Penny Wise But A Pound Foolish

Like many musicians who are fearful of giving up any rights to their music, I administered my catalog for a long time. But it got to the point where I was spending the majority of my time dealing with the business aspect of it, and not much time creating. 

Now, I’m truly happy when I’m creating, so this led to a bit of a dark period in my life. Yes, the money was coming in, but as most creatives know, that’s not what drives us and brings true fulfillment.

I reluctantly realized it was time to hand my catalog over to a music library, but what happened next was astounding… My placements increased exponentially! And so did my income.

Let’s look at two scenarios:

Scenario 1: 

You want to retain 100% of the rights to your music, so you administer your catalog on your own. This requires you to make all the connections, do all the research on the styles of music each show is using, contact all the supervisors and editors, as well as negotiate each license…

That’s a LOT of work! And for this example, let’s say in 1 month, you secure 2 placements.

  1. $500 licensing fee
  2. $1500 licensing fee

You made $2000 in upfront licensing fees that month, but at least you keep 100% if the income.

Scenario 2: 

You sign your songs to an exclusive music library. Your deal with them is that they split the upfront fees, and take the publishing. In 1 month, the staff secures 6 placements of your music.

  1. $250 licensing fee
  2. $300 licensing fee
  3. $450 licensing fee
  4. $800 licensing fee
  5. $1200 licensing fee
  6. $15,000 (for a national commercial)

For now, let’s just disregard the 6th license and look at the total for the first 5 licenses, which is $3000. This means you made only $1500. 

In this case, it seems like Scenario 1 is the better deal right? That is 100% incorrect.  You must never forget about the backend royalties!

With Scenario 1, you only have 2 placements generating backend royalties for you.  With Scenario 2, you have 5 placements generating backend royalties for you. Even with the library taking all the publishing, you’re still ahead because your two placements in Scenario 1 only equals 200%. The songwriting royalties in Scenario 2 equals 250% (50% of the song's income x's 5 placements).

Now, when you factor in the 6th placement, your portion of the upfront fees for the month jumps up to $9,000 (1,500 + 7,500).  That's not a bad month!

It Gets Better!

But Scenario 2 gets even better. Here’s why: 

Instead of spending most of your time administering your catalog like you would in Scenario 1, in this case you're able to spend your time creating, and adding even more tracks to your catalog. This will allow you to generate even more consistent placements in the future.

We haven’t even gotten into the discussion of how this plays into international royalty payments, but we’ll leave that for another day…

Don't Be Penny Wise and a Pound Foolish!

So, in closing, are you seeing why I’m a huge fan of working with exclusive libraries?  This is what’s going to allow you to make that six figure income that you’re after - or at least get into the high five figures. 

The reality is that Scenario 2 just destroys Scenario 1 when it comes to how much money you will be able to deposit into your bank account, even when splitting the upfront fees and backend royalties.

You have to give others incentive to work your catalog of music. If you focus on holding onto every penny your music can earn, you’ll spend so much time administering your catalog to the point where you’ll stop building your catalog. In order for licensing to work for you, you have to follow the 4 step process, and the 1st step in the process is to continuously Build Your Catalog. It is absolutely essential.

What are your thoughts on how these numbers work? Share with us in the Comment Section below:

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