How Royalties Are Determined for New Material Written for Public Domain Music Compositions

A music composition in the public domain is one that is unprotected by copyright because its copyright has expired. As a brief overview of copyright duration under U.S. copyright law ' and there are more complexities depending on the composition involved, so this is a general rule of thumb ' protection for a composition copyrighted prior to Jan. 1, 1978, lasts for 95 years from the earlier of registration with the Copyright Office or of publication. For compositions written on or after Jan. 1, 1978, copyright protection lasts for the life of the author (or last surviving author if a joint work), plus 70 years. And if the composition was written as a work for hire, the copyright protection term is the earlier of 95 years from publication or 120 years from creation.

Granted, not as much public domain material is recorded in comparison with original material, but if such a song becomes a hit or is on a successful album, the public performance royalties can be substantial provided the writer/arranger (who is many times the recording artist or record producer) holds the copyright in his or her version and registered it with the performance right society (PRO) with which the writer is affiliated.

Royalty Payments

In the artist's record contract or the producer agreement (if the writer is the producer) there is almost always a clause that deals with how mechanical royalties are paid if a public domain song is contained on the album or released as a single track. Some record companies refuse to pay any writer or publisher mechanical royalties for public domain compositions. Others pay a reduced stated penny rate.

The most common approach (one accepted by most record companies), however, provides that the record company will pay the songwriter/arranger on the basis of the percentage that ASCAP, BMI or SESAC determine what they will pay the writer/arranger for performances of the copyrighted arrangement. In this regard, ASCAP will treat an arranger as a writer and pay royalties according to the amount of new material that has been added to the original public domain composition. The percentages range from a low of 2% to a high of 100%.

Here is a summary of ASCAP's guidelines in the crediting of public domain works for royalty purposes:

• If the arrangement is separately published or separately copyrighted, there will be a 10% royalty crediting (i.e., the royalties payable for performances will be 10% of the royalties that would be earned by an original song). If the work is included in a copyrighted collection (but does not qualify for 10%), then the royalty crediting is 2%.
• If the composition contains public domain lyrics and new, original music, it may receive up to 50% crediting, depending on the extent and treatment of the lyrics within the context of the entire work.
• If the copyrighted arrangement contains lyrics, it is deemed to be a vocal arrangement and can earn up to 100%, depending on the extent to which it embodies changes in the underlying composition as follows: a) new lyrics, up to 50%; or b) changes in the music, up to 50% (in addition to any % received in a) above).
• If the work is primarily an instrumental, it can be accorded up to 100% of the % given to an original composition as follows: a) a transference from one medium to another, up to 35%; or b) a development of a composition, which exhibits creative treatment and contains original musical characteristics and is identifiable as a set piece apart from the source material, up to 100%.

BMI, on the other hand, will pay the writer/music publisher 20% of what an original newly written song would earn. Unlike ASCAP where there is a review process, if the writer requests such to increase the percentage from the initial 2% to 10% that is initially allocated, this is a flat rate determination which is applied to all copyrighted arrangements of public domain compositions across the board.

SESAC treats public domain works in a manner similar to BMI, as arrangements of songs that are in the public domain are paid at 15% of the otherwise applicable income that would have been earned by an original song.

To illustrate with an example as to how the procedure works in reality, let's assume that a writer artist or writer producer is an ASCAP writer member who records a contemporary arrangement of a song that is in the public domain. In the artist's record contract there is a provision that the artist will be paid the 9.1' U.S. statutory royalty for the sale of every composition that the artist writes and records. There is a 13-times statutory cap on physical product, but in our example such does not apply due to the fact that the album does not exceed the cap (i.e., the album has only 13 songs on it).

In addition, there is a provision in the controlled composition clause of the artist and/or producer agreement that states that mechanical royalties on any arrangement of a public domain work will be calculated in proportion to the percentage given the writer's copyrighted arrangement by ASCAP, BMI or SESAC.

The single is released, is successful and sells 250,000 downloads. The album goes to #1 and sells 500,000 units in the United States. The recording artist/writer (or writer/producer, if applicable) submits the recording and a copy of the new arrangement to ASCAP, where the composition is analyzed in-house and a percentage determination is made. If the writer is not happy with this decision, he or she can appeal to the Special Classification Committee. For the sake of this example, ASCAP and its Special Classification Committee give the composition a 50% royalty rating because of significant additional new material, creativity, etc. ' in effect making the new composition worth one-half of an original newly written song.

The record company is sent a copy of the ASCAP determination (the same would occur with BMI and SESAC with their flat fee rates). The company then gives the song a 50% mechanical royalty payout rate. In other words, the song will receive 50% of the “original song” statutory 9.1' per-composition mechanical royalty rate. Certain agreements have a time limit on when the determination and supporting evidence has to be received by the record company, though this article is intended to answer whether such a provision is enforceable or not. One should, however, be aware of such.

In the example, the mechanical royalty calculations for sales in the United States would be:

Single

9.1' x 50% = 4.55' x 250,000 = $11,375

Album

9.1' x 50% = 4.55' x 500,000 = $22,750

$34,125 Total

Such a clause may not seem important to most recording artists and producers who write their own material, but a good recording or producer contract should anticipate and provide for all contingencies. It may not seem likely that the artist will be recording any public domain compositions. But if it happens, the artist (or writer/producer) should be guaranteed some type of fair formula for payment.

It should be emphasized that songwriter and music publisher performance royalties will be based on that same percentage, so if a public domain song becomes a radio or Internet hit, the percentage allocation received from ASCAP, BMI and SESAC can really have an effect on the amount of money that can be earned. Thus, if a song is a major radio hit, earnings in the area of $300,000 to $700,000 in songwriter earnings are not unusual in performance royalty income for an original song during the period of chart activity. One just has to do the math to see the monies at stake depending on the percentage given by the writer's PRO for the public domain work arrangement. For example, an ASCAP 50% public domain crediting would generate $150,000 to $350,000 in writer earnings if one were to use the above original song payments. A BMI 20 % crediting would generate total songwriter figures in the area of $60,000 to $140,000. A SESAC 15% crediting would generate $45,000 to $105,000.

And because the music publisher is paid at the same rate as the writer/arranger, this is not only a songwriter issue but a publisher issue as well.

Registering with a PRO

In the registration processes with ASCAP, BMI and SESAC, some of the forms and inquiry boxes to be checked are somewhat different from the normal registration process [e.g., a) original music, b) public domain music, c) pre-existing copyrighted music written by someone else, used with permission, but not in collaboration, d) original lyrics (words), e) public domain lyrics (words), f) pre-existing copyrighted lyrics (words) written by someone else, used with permission but not in collaboration, g) the work is concert music (e.g., symphonic, chamber, recital, etc. with qualifiers concerning whether the work is complete in one movement, part of a multi-movement work such as a symphony, concerto or song cycle, or part of a larger work, etc.)]. So knowledge of registration procedures (as mundane as this may sound) is vital to ensure rights and proper crediting, monitoring, and payment of royalties.

Note that determining whether a song is in the public domain is always the first inquiry. Once this has been established, the next inquiry is how to receive income for its use. To receive any royalties or license fees for a particular copyrighted arrangement of the public domain work, notify the PRO. Without that step, the income flow will be zero dollars. Once done, the PRO will pay between 2% and 100% of the royalties that would have been generated had the song not been a public domain work.

Jeff Brabec is Vice President Business Affairs, BMG Chrysalis, BMG Rights Management and a member of this newsletter's Board of Editors. Todd Brabec, Esq., is former ASCAP Executive Vice President. The Brabecs are co-authors of the book Music Money and Success: the Insider's Guide to Making Money in the Music Business, available at www.musicandmoney.com. '2013 Jeff Brabec and Todd Brabec.

A music composition in the public domain is one that is unprotected by copyright because its copyright has expired. As a brief overview of copyright duration under U.S. copyright law ' and there are more complexities depending on the composition involved, so this is a general rule of thumb ' protection for a composition copyrighted prior to Jan. 1, 1978, lasts for 95 years from the earlier of registration with the Copyright Office or of publication. For compositions written on or after Jan. 1, 1978, copyright protection lasts for the life of the author (or last surviving author if a joint work), plus 70 years. And if the composition was written as a work for hire, the copyright protection term is the earlier of 95 years from publication or 120 years from creation.

Granted, not as much public domain material is recorded in comparison with original material, but if such a song becomes a hit or is on a successful album, the public performance royalties can be substantial provided the writer/arranger (who is many times the recording artist or record producer) holds the copyright in his or her version and registered it with the performance right society (PRO) with which the writer is affiliated.

Royalty Payments

In the artist's record contract or the producer agreement (if the writer is the producer) there is almost always a clause that deals with how mechanical royalties are paid if a public domain song is contained on the album or released as a single track. Some record companies refuse to pay any writer or publisher mechanical royalties for public domain compositions. Others pay a reduced stated penny rate.

The most common approach (one accepted by most record companies), however, provides that the record company will pay the songwriter/arranger on the basis of the percentage that ASCAP, BMI or SESAC determine what they will pay the writer/arranger for performances of the copyrighted arrangement. In this regard, ASCAP will treat an arranger as a writer and pay royalties according to the amount of new material that has been added to the original public domain composition. The percentages range from a low of 2% to a high of 100%.

Here is a summary of ASCAP's guidelines in the crediting of public domain works for royalty purposes:

• If the arrangement is separately published or separately copyrighted, there will be a 10% royalty crediting (i.e., the royalties payable for performances will be 10% of the royalties that would be earned by an original song). If the work is included in a copyrighted collection (but does not qualify for 10%), then the royalty crediting is 2%.
• If the composition contains public domain lyrics and new, original music, it may receive up to 50% crediting, depending on the extent and treatment of the lyrics within the context of the entire work.
• If the copyrighted arrangement contains lyrics, it is deemed to be a vocal arrangement and can earn up to 100%, depending on the extent to which it embodies changes in the underlying composition as follows: a) new lyrics, up to 50%; or b) changes in the music, up to 50% (in addition to any % received in a) above).
• If the work is primarily an instrumental, it can be accorded up to 100% of the % given to an original composition as follows: a) a transference from one medium to another, up to 35%; or b) a development of a composition, which exhibits creative treatment and contains original musical characteristics and is identifiable as a set piece apart from the source material, up to 100%.

BMI, on the other hand, will pay the writer/music publisher 20% of what an original newly written song would earn. Unlike ASCAP where there is a review process, if the writer requests such to increase the percentage from the initial 2% to 10% that is initially allocated, this is a flat rate determination which is applied to all copyrighted arrangements of public domain compositions across the board.

SESAC treats public domain works in a manner similar to BMI, as arrangements of songs that are in the public domain are paid at 15% of the otherwise applicable income that would have been earned by an original song.

To illustrate with an example as to how the procedure works in reality, let's assume that a writer artist or writer producer is an ASCAP writer member who records a contemporary arrangement of a song that is in the public domain. In the artist's record contract there is a provision that the artist will be paid the 9.1' U.S. statutory royalty for the sale of every composition that the artist writes and records. There is a 13-times statutory cap on physical product, but in our example such does not apply due to the fact that the album does not exceed the cap (i.e., the album has only 13 songs on it).

In addition, there is a provision in the controlled composition clause of the artist and/or producer agreement that states that mechanical royalties on any arrangement of a public domain work will be calculated in proportion to the percentage given the writer's copyrighted arrangement by ASCAP, BMI or SESAC.

The single is released, is successful and sells 250,000 downloads. The album goes to #1 and sells 500,000 units in the United States. The recording artist/writer (or writer/producer, if applicable) submits the recording and a copy of the new arrangement to ASCAP, where the composition is analyzed in-house and a percentage determination is made. If the writer is not happy with this decision, he or she can appeal to the Special Classification Committee. For the sake of this example, ASCAP and its Special Classification Committee give the composition a 50% royalty rating because of significant additional new material, creativity, etc. ' in effect making the new composition worth one-half of an original newly written song.

The record company is sent a copy of the ASCAP determination (the same would occur with BMI and SESAC with their flat fee rates). The company then gives the song a 50% mechanical royalty payout rate. In other words, the song will receive 50% of the “original song” statutory 9.1' per-composition mechanical royalty rate. Certain agreements have a time limit on when the determination and supporting evidence has to be received by the record company, though this article is intended to answer whether such a provision is enforceable or not. One should, however, be aware of such.

In the example, the mechanical royalty calculations for sales in the United States would be:

Single

9.1' x 50% = 4.55' x 250,000 = $11,375

Album

9.1' x 50% = 4.55' x 500,000 = $22,750

$34,125 Total

Such a clause may not seem important to most recording artists and producers who write their own material, but a good recording or producer contract should anticipate and provide for all contingencies. It may not seem likely that the artist will be recording any public domain compositions. But if it happens, the artist (or writer/producer) should be guaranteed some type of fair formula for payment.

It should be emphasized that songwriter and music publisher performance royalties will be based on that same percentage, so if a public domain song becomes a radio or Internet hit, the percentage allocation received from ASCAP, BMI and SESAC can really have an effect on the amount of money that can be earned. Thus, if a song is a major radio hit, earnings in the area of $300,000 to $700,000 in songwriter earnings are not unusual in performance royalty income for an original song during the period of chart activity. One just has to do the math to see the monies at stake depending on the percentage given by the writer's PRO for the public domain work arrangement. For example, an ASCAP 50% public domain crediting would generate $150,000 to $350,000 in writer earnings if one were to use the above original song payments. A BMI 20 % crediting would generate total songwriter figures in the area of $60,000 to $140,000. A SESAC 15% crediting would generate $45,000 to $105,000.

And because the music publisher is paid at the same rate as the writer/arranger, this is not only a songwriter issue but a publisher issue as well.

Registering with a PRO

In the registration processes with ASCAP, BMI and SESAC, some of the forms and inquiry boxes to be checked are somewhat different from the normal registration process [e.g., a) original music, b) public domain music, c) pre-existing copyrighted music written by someone else, used with permission, but not in collaboration, d) original lyrics (words), e) public domain lyrics (words), f) pre-existing copyrighted lyrics (words) written by someone else, used with permission but not in collaboration, g) the work is concert music (e.g., symphonic, chamber, recital, etc. with qualifiers concerning whether the work is complete in one movement, part of a multi-movement work such as a symphony, concerto or song cycle, or part of a larger work, etc.)]. So knowledge of registration procedures (as mundane as this may sound) is vital to ensure rights and proper crediting, monitoring, and payment of royalties.

Note that determining whether a song is in the public domain is always the first inquiry. Once this has been established, the next inquiry is how to receive income for its use. To receive any royalties or license fees for a particular copyrighted arrangement of the public domain work, notify the PRO. Without that step, the income flow will be zero dollars. Once done, the PRO will pay between 2% and 100% of the royalties that would have been generated had the song not been a public domain work.

Jeff Brabec is Vice President Business Affairs, BMG Chrysalis, BMG Rights Management and a member of this newsletter's Board of Editors. Todd Brabec, Esq., is former ASCAP Executive Vice President. The Brabecs are co-authors of the book Music Money and Success: the Insider's Guide to Making Money in the Music Business, available at www.musicandmoney.com. '2013 Jeff Brabec and Todd Brabec.