October 2010 Music Publishing Overview

2 Overview of Music Publishing Music Publishing is the business of acquiring, administering and exploiting rights in musical compositions Music publishers earn revenue from licensing the right to use their songs; every time a song is used or performed, a license must be issued and a payment must be made; in most cases the owner of the copyright must also grant permission, although some uses are compulsory or may be included in blanket licenses. Types of publishing income:  Synchronization – Advertising spots, film soundtracks, musicals etc.  Performing – Television, cinema (outside U.S.), radio, music videos, Internet, concerts  Mechanical – CDs, records, tapes, ring tones, and certain digital configurations  Other – Stage, printed music Generally, the right to receive copyright royalties extends for the life of the writer plus 70 years following his/her death in most jurisdictions, or 95 years from publication for “works- made-for hire” Royalties generated by the use of a song are generally split 50/50 between the publisher and the composer/lyricist In the case of SPE, net music publishing proceeds must be allocated to a product and are subject to participations agreements

3 Performance Royalties Cover a wide range of uses including when a song is broadcast on radio, television, in a cinema (except in the U.S.) or over the Internet Royalties from television exploitation are calculated using surveys performed by the local Performing Rights Organization (PRO) (e.g. ASCAP, BMI and SESAC in the US) Royalties from international (outside the U.S.) theatrical exploitation are calculated based on the revenue generated from ticket sales The PRO collects royalties and forwards 50% to the publisher and 50% to the composer/lyricist directly

4 Synchronization Royalties (Licensing of Music) Licensing of songs for use in audiovisual media, including films, television programs, advertisements, videogames, etc. –SPE generates such revenue when songs for which SPE is the publisher are exploited outside of the original product (e.g. a song from a TV show is used in a radio commercial, a song from a movie is used in a video game, etc.) The publisher is paid directly by the party licensing the composition for synchronization –The publisher pays the composer/lyricist 50%

5 Mechanical Royalties Each time a record is sold, the publisher gets paid –The pace of growth of mechanical royalties is driven by the growth rate of the overall recorded music market In the US, mechanical royalties are currently a statutory rate of 9.1 cents per song per unit sold, although lower rates are often negotiated by record labels (usually 75% of the statutory rate) –Internationally, mechanical royalties vary from region to region, and are based on a percentage of the price of each record sold (e.g., the rate in the UK is 8.5% of the wholesale price) The responsibility for collecting the monies from the record companies that ship the albums lies with local collection societies (sometimes the same as the PROs); In the US, most mechanical fees are collected through The Harry Fox Agency. −The collection society keeps a small fee and forwards the royalty to the publisher, which then pays 50% to the composer/lyricist