How does a music publishing company make money?

Administering copyright ownership of songs or a catalog of records (i.e., many albums) that can yield decades of payments is how a music publishing company makes money. Thusly, a music publishing firm will not see any sufficient revenue on its books to remain in business if it does not own lucrative intellectual property (e.g., top 40 hit songs) in the form of lyrics and composition.

Remember, some songs suck and people barely listen to them—Lawd have mercy. But umm, long story short: fewer views or streams mean less money. Otherwise, music publishing corporations sign deals with songwriters, ghostwriters, and record producers that include a transfer of publishing rights for some time.

For example, a music publishing company’s ability to collect royalties on behalf of a songwriter, ghostwriter, or beatmaker might be established for a term of X number of years or for a lifetime (i.e., in perpetuity) derived from the following sources of income:

Streams of income
Printed music (or sheet music)
Published lyrics e.g., on websites and mobile apps
Synchronization royalties (e.g., ads, movies, or TV shows)
Mechanical royalties (e.g., streaming, downloads, and physical media)

Music publishing contracts

It is common for music publishing contracts to stipulate that a songwriter, ghostwriter, or music producer will receive 50% of any revenue generated from publishing royalties; sometimes the amount can vary based on the terms negotiated.

Some music publishing businesses will also provide money (i.e., an advance or a financial loan) for songwriters, composers, and beatmakers to write lyrics, and produce records. However, the minimum or maximum amount of money to be disbursed should be clearly stated in the contract to avoid too much drama down the line.

The whole idea behind funding songwriters is to help those who might not otherwise be able to afford studio time and to also ensure that their songs are pitched to recording artists who don’t write their lyrics but will demand to be credited and given royalties too. It’s just business after all.