DROP THAT ENTERTAINMENT PUBLISHING COMPANY The contractual relationship between a songwriter or music composer and a music publisher, whereby the writer assigns part or all of his or her music copyrights to the publisher in exchange for the publisher's commercial exploitation of the music. Music publishing has been an important part of the U.S. entertainment industry since the early twentieth century. Songwriter’s contract with music publishing companies to exploit their songs, with both parties sharing the income generated from the songs. Before the introduction of musical recordings, songwriters and publishers earned their income primarily from the sale of sheet music. In the modern era, songs can be commercially exploited in many types of media, including recordings, radio, television, film, and video. Music publishing is governed by U.S. copyright law, but much of the law of music publishing is negotiated through private contractual agreements. Music publishers are powerful intermediaries between songwriters and recording companies. Typically, a music publisher demands copyright ownership from the songwriter, along with half of the royalties. A publisher may make a large cash advance to a popular or promising songwriter, but often the advance is minimal. In return, the publisher seeks to place the songwriter's compositions with performers who will make a recording. In addition, a publisher will try to place songs in films, television shows, and advertisements. If the songwriter is also a performer, the publisher will assist the artist in obtaining a recording contract. The publisher also assumes the responsibility of collecting royalties and giving the songwriter his share. Publishing income comes from various sources, but it is separate from income derived from retail sales of recordings. Income from recording sales flows to the owner of the recording (usually the record company), which then pays a contractually negotiated recording royalty to the performer. The owner of the recording separately pays the publisher of the recorded compositions a mechanical royalty for the right to record, copy, and distribute copies of the composition. These royalties are called mechanical royalties because the license is for mechanical recording and reproduction of the composition. Under U.S. copyright law, a publisher is required to grant a mechanical license to anyone wishing to record a composition that has previously been recorded and released commercially. This is called a compulsory license, and the minimum rate that must be paid to the publisher for such a license is set by Congress at a few cents for each copy made of a recording of the composition. Normally, however, a record label that wishes to record a publisher's composition will negotiate a private license with the publisher rather than follow the strict accounting and reporting rules that accompany recording under a compulsory license. Because of this situation, the statutory compulsory license rate has become the effective ceiling rate for recording a composition, because no one need pay more than the rate set by law. A lucrative part of music publishing involves performance royalties. Performance royalties are paid when a song is played on the radio or television, used by businesses for background music, or used by clubs for dance music or by bands performing at a club. A popular song can earn thousands and sometimes millions of dollars through the collection of performance royalties. However, it would be too demanding for a publisher to sign performance licenses with every club, radio station, and business office that might use a particular song. Instead publishers and songwriters register with a performing rights organization (PRO) to collect fees on their behalf. The three PROs in the United States are the American Society of Composers, Authors, and Publishers (ASCAP), Broadcast Music, Inc. (BMI), and the Society of European State Authors and Composers (SESAC). The PROs negotiate blanket licenses with all who use music for profit. Such fees can range from less than one hundred dollars for a small business using music to enhance its business environment, to hundreds of thousands of dollars or millions of dollars for large-scale broadcasting entities. The PROs then monitor radio and television broadcasts and, using a complex statistical model, pay publishers and songwriters based on projected actual uses of a song. When a composition is registered with a PRO, the registrant informs the PRO what percentages of royalties are to be paid to the publisher and songwriter. The PRO issues separate payments to the publisher and to the songwriter (or songwriters). A particular songwriter may only be registered with one PRO at a given time to avoid confusion as to which PRO is responsible for collecting performance royalties on the songwriter's behalf. The use of blanket licenses allows an artist to perform compositions written by another songwriter without first requesting the songwriter's permission. As opposed to mechanical licenses, there is no statutory rate for the use of a song in films and television advertisements (synchronization licenses), in radio advertisements (transcription licenses), or for sale as sheet music (print licenses). These fees are negotiated separately between the user and the music publisher. The licensee pays the entire fee to the publisher, who then pays the songwriter's share to the songwriter. Since the 1960s, many popular musical performers have written their own musical compositions. Some of these artists choose to "self-publish," forgoing relationships with publishers and thus retaining full ownership and control of their copyrights. These artists are more often songwriters whose compositions are so unique that they are not likely to be recorded by other performers. Therefore, this type of artist will receive little benefit from an outside publisher's marketing efforts. However, because the music industry's royalty structure assumes that publishing income will be paid to a publisher, a self-published artist often will set up her own publishing company under an assumed name to receive publishing income. A self-published artist will frequently hire an accounting firm to handle specific administrative functions such as royalty collection, for a much smaller fee than a full-service music publisher would demand.