Setting up a Music Publishing Company in Canada – Introduction
Setting up a music publishing company in Canada may seem like a daunting task, you may have questions about the cost and whether it is really necessary. Here is a story to give you some insight into the process.
A musician told me he was contacted by an established music publishing company. They’re interested to represent his music for publishing opportunities, namely to get the music placed in TV series, movies, advertisements and games.
However, he was told that because he doesn’t have his own publishing company, he wouldn’t be able to directly collect his publishing performance rights royalties. While that’s accurate, it shouldn’t be the end of the story.
Publishing Company Step 1 – SOCAN
To help understand the context, let’s start with SOCAN. SOCAN (the Society of Composers, Authors and Music Publishers of Canada) represents the Canadian performing rights of Canadian and international music creators and publishers.
As SOCAN describes it, whenever a copyrighted piece of music is played publicly, such as on the radio, in concert, or on television, the writers and copyright owners of the music are entitled to a performance royalty. For example, a Canadian TV network, that uses music for public performances, pays license fees through a series of tariffs (set by the Copyright Board of Canada) to SOCAN, who pay a performance rights royalty to the relevant writers and copyright owners of music that was performed publicly.
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Publishing Company Step 2 – Calculations
The song’s writer(s) are entitled to 50% of the performance rights royalties – the writer’s share. The copyright owner(s) are entitled to other 50% – the publisher’s share. A musician will be entitled to all of the publisher’s share in her music unless she gave some of her rights to a publisher.
The music publisher will likely want to receive a percentage of the up-front fees from a publishing sale, and a percentage of the publisher’s share of the performance rights royalties.
Let’s return to the musician who contacted me. The publishing company wanted 50% of the publisher’s share of performance rights royalties (a typical co-publishing deal), and another 20% of the musician’s 50% as compensation for collecting the musician’s performance rights royalties as the musician doesn’t have a publishing company.
Musicians should not accept losing money because they don’t have their own publishing company. At a certain point, another reason to set up a publishing company is for tax planning purposes.
Setting Up a Music Publishing Company in Canada Step 3 – Naming
How do you go about setting up a music publishing company in Canada? First, pick a name. I’d call mine Pascoe Music Publishing. Although my brother Noah Pascoe (https://pascoe.bandcamp.com – shameless plug) or Ottawa-based country musician Jesse Pascoe (www.JessePascoeKP.com – no relation) might snatch the name first! SOCAN does not require that it be a corporation. It can be your sole proprietorship, or be a partnership.
I would also register the name of the business for $60 to comply with the Ontario Business Names Act. If you carry on business under a name other than your own, there’s a legal obligation in Ontario to register the business name. If not, you could be fined, among other issues. A business name registration doesn’t grant exclusive rights to the business name.
Publishing Company Step 4 – Membership
To set up a SOCAN publishing membership, which no longer has a required registration fee, you must demonstrate you either (a) own at least 5 copyrighted protected musical works written or co-written by a writer member of SOCAN or by a Canadian; or (b) are entitled by contract to receive the publisher’s share of the performance credits of at least 5 copyright protected musical works that were written or co-written by a writer member of SOCAN or by a Canadian.
If you’re a Canadian songwriter, who has written 5 songs, one option is to assign (give) the publisher’s share of the performance rights royalties from you personally to your publishing entity. This can be done by a short and sweet agreement. If it were me, the publisher’s share of the performance rights royalties from songs A, B, C, D and E (I need better song names!) would be assigned from myself personally to Pascoe Music Publishing. The assignment would include the song names, and would be submitted to SOCAN during the application process.
Returning to the musician, his response to the established publishing company is that he’s setting up a SOCAN publisher membership, and therefore the established publishing company will not be taking any additional fees to compensate them for collecting the musician’s performance rights. The songs will be registered with 50% of publisher’s share going to the established company and 50% of the publisher’s share going to the musician’s publishing company.
Setting Up a Music Publishing Company in Canada – Conclusion
Also to note is that SOCAN will provide 100% of the performance rights royalties (50% writer share and the 50% publisher share) to a musician when a song is registered with SOCAN and there is no designated publisher. Therefore, you don’t need to set up a publishing company to collect your SOCAN publisher’s share of performance rights royalties if you’re entitled to all of the publisher’s share. While we’re on the subject of sharing, feel free to share this post with your people who may benefit from this content!
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Author: Byron Pascoe, Entertainment Lawyer
Edwards Creative Law is Canada’s Entertainment Law Boutique™, providing legal services to Canadians, and international clients who partner with Canadians, in the Music, Film & Television, Animation, Interactive Digital Media, Game, Publishing and Software industries.
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* This blog is for general informational purposes only and is not to be construed as legal advice. Please contact Edwards Creative Law or another lawyer, if you wish to apply these concepts to your specific circumstances.