted, to protect the innocent, and the not-so innocent). As he was signed to a US publishing company, my friend assumed that his publisher, obviously aware of the success of the album, would take the necessary steps to collect the money earned by the song. So he waited. And waited.

As a year went by and earnings failed to materialize, he became concerned (that’s an understatement). Finally, he began to do his own research as to what had happened to the pot of gold that was supposed to be at the end of his rainbow. It had vanished into thin air.

Well, not exactly. It had vanished into someone else’s pocket. It seems that my friend’s publisher, mired in paperwork as most publishers are, had failed to properly register the song with MCPS-PRS in the UK (their version of Harry Fox). Consequently, the money that had been earned by the writer fell into the vast pit of unclaimed earnings. That’s a big, ugly cauldron where confusion reigns supreme, and nothing and no one is safe.

How big is it? You can’t imagine. As a member of MCPS-PRS, our publishing company receives a document semi-annually that lists the unclaimed monies, with song titles and often with the names of the writers. The document is well over fifty pages long. Some titles are well-known hits, by superstar artists. The fact that a writer’s money falls into the unclaimed file doesn’t mean that the writer or the artist is obscure or unknown. It merely means that the song has not been properly registered, and therefore, the society has no place to send the money. It’s a very educational list.

Therein lies the problem. For an unscrupulous publisher, such a list is an invitation to treachery. After all, here is a list of titles, many of them recognizable from successful albums, representing money that the true writers and publishers don’t even know exists. What’s to stop another publisher from forging a contract, and claiming that money on behalf of the writer? Not much it seems. This is what seems to have happened to my friend.

But that’s stealing, right? Uh, yes. Surely one can take legal action to reclaim the money that was taken illegally. Well, sort of. My friend could have hired a lawyer in the UK (not all that easy, and definitely not cheap) to sue the other publishing company. It’s a pretty good strategy, if there’s over several hundred thousand dollars at stake. But when one calculates the costs of a two-year legal wrangle in a foreign country, it’s not a a very practical undertaking for any amount under $200,000. Keep in mind that there is no way to know exactly how much may have been stolen, until you launch an investigation, an audit, etc. More importantly, remember that most of the money on the Unclaimed Income list is money that the writer and publishers don’t even know is out there. Nine times out of ten, no one will ever find out that it’s gone.

So what’s the moral of this sordid little tale? What can a writer do to protect him or herself in the Darwinian world of the music biz? Start by obeying the first law of the jungle: Don’t leave money lying around.

1. Check your registrations. Then check them again. BMI, ASCAP, and Harry Fox all have systems that allow you to check that your song is registered correctly. Even if you’re signed to a publishing company, you still need to check and re-check those registrations. A publisher has a responsibility, but in many cases not a legal requirement to register your songs. This is not an area for blind faith. Trust, but verify.

2. Make some friends. Get to know your ASCAP, BMI, or SESAC representatives. If you do a lot of business in the UK, then make some contacts at MCPS/PRS. You need to know people, and just as importantly they need to know you. Low profile is no profile.

3. Act fast. I’m amazed at how many writers have a hit, then spend a year or two trying to decide if they want a publishing deal, who they should sign to, what society they want to affiliate with, etc. All the while, the money being earned by the song is languishing in “copyright control” or “unclaimed earnings”. If you put a $1000 on the sidewalk, would you expect it to be there a year later? Time is of the essence.

This is not a happy story. It’s unfortunate that the industry has people who will rip-off songwriters and others in the creative community. These “take the money and run” types are not the majority, but they’re not rare birds either. The reality is that they prey on the ignorance or inattention or complacency of legitimate writers and publishers. That’s the value of the wake-up call. Lost money will not find its own way home. Nor will it remain lost forever. If it’s yours, you have to go out and get it.

    This is so true. But I wonder, when is it best to register the songs with all these companies? When we know it is getting released? I am in the process of pitching music through my manager Tony Spears. And I am my own publisher right now. So I’d like to know when is best to register the material? Thanks Eric.

    The key is to get things registered within 2-6 months of being released. The primary danger is when income sits around uncollected for a couple of royalty periods (Jan-June; June-December). That’s when the song title starts showing up on reports as “copyright control”, “unidentified income”, “missing”, etc. Never leave income sitting around for more than a year.

    Personally, I’d recommend registering the song with the US Copyright Office before the record is released. I would register with ASCAP, BMI or SESAC, and Harry Fox (if that’s who you use) sometime within the first two months that a song is out in the marketplace. Then if it’s released internationally, I’d consider registering it with the local society– again, right after release.

    But here’s the key: Then check those registrations every few months. They will tell you it can’t happen, but trust me, it happens all the time: things get changed. All of sudden, your song is no longer showing up, or showing up with the wrong percentages. You have to check and double-check this stuff. These systems are handling far too many songs, and mistakes are inescapable.

    I don’t understand.

    How does an independent songwriter (registered with BMI or ASCAP) also register with the Harry Fox Agency?

    BMI and ASCAP are free to join. Are there fees involved with Harry Fox? What money is out there for Fox to collect that BMI/ASCAP do not collect?

    Bob:

    I understand your confusion. It’s pretty confusing. You might want to check out my book, “Making Music Make Money”, or my class, Music Publishing 101 at berkleemusic.com, to get a more complete answer.

    But Harry Fox collects mechanical royalties for publishers– ASCAP and BMI collect performance royalties. Here’s how it works:

    Mechanical Royalties– This is a royalty that is paid to the publisher each time a copy of the song is sold in “mechanical” form, meaning on a CD or as a digital download. The mechanical royalty rate is 9.1 cents per unit sold. The publisher collects this money, and according to the terms of the writer’s publishing agreement, pays a portion of it back to the songwriter.

    Most publishers use the Harry Fox Agency to collect these mechanical royalties from the record companies. Publishers register the song with Harry Fox, notify them of the release, then Harry Fox issues a mechanical license on behalf of the publisher, collects the royalties, and sends the money to the publsiher.

    A publisher doesn’t have to use Harry Fox– you could go directly to the record label and license and collect yourself. But it can be pretty difficult, especially if you have dozens of songs on different albums.

    BMI and ASCAP collect Performance Royalties. This is money that is paid by Broadcasters, Club Owners, Theater owners, and others who use music in a public setting. Once a writer and/or publisher join ASCAP or BMI, and register their songs, these PRO’s will pay the publisher and writer a portion of the money collected, based on how often the songs were used in public venues (radio, tv, elevators,nightclubs, etc.).

    You should be able to find information about how to register your work with Harry Fox Agency by checking out their website. You join HFA when you have music being commercially sold on CD’s, or as downloads.

    Hope that helps.

    Thanks for this Eric. I’ve used HFA to license a song that I wanted to cover, but never thought to register my songs with them.

    Woody

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