Performance royalties come from radio, TV, and streaming through three major PROs: BMI, ASCAP, and SESAC. You register as both writer and publisher, but payments lag by months. The IRS treats PRO income as self-employment, so you owe quarterly taxes and need an accountant.
Chapters
Hi guys, thanks for tuning in. Today we're going to talk about performance royalties, and performance royalties is the money that you get paid when your song is performed live or, um, when it's broadcast on the air like radio or TV, right? It's performance royalties, and you probably recognize the names BMI, ASCAP, and SESAC. They are the three major companies that collect performance royalties. They're called performing rights organizations, and each artist signs up for one or the other, right? So you're going to collect money based on your music getting played. It's sort of like the radio stations pay a licensing fee for all of the music they, they play, and it goes into a giant bucket, and then the money is divided up from that bucket for that period of time when music is played at radio. So whoever gets the most radio play is going to collect the largest portion of the licensing fees. So it's a way that you're going to get paid. You're probably in the early days are not going to make a lot of money through performance royalties, but once you start producing for larger artists like Ed Sheeran or Drake or Future and they're getting a lot of radio play and they're doing a lot of live shows, you're probably going to make some decent money at performance— in performance royalties. So it's really important that you sign up for either ASCAP, BMI, or SESAC. Also, you're going to want to sign up for SoundExchange, which is the money that you make from music that's streamed on the web. So like Pandora, for example, you would get paid through— or an internet radio station, you would get paid for through SoundExchange. So make sure you sign up for those companies. Um, it's not that I can recommend one over the other. You need to do the research. Go to ASCAP.com, go to BMI.com, go to SESAC.com. Um, SESAC, I believe, is still by invitation only. BMI or ASCAP, you can choose. ASCAP is run by artists. BMI is run by broadcasters. So BMI is sort of like broadcasters policing radio themselves. ASCAP is more of an artist organization with artists policing radio, but it's up to you to decide which one you want to join. You can't just jump from one to the other. Like, if you don't like ASCAP, you can't just jump to BMI. You've got to go in and read your contract with them. There's a very small window of time in a year, in a certain period of time— I think it's after 3 years— where you can switch from one to the other. But they all pretty much do the same thing. They collect money for you and they pay you. It seems to take forever to get paid. I know that when, um, when you get radio play, for example, in 2018, it's gonna take until late in 2019 for you to start getting paid. It just takes a while for that money. It kind of lags a little bit. But those are performance royalties, and you definitely need to be part of one organization or another. For those of you that are signing up through Songtrust to administer your publishing, um, they will actually sign up your publisher side to BMI for you. It saves you a little bit of money. I think it saves you, um, $100 or $150 to have them sign up for you, which is quite a good savings. But if you go to each of those organizations' websites, you can see exactly what it costs to join. And you're going to join on the writer's side and the publishing side. So there's two different, um, uh, ways to sign up that you definitely need to have both. So if you're writing your own music and you're collecting the publishing on your own music, you absolutely need to sign up on, on both sides. And then another thing that I want to touch on really lightly here is probably the least popular topic that I could possibly speak about, but also one of the more important ones, and that's about paying your taxes. Because every April 15th, you need to pay your taxes from the year prior. And as people pay you, for example, like BMI and SoundExchange and ASCAP, they file a 1099 form with the IRS that says how much they paid you that year. So if you don't pay your taxes that following April— and you're supposed to pay your taxes quarterly, you don't necessarily wait until March and cut them a check— you're supposed to be paying them based on the amount of income you have. And for those of you that are making a good sum of money you absolutely need to have an accountant handling this for you, because the last thing you want is to wait till the end of a year or the end of a second year after you've made a shit ton of money, and then all of a sudden you're hit with late fees and interest. It gets really expensive to not pay your taxes, and they really don't pay— I mean, play. So you have to pay because they don't play. They will come and they will take their money. The US government are the biggest gangsters out here, and if you don't pay your taxes, they will come and get the money. They will seize your money. They will seize your bank accounts. They will get their money. They will get their money. They will get their money. So please just handle it in a timely fashion. Have an accountant. Have people on your team that can educate you about what needs to be done when you start making money. Find a financial advisor, somebody that's trustworthy, that actually can give you advice on how to invest your money and how to set yourself up on a budget so that you don't overspend. Especially for those of us that aren't used to having money, make sure that you have professionals in your court so that you know exactly what to do and what not to do when you start making money. Okay guys, that's it. Thanks for tuning in. I will see you tomorrow.
