Music store value chain

Many folks don't understand the byzantine world of music rights and sales, and I thought I'd try to post a one page explanation.

Music happens in several stages:

• A songwriter writes a piece of music.
• They then do a deal with a publisher. The publisher is responsible for collecting publishing royaltees for performances and copies of the music. For example, if a song appears in commercial or movie, or is performed publicly, or a digital copy is made, or sheet music is printed, the publisher and songwriter gets paid. You should think of the publisher as having rights to the composition (or sheet music), but not the actual recordings. To make things confusing, many music labels (a different role described below) also have publishing arms - EMI, Warner, Sony, Universal. But there are many other independent publishing arms. Another source of confusion is the mechanical rights (a payment to the publisher for each and every copy of a composition) vs. the performance rights, both of which are controlled by the publisher. The publishing rights are often a mess, and this part of the system gets really confusing when the world turns digital.
• An performer records or performs the music. Because this is the most public face of the record industry, I'll assume no more need be said here.
• The artist will probably have entered into a recording contract with a Music Label. The Label offers financing and development, along with massive distribution and marketing to the artist in exchange for the right to exclusively market all recordings for a specific period of time. There are a number of independent labels, but the "big four" that sell the vast majority of US music are Warner, EMI, Sony, and Universal. In most cases, the label is paid every time a CD or digital copy is sold.

These three entities are just the surface later of the puzzle, and to prevent your head from exploding I won't go into the Harry Fox Agency, ASCAP/BMI, the variability in all the relationships above, etc....

This whole system seems very painful - and it is. It has evolved over the last century and keeps getting twisted. Remember it started out as being about compositions and printed sheet music sales, then had to evolve to accomodate recording, broadcasting, TV, Movies, and now digital distribution.