Baby Steps

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An in-depth discussion of the legal requirements and tax consequences of starting your own music-publishing company is beyond the scope of this writing, so I'll only briefly summarize them here. As is the case when starting any other business, you should first choose a legal business structure (such as a sole proprietorship, limited liability company or corporation) and business name. A sole proprietor may conduct business under its own name or use an assumed or fictitious business name (otherwise known as "doing business as" name or "dba"). If you want to use an assumed name, check your state's business registry database to see whether it's available or has already been taken by someone else.

You may also need to apply to the Internal Revenue Service for a federal tax identification number (EIN). Go to www.irs.gov for a list of circumstances that require an EIN. Also, find out from your state and local agencies what the business-license requirements are for your area. I recommend you consult with a CPA (certified public accountant) for help with all decisions--and their tax consequences--related to starting your new business. State and local governments also offer helpful online resources for do-it-yourselfers.

You'll also need to affiliate your new company--and yourself separately as a songwriter-with a PRO. The PRO's operating in the United States are ASCAP (American Society of Composers, Authors and Publishers; www.ascap.com), BMI (Broadcast Music Inc; www.bmi.com) and SESAC (Society of European Stage Authors & Composers; www.sesac.com). They collect and disburse to their publisher and songwriter affiliates (or "members" in ASCAP parlance) performance royalties. These are revenues earned from the uses of a song in radio and Internet broadcasts, TV programs and commercials, and movies played in theaters outside the United States. Put another way, PRO's are essentially clearinghouses for licensing the performances of a good song as opposed to licensing the sale of physical copies or downloads, the synchronization of the song to picture in films on TV, and other uses. If you don't belong to a PRO, you'll have to individually license, keep track of, and collect payments for performances of your songs everywhere in the world--an impossible task for widely used songs.

ASCAP, BMI and SESAC all have different requirements for joining and use different payment schedules. You can belong to only one PRO at a time, but you can switch from one to another when your contract with your present PRO is up for renewal. ASCAP and BMI have a much bigger presence in the United States compared with SESAC, a fact that may have a bearing on the size of an affiliates royalties for a hit in this country.

You might also consider joining the Harry Fox Agency (HFA; www.harryfox.com). The HFA is a licensing clearing house and royalty compliance watchdog for the use of your songs in phonorecords and digital services, including downloads and on-demand streaming. The HFA does not issue synchronization and master use licenses (for film and TV placement), provide sample clearance, or license performance and print (sheet music) rights. It charges an annual membership fee and service commissions per license issued, so many start up companies choose to do their own mechanical and streaming licensing until their level of success justifies the added expense of joining the HFA.

More tommorrow...IMPORTANT...Copyright Registration