How to start a music publishing company from scratch

Starting a music publishing company is a rewarding venture that combines a passion for music and an ear for talent with sharp business savvy. The global music publishing market is a multi-billion dollar industry, fueled by a constant demand for music in films, advertising, video games, and streaming services.

This guide will take you through the practical steps of validating your concept, understanding music rights, securing funding, and building your song catalog to help you launch a successful music publishing company in the U.S.

Step 1: Plan your business and validate your concept

Start by researching your niche. Analyze trends using Billboard charts and consumption data from sources like MRC Data. This helps you identify underserved genres or emerging artist scenes where you can build a unique catalog.

Next, study the competition. Use the public repertory search on ASCAP or BMI to see which publishers represent certain songwriters. This reveals who the key players are in your chosen space and what kinds of deals they make.

Estimate your startup costs

Your initial investment will vary, but you can map out a clear budget. A frequent oversight is failing to register a distinct publisher entity with a PRO, which prevents you from collecting the publisher's share of royalties.

• Business Formation (LLC): $100 - $800, depending on your state.
• PRO Publisher Affiliation: Around $50 - $150 to join ASCAP or BMI.
• Initial Legal Fees: Budget $2,000 - $5,000 for proper contract drafting.
• Catalog Management Software: Expect to pay $100 - $500 annually for a service like TuneRegistry.

Relying on generic contract templates is another pitfall. You might want to invest in a music attorney to draft solid agreements from the start. This protects both you and your songwriters down the line.

Here are 4 immediate steps to take:

• Draft a one-page business plan that defines your target genre or artist profile.
• Research LLC formation costs in your state and file the necessary paperwork.
• Create both a writer and a publisher account with ASCAP or BMI.
• Schedule a consultation with a music attorney to discuss songwriter agreements.

Step 2: Form your legal entity and secure licenses

You should form a Limited Liability Company (LLC). This structure protects your personal assets from business debts and lawsuits. It also offers pass-through taxation, so profits are taxed on your personal return, which simplifies filings compared to a corporation.

A frequent misstep is operating as a sole proprietorship to save money. This route offers no liability protection, putting your personal assets at risk. You can file for an LLC through your state's Secretary of State website for between $100 and $800.

With your business entity formed, get an Employer Identification Number (EIN) from the IRS. This is your business's federal tax ID. The application is free on the IRS website. You need an EIN to open a business bank account and manage payroll.

You must also secure a general business license from your city or county. This is often overlooked. Costs typically run from $50 to $200. Along with PROs, the U.S. Copyright Office is a key body you will interact with to register works.

Here are 3 immediate steps to take:

• File LLC formation documents with your state's Secretary of State.
• Apply for a free Employer Identification Number (EIN) on the IRS website.
• Contact your local city or county clerk about a general business license.

Step 3: Secure insurance and manage risk

Protecting your business from legal claims is a vital step. For a music publisher, the main risks involve copyright disputes and royalty payment errors. The right insurance policies shield your company from these costly issues.

Key insurance policies for music publishers

You will want to explore a few specific types of coverage. Each one addresses a different area of risk for your publishing business. A frequent misstep is to skip Professional Liability insurance to save money, which exposes your business to huge financial risk from a single copyright lawsuit.

• Professional Liability (E&O): This is your most important coverage. It protects against claims of negligence, copyright infringement, or errors in royalty distribution. Expect annual premiums from $600 to $2,000 for a $1 million policy.
• General Liability: This covers third-party bodily injury or property damage. It is useful if you have an office or meet with clients. Annual costs typically range from $400 to $700.
• Workers’ Compensation: If you hire employees, most states require this. It covers medical costs and lost wages for work-related injuries. Costs vary based on payroll and state laws.

To find the right coverage, work with a broker who understands the music industry. You might look into providers like Hiscox or Chubb. You can also contact specialized brokers like Front Row Insurance for policies tailored to media businesses.

Here are 3 immediate steps to take:

• Request quotes for a $1 million Professional Liability (E&O) policy.
• Contact an insurance broker who specializes in entertainment or media.
• Determine if you need Workers' Compensation based on your state's laws and hiring plans.

Step 4: Set up your workspace and tools

A home office is a smart start. You do not need a commercial space or special zoning, which keeps your overhead low. If you decide to lease, a small office of 100-200 square feet is more than enough for administrative work.

Should you lease, you might want to negotiate a shorter term, like one or two years. A gross lease, which bundles utilities into your rent, can also help you predict your monthly budget more accurately.

Key equipment and software

Many new publishers think they need a full recording studio. This is a costly misstep. Your focus is on managing rights, not producing tracks. A simple, quiet space with a few key items is all you need.

• Reliable Computer: A capable laptop or desktop is your main workhorse. Budget between $1,000 and $2,500.
• Quality Headphones: You need to review demos clearly. A pair like the Audio-Technica ATH-M50x costs around $150.
• Catalog Software: You will use a service like TuneRegistry or Songtrust for royalty tracking and administration.

Here are 3 immediate steps to take:

• Designate and set up your dedicated home office space.
• Research and purchase a pair of reference headphones for listening to demos.
• Compare the pricing and features of TuneRegistry and Songtrust.

Step 5: Set up your payment processing

You will typically pay songwriter royalties quarterly or semi-annually. These payments are usually sent via direct bank transfer (ACH). Your songwriter agreements must clearly state these payment schedules and methods to avoid confusion.

However, you may need to accept other types of payments. A local filmmaker might want to pay a sync license fee on the spot, or you might collect a fee for a co-writing session you arranged. Relying only on bank transfers can slow you down in these moments.

Set up on-the-go payments

For times when you need to accept payments on-site, JIM offers a streamlined solution. With JIM, you can accept debit, credit, and digital wallets directly through your smartphone. Just tap and you are done.

At just 1.99% per transaction with no hidden costs or extra hardware, it is particularly useful for securing small sync license fees in person. This rate is a clear advantage over other providers, which often charge between 2.5% and 3.5%.

• Get Started: Download the JIM app for iOS.
• Make a Sale: Type the sales amount, hit sell, and ask your customer to tap their card or device on your phone.
• Access Funds: Your money is available right on your JIM card as soon as the sale is done, with no waiting for bank transfers.

Here are 3 immediate steps to take:

• Define your royalty payment terms (e.g., quarterly) in your songwriter agreements.
• Download the JIM app for iOS to handle on-the-go payments.
• Identify scenarios where you might need to accept in-person payments for licenses or fees.

Step 6: Secure funding and manage your finances

Most new music publishers self-fund or use personal loans. If you need external capital, an SBA Microloan is a strong option. These loans go up to $50,000 and are great for covering initial operating costs. Interest rates typically range from 8% to 13%.

Some lenders may not understand music assets. You might want to find one that recognizes intellectual property as collateral. This can improve your chances of approval. Your business plan and financial projections will be key documents in these discussions.

Calculate your first six months of capital

Your working capital should cover more than just software and legal fees. A frequent oversight is failing to budget for songwriter advances. These payments are necessary to sign talent and build your catalog. You should plan for at least $15,000 to $25,000 for your first six months.

This budget could cover operating costs of around $5,000 and allow you to offer two or three modest advances of $5,000 each. Once you have your business bank account open, you can use accounting software like QuickBooks to keep track of all income and expenses.

Here are 4 immediate steps to take:

• Calculate your 6-month working capital, including songwriter advances.
• Research SBA Microloan requirements through a local SBA-approved lender.
• Open a dedicated business bank account for your publishing company.
• Compare accounting software like QuickBooks or FreshBooks for managing finances.

Step 7: Build your team and manage operations

In the beginning, you will handle most tasks. As you grow, your first key hire is often a Creative Manager. This person finds songwriters, listens to demos, and pitches songs for sync placements. Expect a salary range of $50,000 to $75,000 for this role.

Next, you will need a Royalty Administrator. This role is detail-oriented and focuses on registering songs with PROs, tracking payments, and managing your catalog data. Salaries typically fall between $45,000 and $65,000. Experience is more valuable than formal certifications for these positions.

Many new publishers try to do it all themselves for too long. This can lead to missed registration deadlines or neglected songwriter relationships. A good benchmark for hiring is to aim for one employee per $250,000 to $500,000 in annual gross revenue.

Here are 3 immediate steps to take:

• Draft a job description for a Creative Manager focused on A&R and song plugging.
• Outline the daily tasks for a Royalty Administrator within your catalog software.
• Set a revenue target that will trigger your first hire, either part-time or full-time.

Step 8: Market your business and acquire songwriters

Build your network and find talent

Your first songwriters will likely come from your network. You can attend local songwriter rounds and open mics. Also, events like the ASCAP "I Create Music" EXPO or the Durango Songwriters Expo are great places to connect with unsigned talent.

Create a professional one-sheet that details your company's focus and what you offer writers. This simple PDF can be your calling card. A frequent oversight is to chase every promising writer. Instead, focus on a niche genre where you can become a known expert.

Use digital platforms for outreach

Use platforms like SoundCloud and Bandcamp to discover artists. You can also follow music bloggers and playlist curators who champion emerging talent in your genre. A targeted Instagram or X (formerly Twitter) presence helps you connect directly with artists.

When you reach out, be specific about what you like in their music. A generic "I like your stuff" message rarely works. Reference a specific lyric or melody. This shows you have done your homework and are serious about their craft.

Here are 4 immediate steps to take:

• Identify and schedule attendance at three local songwriter showcases.
• Create a one-sheet PDF that outlines your company's mission and services.
• Set up a SoundCloud profile to organize and review demo submissions.
• Follow 10 influential music bloggers or playlist curators in your target genre.

Step 9: Set your pricing and deal structures

Your pricing is defined by your deal structure. The industry foundation is a 50/50 split of all income. The songwriter receives the "writer's share" (50%) and you, the publisher, receive the "publisher's share" (50%). Your profit is what remains of your share after covering advances and operating costs.

Choose your deal types

You will not offer the same deal to every writer. It is smart to have a few structures ready. These agreements determine your ownership stake and the percentage you collect for your work.

• Co-Publishing Agreement: The writer gets their 50% writer's share plus half of your publisher's share. This creates a 75/25 split in the writer's favor. You might offer this to a songwriter with an existing track record.
• Administration Deal: You take a 10-20% fee from the gross income to handle registration and collection. You do not own the copyright. This is for established writers who want to keep full ownership.
• Full Publishing Deal: You receive the entire 50% publisher's share. This is more common for new songwriters who need significant support and are willing to trade ownership for the opportunity.

A frequent misstep is to offer a large advance without a clear path to recoupment. An advance is a loan against future royalties. Only offer an amount you can realistically earn back from placements and mechanicals within two to three years.

Here are 4 immediate steps to take:

• Decide which deal structure will be your primary offer for new songwriters.
• Create a simple term sheet template for a co-publishing and an administration deal.
• Set a maximum advance amount you are willing to offer for an unproven writer.
• Research current mechanical royalty rates set by the Copyright Royalty Board.

Step 10: Control quality and scale your business

To maintain quality, you should track a few key performance metrics. These numbers tell you if your business is healthy and if your songwriters are succeeding. They also signal when it is time to grow.

Measure your performance

You can measure your effectiveness with concrete data. Vague feelings about progress are not enough. A few simple calculations will show you what works and what does not.

• Sync Pitch-to-Placement Ratio: Track how many pitches result in a license. A 5-10% success rate is a strong benchmark. It shows your pitches are well-targeted.
• Royalty Collection Accuracy: Your goal is 99% accuracy on royalty statements. You can audit this quarterly against your PRO and sub-publisher reports.
• Songwriter Retention Rate: A high rate of contract renewals is a clear sign you are delivering value. This is perhaps your most important long-term metric.

Know when to grow

It is tempting to hire staff as soon as you sign a few writers. A frequent misstep is hiring a creative manager before you have the administrative foundation to handle the income. Your first hire should often be a part-time royalty administrator.

A good benchmark for expansion is to hire one full-time employee for every $250,000 to $500,000 in annual gross revenue. As you scale, you might want to use software like DISCO to manage and pitch your catalog professionally to music supervisors.

Here are 4 immediate steps to take:

• Calculate your sync pitch-to-placement ratio for the last quarter.
• Audit one songwriter's royalty statement for accuracy against PRO data.
• Set a revenue goal that will trigger your first part-time administrator hire.
• Create a free account on DISCO to explore its music management features.

You have the steps to launch your music publishing company. Remember, your greatest asset will always be your relationships with songwriters. Trust your ear, support your artists, and build a catalog you believe in. You are ready to make your mark.

As you build those relationships, you will need to manage payments simply. JIM turns your smartphone into a card reader, so you can accept payments anywhere with a flat 1.99% fee and no extra hardware. Download JIM and handle business with ease.