When a listener plays a song on an on-demand streaming service or makes a download, a mechanical royalty is owed for use of the underlying composition copyright (think music and lyrics). The Harry Fox Agency ensures that these royalties are paid in the correct amount from certain DSPs to songwriters and music publishers. Its counterpart is Music Reports, which adminsters these same digital mechanical royalties to different DSPs.
If one is not registered with the Harry Fox Agency, they may be missing out on mechanical royalties from these platforms.
Songwriters who want to know more about how their mechanical royalties are administered when someone else reproduces their lyrics and/or music.
Artists who want to record someone else’s song and learn how the Harry Fox Agency administers the required licenses to do so between the song’s publisher and them.
Music Publishers who want to understand how the Harry Fox Agency ensures that they receive the proper amount of royalties for the use of their copyrights on the underlying composition for mechanical uses.
Anyone who is interested.
Note: ”Music” in this case does not refer to the sound recording, which is a separate copyright.
What is the Harry Fox Agency?
How The HFA Works
Becoming an HFA Affiliate
Can I Still Collect Mechanical Royalties Even if I’m Not Affiliated with HFA?
Delivery of Metadata to HFA
Song Claiming and Disputes
The Counterpart – Music Reports
HFA is a mechanical license administrator. In short, they issue mechanical licenses for reproductions of musical compositions embodied in sound recordings that are manufactured and distributed in the U.S. The licensor in this case would be any owner of the underlying composition (lyrics/music)—whether he or she is a music publisher, songwriter, or both. The licensee in this case would be any person or entity who wants to record, reproduce, and distribute in any way an original composition owned by the licensor. Traditionally, mechanical royalties are paid by record labels to the Harry Fox Agency which then pays the publishers. One’s mechanical royalties are paid to a songwriter directly if they are self-published, or from their publisher if they have signed a publishing deal.
Back in the Brill Building days of the music business, before the National Music Publishers Association (NMPA) was established in 1917, Harry Fox worked for Music Publishers Protective Association in New York City. When someone wanted to reproduce a copyrighted work, Harry secured the mechanical licenses between them. Originally, these were mostly created to pay royalties to the writers of sheet music often performed in cafes, on pianos, and for vaudeville shows at the time.
The Harry Fox Agency, founded in 1927 by the NMPA, went on to become the biggest mechanical rights administrator in the United States. They now represent 48,000 music publishers. For decades, mechanical rights were extremely important because physical record sales provided a huge revenue stream. Digital downloads and streaming now predominate as the main sources of mechanical royalties in the current marketplace, and HFA has adapted to offer licensing opportunities specific to these trends.
In 2011, the National Music Publishers Association sued YouTube for unpaid royalties. The settlement from this lawsuit resulted in the creation of a “YouTube Licensing Offer.” This agreement allows publishers to collect synchronization fees based on user-generated videos uploaded to YouTube. The license grants YouTube the right to synchronize a publisher’s musical works with certain videos posted by YouTube users. When that music is used in videos for which YouTube receives advertising revenue worldwide, YouTube will send royalties to HFA for distribution. YouTube offers publishers the opportunity to either license directly with them or be administered through the HFA to have mechanical royalties paid for YouTube in the United States. By late 2011, music publishers large and small were already working on direct deals with YouTube to collect these royalties.
A few years later, the HFA structured a deal with Spotify to administer all of the DSP (Digital Service Provider)’s mechanical licensing payouts. Throughout 2017, Spotify found itself involved in a number of lawsuits for unpaid mechanical royalties for millions of songs streamed on the service. Many point to improper licensing by the HFA as a direct cause of these infringements. However, the relationship between these lawsuits and HFA’s involvement with Spotify is unclear.
In 2015, the Harry Fox Agency was purchased by SESAC, a Nashville-based PRO (Performing Rights Organization). Other PROs include ASCAP, BMI, and more recently, GMR. ASCAP and BMI are public not-for-profit organizations; SESAC remains a private for-profit membership-based company. All PROs monitor and administer public performance licenses. SESAC’s purchase of the Harry Fox Agency may enhance its licensing capabilities and allow the company to offer singular licenses for works that aggregate both performance and mechanical royalties. Spotify and other DSPs exploit both the mechanical and performance right, as discussed in detail within other guides.
HFA is headquartered in New York City, but may move some or all of its operations to Nashville in the future to connect geographically with SESAC’s headquarters.
Slingshot is HFA’s rights management service which helps digital music providers manage their licenses. According to HarryFox.com, Slingshot “is a comprehensive, end-to-end solution designed to streamline the licensing and royalty process, accelerate market entry and reduce administration costs for music distributors.” These music distributors include record labels, streaming services, download sites, content aggregators, online video networks, background music companies, digital jukebox companies, cloud-based services, lyrics and tablature businesses, gaming sites, mobile apps, ringtone distributors, and more. CDBaby and INgrooves are two digital distributors currently using Slingshot.
All metadata for a given composition becomes stored within Slingshot. Metadata is the information embedded in an audio file that is used to identify the content. It can include a song’s title, the band/artist, the songwriting credits, the genre, the track number, the year of release, the ISRC, etc.
Songfile is the system HFA has in place for limited quantity mechanical licensing. It is an online tool which allows the public to search through millions of songs and purchase licenses if desired. Users pay a low per-song processing fee and royalties for licenses, which are set at the current U.S. statutory rate. Songfile can be used to license up to 2,500 copies of a song for physical sales or digital downloads, as well as ringtones. It can also be used to obtain licenses for limited interactive streaming (allows listeners to CHOOSE the songs that are played)—a minimum of 100 streams and a maximum of 10,000 streams.
It is important to note that if HFA does not represent the entire song, meaning 100% of both the music and lyrics, the party wishing to obtain the license will need to reach out to the music publisher directly to gain rights to the remaining portions of the composition. If HFA does represent 100% of the song, the entire licensing process can happen through Songfile.
Many music distributors utilize Rumblefish to help with the many aspects involved with licensing music for distribution. As it specifically pertains to streaming, Rumblefish identifies the music publishers connected to the recordings that are distributed on their clients’ platforms in order to send out Notices of Intention and handle payment of the applicable mechanical royalties. Music publishers can also utilize Rumblefish in order to more accurately connect their compositions to their distributed recordings.
HFA Song Code
The HFA Song Code is a unique 6-character identifier for a song in HFA’s database and is often used to associate a publishing asset to a master recording. It is vital to music publishers because it matches copyright use to its licenses so that royalties can be distributed accurately.
Except in cases of licensing activities expressly offered to publishers on a reduced rate or commission-free basis, HFA’s commission rate is 11.5% of all payments collected for all categories of licensing services offered.
HFA requests money from a licensee (user of the copyright) and, once received, pays the licensor (a music publisher and/or songwriter) his/her due mechanical royalties. If one obtained the mechanical license though Songfile, one has already paid the mechanical royalties upon registration and no further payment is necessary. But for licenses for more than 2,500 units, royalties are due within 45 days after the close of each quarter.
A Case Study: Kanye West decides not to sample “Bound” by Ponderosa Twins Plus Ones for his upcoming song “Bound 2” from Yeezus and instead secures only a mechanical license for use of the melody/lyrics. HFA will facilitate the payment of mechanical royalties from Kanye West to the copyright holder, most likely the songwriter and/or publisher. Because “Bound 2” is less than 5 minutes long, the royalty rate is 9.1 cents per sale. Assuming Yeezus sold 750,000 physical copies or digital downloads, Kanye will owe $68,250 to the copyright holder. For administering this payment from one entity to the other, HFA will collect 11.5% of this, or $7,848.75.
Keep in mind this only accounts for the physical sales or digital downloads of Yeezus and does not represent the full mechanical royalty payment due. Streaming mechanical royalties would still need to calculated.
Core: HFA only handles mechanical rights attached to music and lyrics, so the company works predominantly with songwriters and publishers. HFA does not handle master rights and rarely deals with record labels.
Royalty Collection: HFA is a mechanical license administrator. It serves as an intermediary between copyright holders and those wishing to exploit copyrights.
In order for HFA to represent a music publisher for mechanical licensing, that music publisher must become an HFA affiliate. To affiliate, one must have at least one commercially released song by a record label in the U.S. within the past year. Benefits of affiliation include new licensing opportunities with digital business models and other media companies, payment services such as income tracking, and access to a variety of online tools for song catalog updates and monthly royalty statements.
Mechanical royalties are paid by labels or artists to the Harry Fox Agency which then pays the publishers. A songwriter’s mechanical royalties are paid to them directly if they are self-published, or through their publisher if they have a publishing deal. One can only affiliate with HFA if they are a publisher that has songs released via a third-party label. Affiliating with HFA offers publishers better licensing opportunities, but does not affect royalty payout from interactive streaming platforms (Spotify, Apple Music, etc.).
There is a process in place for song registrations with the Harry Fox Agency, and they highly encourage everyone to register their music so that all songs can be properly licensed and any due royalties properly distributed from the use of one’s songs on their clients’ platforms. To register songs, one must set up an HFA Online Account. This does not affiliate a person or company with Harry Fox, but rather allows a way for music to be registered for proper licensing and royalty collection. This way, everyone can collect on their royalties regardless of affiliation or the lack thereof.
A few options exist for submitting metadata to HFA, depending on each individual publisher’s capabilities and/or preferences.
eSong is one option that allows one to register individual songs using an HFA Online Account. One may also submit multiple songs through eSong Bulk.
HFA has an Excel spreadsheet metadata template that can be used for submission via eSong Bulk. This template includes many of the same pieces of information that most collection organizations need, such as songwriter(s), publisher(s), percentage shares, ISWC code, territories, artist, record label, ISRCs, etc. It is important to remember that more information is better. The more details that HFA (as well as other companies) have, the more effective the licensing and royalty collection processes can be.
Common Works Registration (CWR) is another option for song registration if one is CWR-enabled. This is considered the industry standard for registering compositions in bulk. Because of the deals that HFA has in place with digital music services, it is imperative that HFA is continually updated by music publishers on all changes to a catalog.
Registering new songs would fall under the guidelines for submission mentioned above. However, the process of registering a claim to a song or catalog that was previously owned or administered by another company is a process handled internally by the Harry Fox Agency. If one has acquired a song or catalog from another publisher, instead of registering with a new entry via their online portal, one would reach out to Harry Fox’s client services department directly and advise of the change, while also providing a Letter of Direction. The Harry Fox Agency will then get a confirmation from the previous owner/ administrator. Once the combination of the LOD and confirmation occur, Harry Fox will make the change in its system.
Harry Fox Agency handles mechanical licenses and mechanical royalties for U.S-distributed content ONLY.
Music Reports is the other major collection agency in the United States that has deals in place to collect on mechanical royalties associated with interactive streaming. In the digital age, it is not in the songwriter’s or publisher’s control of which company they can send their metadata to in order to handle these royalties. For example, one has the option to decide which performing rights organization to be a member of and receive performance royalties from. With streaming mechanicals, that is not the case. One does not “choose” Harry Fox Agency or Music Reports. HFA and MRI enter into separate deals with digital music platforms. In order to receive royalties from these platforms, MRI and HFA both need proper metadata from the publisher. One cannot choose, for example, to have MRI collect on interactive streaming mechanical royalties generated on digital music platforms which have deals in place with HFA. Therefore, to collect any due mechanical royalties from the use of one’s music on HFA’s clients’ services, it is mandatory that HFA has all publishing information on the underlying compositions connected to the distributed recordings.https://www.youtube.com/embed/v0rOtiQ3-bA
Luke Evans, Mamie Davis, Jacob Wunderlich, Rene Merideth, Jeff Cvetkovski, & Aaron Davis