HOW SONGWRITERS ARE PAID And the Federal Government’s RoleROYALTIES:
- Mechanical Royalty — Writers receive 9.1 cents for a song that sells on an artist’s CD. However, this is usually split with the publisher, leaving the songwriter only 4.55 cents. If the song is co-written, then they receive only 2.275 cents! So, if a writer has a song on a million-selling album, they earn around $22,750.
- Performance Royalty — A songwriter is paid when his or her song is performed live or on radio, television, or cable. The average performance royalty is under $5,000 per year for those who are lucky enough to receive performance income.
- Songwriter royalties are THE ONLY INCOME STREAM in America DICTATED by the Federal Government! The rate a songwriter is paid is determined by the Copyright Royalty Board. When and how songwriter royalties are distributed is governed by Congress and the Department of Justice.
- Songwriters cannot increase their royalty income, even if the cost of doing business increases.
- A songwriter may go years without receiving royalties. If they have a hit song, the federal government says that the songwriter must receive royalties immediately after they are collected. This means a songwriter might receive most of their income from a song in one calendar year — making that income subject to a disproportionately high income-tax levy. Other creators, such as book authors, can negotiate the terms of their payments over several years for tax purposes — but NOT songwriters! Songwriters were once allowed to average their incomes. This is no longer permitted.
- Frivolous lawsuits can cost a songwriter their royalty income.
Copyright infringement is one of the most important and potentially expensive legal issues affecting songwriters. Every songwriter needs to understand what to do, as a practical matter, to minimize the likelihood of being accused of copyright infringement and to maximize the likelihood of convincing others that the songwriter’s works are independent creations.