HOW TO START YOUR OWN MUSIC PUBLISHING COMPANY
by Nancy A. Reece Carpe Diem Copyright Management,
Nashville, TN (615) 865-6302
One of the most important things to consider as a songwriter is the way in which you decide to conduct your business. You may have spent a good deal of time deciding how to care for your art. You have selected a space to write in and the tools by which to work your craft. It is now time to spend some energy on the business of this craft.
The most common and familiar forms of doing business include the sole proprietorship, partnerships and corporations. Other types of entities used include trusts, joint ventures and limited liability companies. Often, several objectives are evaluated in choosing the appropriate business entity. Most notable are the ability to limit personal liability from the debts and obligations of the business and the tax advantages and disadvantages associated with operating as a particular entity.
Types of entities to consider:
A> Sole Proprietorship
A sole proprietorship is a business conducted by one individual in his or her own capacity without forming a separate legal entity for holding a conducting business. The business owner is referred to as a "sole proprietor" and simply uses a certain portion of his or her personally-owned assets for business purposes. The income or losses produced by the business are essentially those of the business owner and are reported on the owner's personal income tax return. It is the simplest form of entity to create where there is only one owner.
B> General Partnership
Where two or more individuals organize as co-owners to carry on a business for profit, a general partnership is formed. No written agreement is required; however, in most if not all instances, a written agreement is preferable. The owners can consist of individuals, other partnerships, corporations, or other entities. The general partnership is a separate entity apart from its owners, and the owners are referred to as "partners."
The assets of a partnership are treated as belonging to the business unit and are considered separate and distinct from the individual assets from the partners.
C> Limited Partnership
A limited partnership is a partnership formed by two or more persons under the limited partnership laws of a state. The partnership must have at least one general partner and at least one limited partner. Where a limited partnership is formed and operated, each of the limited partners is not subject to the partnership debts and obligations, unless 1) separate grounds for liability exist, 2) the limited partner is also a general partner, or 3) the limited partner takes part in the management of the partnership.
D> Joint Venture
A joint venture is an entity formed for a specific duration or project. Generally, the joint venture is treated the same as a general partnership.
E> Corporation
Every state provides statutes for doing business in corporate form. By law, a properly formed corporation is treated as an entity separate and apart from its owners. This is true even where all of the corporate stock is owned by one person. A corporation is a separate entity for tax purposes and must file its own tax returns and pay tax on its income.
F> Limited Liability Company
The "LLC" is a relatively new entity that has become very popular in recent years. The limited Liability Company combines the limited liability aspects of the corporation with the flow through tax treatment of a partnership. In general, the limited liability company is a very flexible entity under which to operate. The owners are referred to as "members."
Once you have thoroughly considered your options for the type of business you want to set your publishing company in, it is time for a name for this new company. You may have already thought of one. The important thing is to have fun with it. Some publishers choose to end the name of the company with the word 'music' or 'publishing' such as "XYZ Music" or "XYZ Publishing." There is no hidden rule about doing this, but it has become customary.
Your new music publishing company will need to be affiliated with the performing rights organization (PRO) that the songwriters are signed up with. You must have a separate name for each PRO affiliation. For example, if you are the only writer, then the publishing company would be with your PRO. If you co-wrote with another writer and also have their share of the publishing and they happen to be with another PRO then you must form a separate publishing company to affiliate with that PRO.
You may choose to have each company separate entities or divisions of one entity.
Each PRO has different requirements and guidelines for new publisher affiliations and can be obtained at their web sites. Here are the United States Performing Rights Organizations:
BMI
ASCAP
SESAC
Now that you have a name and have selected your form of organization it is important to take a hard look at your product; your compositions.
What is the best way for these compositions to make the company money? Mechanical, Synchronization, Performance or Print uses? Map out plans for each of these forms of exploitation and do your best to move forward on each of them in some way. You can read more about this in an article called "Publishing".
Here is a tip for self-published songwriters to think about: If you sold 1000 CDS and cassettes on your own of a project, you had 10 songs recorded of all your compositions, published by your publishing company did you know that you have already made $710.00 as a writer/publisher! The current statutory rate for a mechanical use is $.071 x 10 songs is $.71 per record x 1000 units = $710.00
You may be making money as a writer and publisher and didn't even know it! Okay, so it came out of one pocket and into another, but still, it made you feel good didn't it!
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Carpe Diem's owner and president, Nancy A. Reece has been involved in the music business since 1983. She was the president of an independent advertising agency for eight years as well as a successful personal artist manager for nine years. She represented the careers of several recording artists and songwriters including those with EMI, Zomba and Liberty Records as well as Benson, Starsong, WoodBridge, Temple Hall and N'Soul Records. She also represented, for a number of years, a Grammy and Dove nominated record producer. Reece has won awards of excellence in print magazine advertising and has been named as one of 2,000 Notable American Women (1995) as well as being listed in the International Who's Who of Professional and Business Women (1993). She was also named Cashbox Magazine's Promoter of the Year (1989).
If you would like to ask Nancy a copyright or publishing question for our continuing Q&A section, please send your e-mail to
editor@musesmuse.com.. We can't guarantee we'll get to all of the questions, but we'll certainly try.
