When a piece of music is used in some synchronization with a moving picture, it is traditional that there is an upfront licence fee, and depending on the use, there is some “long trail” or residual or royalty income that is paid to the owners of that piece of music every time it is actually used.
traditionally, a writer / composer would write a song, and an entity would realize it as a finished master. This often used to be a record company. So there was the writer, and the master owner (which is analogous to what a publisher is today). It gets complicated when you start talking about royalty advances and such and Donald Passman’s Book “all you need to know about the music business” is a likely source for helping to paint the bigger picture.
So a license for use in motion pictures has two parts – the Sync license (paid to the writer) and the Master Use License (paid to the master owner or usually the publisher today). The license amounts are typically equal, but could be different sums if the record company had a lot of bargaining power etc.
Since so many people own their own masters, these two parts or SIDES have become collapsed into one and the same, and the total monies of the Sync / Master Use License are often split 50/50% between writer and publisher. Often the contract language dictates that the publisher receives the check directly from the licensing agent or ad agency, or TV producer etc. and then cuts the writer a check for 50% of the total minus various expenses.
You can retain the writers and publishers share if you market your music directly and personally to end users.
You can also sign away the publishers share to an entity that has connections in Film or TV and can get your music placed.
So that is up front licenses.
The back end or “long tail” Residual / Royalty is the part where the Performing Rights Organizations get involved.
ASCAP, BMI, SESAC, SOCAN, PRS etc. have agreements with all broadcasters and establishments where music is publicly performed (which includes live and canned performances such as restaurants and bars playing CDs).
All of these broadcasting entities pay yearly dues to the various PRO’s and through a convoluted and perhaps not exact way of sampling which compositions actually get played plus an arguably more exact stream of cue sheets from broadcasters, and the recent addition of digital watermarking / fingerprinting and services that will track music digitally, these dues are split up in a pro-rated fashion to all music owners whose music was actually used after the PRO’s subtract an administration fee (which I am lead to believe is somewhere around 8% or so for BMI).
Under your PRO registration, a song has two equal halves – the writers share, and the publishers share.
If you have chosen to market yourself, you keep all the money just as above. If you have signed with a publisher they will take their share of up front money plus the publishers share of Royalties. In each case royalties are paid directly to the writer and publisher respectively by the PRO’s.
It can get confusing because not every use of music qualifies for royalties. A big example is in the US and Canada, a performance of a feature film in a theatre bears no royalty income for music owners, but doing the same in foreign countries does qualify the music owners for royalties.
Hope that helps!