Songwriters need to affiliate themselves with a performance rights organization before releasing a song to the public so the P.R.O.'s as they're called, can collect performance royalties for the songwriters.
Collecting performance royalties is a complicated process and the only way to ensure songwriters are properly paid is by the songwriter joining one of these three organizations :
ASCAP - The American Society of Composers, Authors, and Publishers
BMI - Broadcast Music, Inc
SESAC - the name originally stood for Society of European Stage Authors & Composers, but now it's known simply as SESAC
I'm a member of BMI and I'm very happy with them. I know a few songwriters and music publishers who are with ASCAP and they're perfectly content, too. This is a personal decision you must make and a good way to proceed here is to research all three on the web and ask people in the biz what their preference is and why before deciding.
Songwriters earn most of their song royalties from the following two categories:
1. Mechanical royalties
These are song royalties earned from sales of recordings, i.e., CD's, internet downloads, ringtones, computer games, midi files, etc.
The minimum statutory rate is currently 9.1¢ or $1.75 per minute (whichever is greater), which means for every one of your songs sold as a recording, you and your music publisher will split 9.1¢.
Let's say you wrote an awesome song and your music publisher was able to place it on an artist's CD which sold 1,000,000 copies. Check out the hit charts; this scenario happens all the time!
1,000,000 x 9.1¢= 91,000/this means $45,500 each for songwriter and music publisher
2. Performance royalties
These song royalties are earned whenever the songwriter's composition is performed publicly such as: on the radio, television, bars, roller skating rinks, bowling alleys, etc.
Let's take the above example and imagine your song became a top ten hit on pop/top 40 radio:
Over a year's period these song royalties would be approx. $500,000/ $250,000 each for the songwriter and music publisher.
The total for a songwriter in the above scenario is already $295,000. The music publisher gets the other $295,000! And that is not including singles sales royalties, foreign royalties, sheet music royalties, synchronization licenses, and several other song royalty sources for songwriters.
So, in reality just one hit song will earn approx. $350,000 to $600,000 for a songwriter and the same amount for a music publisher during a year's time frame. Imagine if you have three more songwriter credits on this CD and one more hit!
This is the reason a music publisher is always looking for talented songwriters for that next hit song. There's a ton of money to be made from song royalties!
After the song has run its course as a hit, it will keep earning you song royalties as long as it's played on the radio, as long the CD is still for sale, if it's re-recorded by other artists, etc., It can literally earn you a lifetime of revenues.
A good song is a great investment. A great song brings a lifetime of earnings!
There are many songwriters living off their song royalties, long after they had a handful of hits.
Song royalties are a serious lifetime investment for many songwriters and the lifeline of music publishers
Songwriters and Music Publishers make an enormous amount of money in song royalties with just one hit song.