 "Potential Revenue Sources and
Group Percentage Shares: The Song"
by Bobby Borg
Once a group has been signed to a record label, it is extremely important for
them to understand the various revenues that may become available to them, and more importantly, the determination of how the money will be divided
between the members. Why is this so important? In the words of Mick Jagger, "There is nothing like money to break up the band."
Revenue sources may include record advances, recording fees, record royalties, video royalties, live performance monies, merchandising revenues (i.e., income from the sale of T-shirts and
hats), and music publishing royalties. Publishing is perhaps the most valuable of these revenue streams and the focus of our discussion. A successful song can earn hundreds of thousands of
dollars long after the band has parted ways. So how are percentages in a song divided? Divisions in a Song
Under copyright law, when two or more people collaborate on writing a song, and each writer contributes either musically or lyrically or in both ways, the split is "pro rata" (an equal share of
the composition), unless there is an agreement between the writers that stipulates otherwise. A musical contribution includes the melody, and any pre-existing riff or groove that becomes an
integral hook to the song (for example, the bass line in Queen's "Another One Bites the Dust" by John Deacon or the drum intro to Led Zeppelin's "Rock and Roll" by John Bonham).
When groups spend hours together in rehearsal, experimenting with song arrangements, tempos, and instrumentation, a certain percentage of their songs may initially be divided among
all members, allotting a larger share to the songwriter(s). For instance, one group composed of four members allotted 12.5 percent of every song to each member in the band. The remaining
50 percent per song went to the member(s) who contributed to the music and/or lyrics. Often, when it is each member's unique performance that shapes the band's signature sound,
the band simply divides all of the compositions equally. For example, guitarist Stone Gossard and vocalist Eddie Vedder wrote most of Pearl Jam's songs, yet the band originally split the
percentages in its compositions equally-each member (five in total) received 20 percent. However, as the group became more successful and vocalist Eddie Vedder was recognized as
"the star" or "the man," essentially becoming the only irreplaceable member of the group, the
band wanted to keep him happy. The group allotted 36 percent of each song to Vedder, and 16 percent went to each of the other three members of the band. In any case, division shares in
your songs must be indicated to the record company before the release of your record. As you will see below, this is extremely important! Revenues You May Earn
When you share in a percentage of the compositions, you are entitled to special monies from the record company for every record that is sold. These monies are called "mechanical
royalties." Mechanical royalties, which are licensing fees the record company pays to you for using your songs on a record, are different from record royalties and are typically not used by
the record company for recouping recording costs. As of the year 2002, the statutory mechanical license rate is $.08 (i.e., 8 cents) per composition per CD. However, the record
company typically negotiates a lower rate for new bands at 75 percent of statutory ($.06 or 6 cents). If there's four members in a band, dividing the composition equally, that's 2 cents per
song. Mechanical royalties are one of the more immediate sources of income related to record sales. Statements are sent out to you four times yearly compensating you for each record sold.
In addition to mechanical royalties, you'll also receive royalties from public performances of your compositions on radio (assuming that these compositions are played regularly), and television,
including MTV and VH1. These are called "performance royalties." Performance royalties are paid out after joining and registering your songs and percentage shares with one of the major
performing rights organizations: The American Society of Composers, Authors and Publishers (ASCAP), Broadcast Music Incorporated (BMI), or The Society of European Stage Authors And
Composers, now simply known as (SESAC). Secondary publishing income may include "synchronization fees," for the use of your songs in
film and television, and "print" royalties, for the use of your songs in sheet music and music books. Again these monies should be divided according to each members share of a composition.
In cases where a publishing agreement has been signed with a music publishing company, an organization that specializes in collecting royalties world-wide and exploiting musical
compositions in a variety of mediums, a specified percentage of the income is designated between the "publisher" and "the writer." The publisher offers an advance, recoupable from future
earnings, which again should be divided between the writers in proportion to their individual shares in a song. 
Bobby Borg
is an international recording and touring musician with over 25 years' experience in the music business. He has worked with a variety of
artists including the multi-platinim group Warrant, Beggars & Thieves, and his own band Left For Dead. A consultant to both artists and independent
labels, he is a regular contributor to music business publications and online sites, a regular guest speaker at music industry events, and a music
screener for the independent A&R company, Taxi. Bobby will be teaching a new Fall Quarter class at the UCLA Music Business extension program and
is also the author of the highly endorsed Billboard book release "The Musician's Handbook: A Practical Guide To Understanding The Music Business" was released nationwide May 1.
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