Composers’ and Writers’ Share Royalties

Story by SCGC / SOCAN | Monday July 19th, 2021

Screen composers are a vital part of SOCAN’s membership. Approximately half of the company’s annual collections are from audio-visual works, and screen composers among the most passionate, productive, and engaged music creators in the SOCAN family.

Unfortunately, screen composers are also under siege.

Faced with almost daily threats and challenges to their livelihoods, whether one-time, take-it-or-leave-it “buyouts,” reduced opportunities, or even the reality of artificial intelligence automation, it’s hard out there for a screen composer.

SOCAN will never get in the way of our members working to make a living. We’re here to help, and one of the ways we assist our members is by providing them with the information they need to make the decisions that are right for them.

Information and knowledge are your most powerful resources.

Q: What is the SOCAN 50/50 Distribution Rule?
A: The SOCAN 50/50 Distribution Rule states that a minimum of 50 percent of the total share, or shares, of any registered composition must be allocated to the writer(s) of that composition. Put differently, a maximum of 50 percent of the total shares of any registered composition may be allocated to a publisher(s). This rule is a pillar of the organization. Any practice that breaches the 50/50 Rule is contrary to SOCAN’s policies.

Q: What would happen if a member broke the 50/50 Rule?
A: Every SOCAN member signs a Membership Agreement that requires them to act in accordance with the interests of SOCAN, and maintaining the 50/50 Rule is one of those interests. SOCAN trusts and relies on its members to provide accurate work registrations. Filing inaccurate work registrations risks a member’s good standing with SOCAN.

Q: If an audio-visual production company, its agent, or a third party demands that the producer, agent, or third party must have a portion of the writer’s royalty share, even though they’re not an author of the work, is that allowed?
A: When a music creator becomes a SOCAN member, they agree to the 50/50 Rule. A minimum of 50 percent of the total share or shares of any registered composition must be allocated to the composition’s writers. A non-writer demanding a portion of the actual composer’s 50 percent share would break this rule. Composers put in such a situation can push back against these potentially exploitative agreements, based on their member agreements with SOCAN and the 50/50 Rule.

Q: What can I do as a member if I see conflicting work registrations?
A: SOCAN members should monitor their royalty statements to ensure correct share allocation. If any share allocations or participants are incorrect, SOCAN has a policy for dealing with the dispute. The participants are encouraged to resolve the dispute themselves and arrive at an agreement on the correct share participants and/or allocation of shares. SOCAN must be notified by the participants of the outcome of their resolution to make any changes to the registration at issue. If participants are unable to come to an agreement, SOCAN will only hold the disputed shares of royalties from distribution if a legal proceeding is commenced.

Q: Where does SOCAN stand on the subject of “buyouts”?
A: When a writer becomes a member of SOCAN, they assign their performing rights to SOCAN for all works that may be created by them. A “buyout” of performing rights therefore contravenes a member’s agreement with SOCAN. SOCAN is always on the side of what’s best for a member to advance their career and livelihood as a creator and/or music publisher. Only they can decide. But so-called “buyouts” – for example, when a screen production company pays a composer a one-time flat fee for their work – are detrimental to the health of collective rights management societies and their members. Healthy collective rights management pays long-term dividends to music creators who rely on fair royalties for the use of their work. Having instant cash-in-hand can be alluring in the short term. However, in the long term, by ceding your rights to future royalties, you may be short-changing your future, particularly if composing is your chosen career.

Q: Is it legal for a production company, its agent, or a third party to buy out the performing rights in my work and then register it under its own names?
A: SOCAN members must be either a music creator, a music publisher, or a visual artist. Any person or organization that portrays themselves disingenuously will be refused or dismissed as a member. This is a condition of membership for all music rights organizations that are members of CISAC, the global confederation representing 231 authors societies in 121 countries and territories. Please refer to previous question and answer; accepting a buyout of performing rights means a contravention of a member’s agreement with SOCAN.

Q: I could really use the lump sum payment now, but am conscious of giving away future earnings for my work. What should I do?
A: Only you can decide what’s best for you and your career. Being informed will help you to decide. But what you don’t know can change the game for you and your future. Whether you write music for streaming services, television, film, or videogames, there are many opportunities to make money beyond a one-time initial composing or package fee. “Back-end royalties” are generated over many years, wherever and whenever your music is used. This includes airings on broadcast, cable, traditional and satellite radio plays, and streaming service performances. You can also receive royalties from consumer products, including interactive dolls and toys, electronic and physical greeting cards, holograms, stage shows, soundtrack album sales, advertising commercials – even online musical instrument lessons.

Q: Why do screen production companies seek one-time composing or package buyouts?
A: Just like you, they’re trying to gain revenue. Production companies understand that a one one-time flat-fee acquisition of your work and your rights is good business for them. We can assume that, through their research into the monetary value of your work, they’ve concluded that it’s advantageous to remove the original rights holder, the composer, from the picture. Once again, only you as a music creator can determine what’s best for your short-term and long-term gains.

Q: What more can I do?
A: If you’re not already a member, joining the the Screen Composers Guild of Canada (SCGC) or La Société professionnelle des auteurs et des compositeurs du Québec (SPACQ) adds to the solidarity of Canada’s vibrant music composer community. Like SOCAN, these member-based organizations advocate every day for your rights. As a member, you receive numerous benefits, while standing shoulder-to-shoulder with your fellow composers.

Further information:

 SCGC (the Screen Composers Guild of Canada) – The member-based non-profit that promotes the music, status, and rights of film, television, and media composers in Canada.

SPACQ (La Société professionnelle des auteurs et des compositeurs du Québec) – The member-based society created to defend the moral, professional, and economic interests of authors and composers in Québec.

Your Music Your Future – An extensive information resource for the global audience of composers.

Defining Buyouts – An important resource from the Screen Composers Guild of Canada.

Ivors Academy – The U.K.’s independent professional association for music creators, which recently unveiled its Composers Against Buyouts Campaign.

A short guide to non-fungible tokens (NFTs)

Story by Howard Druckman | Thursday April 15th, 2021

There’s been a sudden, widespread proliferation of non-fungible tokens (NFTs) in the music industry in February and March of 2021, so here’s a short guide to explain how they work.

NFTs are a way to sell a unique piece of music (or a painting, photo, graphic, collage, video, piece of writing, or anything else, it seems), exclusively to one person, or one small set of people, via a non-fungible token –  which is intrinsically linked to the original work. In essence, the buyer is purchases ownership of a data file that contains the music (or other work of art) in a unique transaction. The back end is controlled by blockchain technology – a kind of digital ledger that can record transactions between two parties efficiently, verifiably, and permanently.

The only way to buy NFTs now is with a cryptocurrency called Ethereum. Once the artist approves the sale, the Ethereum token is deposited in their digital “wallet,” and can then be transferred into their bank account, and withdrawn as actual money. The combination of blockchain technology and cryptocurrency makes buying an NFT very secure. Once the buyer, or small group of buyers (usually fans of the artist), has purchased the item, the only way for anybody else to obtain it is if a buyer re-sells.

There’s usually still a “middleperson” with NFTs, as the artist sells to the fan through a company, which usually takes a percentage for facilitating the transaction, and a fee for the energy required to create the token. But there can also be less need in the transaction for other typical music industry professionals; record companies, streaming services, digital service providers, agents, managers, publicists, promoters, venues, and so on, might all be left out.

There’s a lot of money to be made with NFTs. Often, the sale is done by auction, which drives up the price for in-demand recording artists. One globally popular Canadian musician auctioned off a video-art piece with a song demo for about $490,000 CAD. Kings of Leon made more than $2.5 million CAD in NFT sales of various exclusive versions of, spin-offs from, and merch for, their current album When You See Yourself. It’s not unlike crowd-funding or Patreon perks, with different products offered by artists to their fans at different prices, or levels of funding; but with NFTs, the sale is only to one fan, or very small, exclusive groups of fans, either once, or in very limited-edition numbers.

And the money can be made multiple times. Because the artists set the terms of the sale, they can dictate the percentage they receive of all future sales of the product, no matter how many times it’s re-sold. So, for example. If whoever bought that Canadian musician’s video-art piece for $490,000 CAD re-sells it for, say, $800,000 CAD, and the musician has established, say, a 20 percent share of future sales, they’ll receive another $160,000 CAD when it’s re-sold. And it might be re-sold many times.

But, according to the eternal laws of supply and demand, in order to drive up the price of the NFTs via auction, or set a high initial price for them, the demand already has to be there. So if a musician draws hundreds of fans rather than hundreds of thousands, or casual listeners rather than hardcore fanatics, they might not make more money from NFTs than from crowd-funding or Patreon offers.

The major, current  drawback to NFTs is that the energy used – referred to as “mining” – for Ethereum is bad for the climate. From Time magazine, March 18, 2021: “Critics say the mining that makes NFTs possible is perhaps humanity’s most direct way of making money by polluting the planet – Ethereum mining consumes about 26.5 terawatt-hours of electricity a year, nearly as much as the entire country of Ireland and its almost five million residents.” But that may improve over time with new advances in technology, so the problem might eventually be solved.

Currently, the buzz around NFTs seems driven more by their money-making potential than their intrinsic musical value. Some say they’re the future of the music industry, some say they’re a fad. Only time will tell for sure.