Originally posted at: TuneCore | Written by: George Howard
One of the interesting unintended consequences of the trend away from albums and back towards singles is that there is now less mechanical income being generated for writers. Remember, a label must pay the copyright holder of the song (i.e. the writer and/or publisher) for the right to "mechanically" reproduce the writer's song on the label's release (be it on CD, vinyl, download, etc.).
The current rate, as set by statute, is nine point one cents ($.091) for songs under five minutes in length. Labels often insert a clause into recording contracts that reduces this amount when the artist signed to the label is also the writer; this so-called controlled composition clause reduces the mechanical royalty that is paid by the label to the artist by as much as 25%.
Whether the writer receives the full-rate or a reduced rate, this mechanical income is very material. Typically, mechanical payments must be paid to the artist from the label from this first record sold, and these payments should not be cross-collateralized against the artist royalty. What this means is that, as is the case for many artists signed to labels, even if an artist's account is un-recouped (meaning they have not made back in sales what the label has paid to sign, record, and (often) promote their record), the label still must pay the writer of the song(s) a mechanical royalty. This mechanical payment is thus often the only money a writer sees from the label.
During the album era, if you wrote all of the songs that were released on the album - and for easy math assume the typical album had ten songs on it, and that you were getting a reduced mechanical payment of seven point five cents per song - this meant that for every record sold, you, the songwriter, were owed seventy-five cents (the reduced mechanical of $.075 for each song multiplied by the ten songs on the album). If you were to sell a hundred thousand records, you were owed $75,000. This is not chump change, and there is a compelling argument to be made that the true benefit to signing with a label was that they were the promotional engine that drove mechanical royalties.
The advantage of this for the songwriter during the album era was, of course, that there may have only been one or two songs that captured the public's imagination - the hits on radio, for example - but the writer still got paid for all of the songs on the album that she wrote, even if the majority of people bought the album just for those one or two songs.
Even during the 7"-single era (i.e. small vinyl), savvy artists and managers would make sure to put a song they had written on the b-side so that when the record was purchased because of the a-side, they made some (or double) the mechanical income. This strategy of putting an original on the b-side of a single with the a-side as a cover is in some respects the reason why The Rolling Stones, for example, began writing their own compositions.
Today, we've largely left behind not only the full-length album, but also the 7"-inch single. Customers download specific individual tracks. In so doing, this results in non-single tracks on the album not being downloaded, and thus not generating any mechanical royalties for the writer.
Certainly, there are artists who still sell "albums"; i.e. their customers either still buy the full-length CD (or vinyl) and/or download an entire album, but clearly the trend is towards à la carte downloads (or streams) of singles.
This impacts, of course, not only those performers who are signed to the label, and also write their own material, but also writers whose work is covered by a performer. Unless this writer's song that is covered is the single, the chances of generating the type of mechanical income that was derived from sales during the album era is pretty much nil.
It will be interesting to see how this economic reality impacts the creative output of artists. If there is less economic incentive to write material that is unlikely to be a "single," will artists write less or write differently? It's frightening to think that in today's single driven market (one without even b-sides) that the Stones might have contented themselves with being a cover band - never writing - and releasing records only so they could tour.
What are your thoughts? Does the "album" concept still matter, given the lack of economic incentives? Leave your thoughts in the comments.
George Howard is the former president of Rykodisc. He currently advises numerous entertainment and non-entertainment firms and individuals. Additionally, he is the Executive Editor of Artists House Music and is a Professor and Executive in Residence in the college of Business Administration at Loyola, New Orleans. He is most easily found on Twitter at: twitter.com/gah650