Cash for Covers Pt. 1: Three Easy Ways to Make Money From Releasing Cover Songs On Digital Music Stores

March 1, 2011{ 36 Comments }

iStock 000004667255XSmall Cash for Covers Pt. 1: Three Easy Ways to Make Money From Releasing Cover Songs On Digital Music StoresThis guest post was written by Alex Holz and originally appeared on the Limelight blog.

It’s no secret Justin Bieber’s ascension to pop superstardom started with a cover song (a version of Ne-Yo’s “So Sick”).  Could he have achieved an “underdog to celebrity” rise without one?  Maybe, but Bieber performed a new spin on a decades-old formula readily available to any recording artist looking to acquire new fans and make additional money from their recordings.

Cover songs (a.k.a. “remakes”) provide an easy path to building audiences.  Releasing one is similar to getting introduced to a new person by way of mutual friend (the song) rather than through a chance encounter (an original tune found on a MySpace page).  A positive introduction is more likely when there is immediate common ground.

Cover songs also provide a unique way of tapping into alternate revenue streams for only modest expense (i.e. money spent securing the required mechanical license and paying royalties via Limelight, time spent learning the song, etc.).  So why is this an effective way of promoting your music?  Let’s explore…


Digital music services offer instant access for consumers to a 24-hour music warehouse that never runs out of stock.  The downside?  Two words: incomplete catalogue.  Not every track you have (or want) in your vinyl or CD collection is available to buy in digital format for any number of reasons (including licensing issues, artist reluctance, wrong brand of dijon mustard at deal signing, etc.).

Just as one person gathers what another spills – “incomplete catalogue” represents a simply supply and demand market opportunity for savvy artists and labels.  If an artist’s music isn’t available via an online store, other recording artists can take advantage by recording and releasing their own cover versions to meet market demand.

For example, if you search for Kid Rock’s music on iTunes (one of several mainstream artist catalogues that aren’t available), you’ll notice an early 1990 release, a live recording of “Bawitdaba” from Woodstock ’99, and surprise, surprise, several tribute records.  Why? iTunes search focuses on track popularity related to song title, artist name, album name and a variety of keywords.  Since the majority of Kid Rock’s catalogue is unavailable, the closest matches are tribute recordings and cover versions of his repertoire. In fact, two separate cover recordings of Kid Rock’s “All Summer Long” charted on the Billboard Top 100 in 2008 (The Hit Masters, The Rock Heroes) based primarily off digital sales alone.  The same principle applies for AC/DC, Garth Brooks, and a several other marquee artists whose catalogues have not seen digital release.


From a consumer viewpoint, a digital release’s major advantage over its physical counterpart is the ability to purchase individual tracks without spending money on unwanted tracks.  While the majority of online releases allow for a la carte downloading, many online retailers give record labels the option to carve out certain releases as “album-only” — the motivation being to increase full-album sales at the expense of individual song downloads (though sometimes done for rights clearance purposes).  Needless to say, “album-only” tracks deny consumers the opportunity to download individual tracks without purchasing the entire record.

Once again, obstacles presented by some labels represent a chance for entrepreneurial-minded artists and labels in releasing cover versions.  Since digital versions of television and movie soundtracks (such as Twilight and The Hangover) are routinely offered out as “Album Only”, recording cover versions of those songs in particular can present another opportunity in capitalizing on simple supply and demand.  If titled via an easy search terms comparable to the soundtrack, the cover versions will appear in search results alongside the original soundtrack.


Physical retailers are limited – staff on hand, hours in a day, and especially by the product real estate available to them.  While Best Buy, Wal-Mart, and other brick-and-mortar shops can only shelve music via singular genre / artist name fashion, digital music stores offer sophisticated search mechanisms, including track title, album name, release year, and even lyric focus.

While many artists may already be familiar with the term “search engine optimization” for purposes of their websites, less have extended that thinking to online music stores.  In the digital age, cover songs provide simple, effective music search engine optimization (especially for covering artists who don’t currently appear on iTunes, Amazon, Rhapsody, etc.).  The sophisticated search mechanisms afforded by online stores over their brick-and-mortar counterparts grant artists an easy tool to sell more music.

In instances where an artist’s repertoire (such as Journey, Beyonce, Katy Perry) is available via digital music stores, cover songs can benefit by way of song title searches.  While common song titles are unlikely to provide any benefit in enhancing search results, cover versions of songs with distinct titles can eclipse the original recordings in search results.  For example searching for “99 Problems” (Jay-Z) on iTunes actually results in a unique cover rendition by the artist Hugo ahead of the original.  Users who listen to and enjoy Hugo’s cover version are also likely to check out Hugo’s additional repertoire (including originals).

Next Step: Clear the Rights and Sell!
Before recording and releasing cover songs, you’ll need to secure a mechanical license (also known as a DPD license for digital downloads distributed via iTunes, eMusic, Amazon, etc.), which provides permission to legally record and distribute the song.  For artists looking to record video versions of their cover songs for purposes of YouTube, Vimeo, and other user-generated content sites, a separate synchronization license is required.

Several entities exist to help artists and labels clear mechanical licenses and ensure songwriters get paid, including Limelight — a simple, one-stop shop to clear any cover song and secure mechanical licenses for digital downloads, interactive streaming, ringtones, and physical albums.  Artists, bands and other musical groups can clear any cover song and ensure 100% of royalties are paid to the appropriate publishers and songwriters via Limelight.

Click HERE to easily obtain the required mechanical licenses from Limelight for your cover songs without expensive lawyers or complicated paperwork.

Start selling your cover song on iTunes, CD Baby, Amazon MP3, and more!  Details HERE.

  • http://www.7yearstoday.com Matt

    The only challenge I see with doing a digital download cover for sale is with iTunes through some companies you get anywhere from $.40 to $.70 from the $.99 download. With Limelight, you have to pay $.91 per download for a song under 5 minutes.

    Meaning, you'd actual end up owing per download. I could see it from the standpoint of promotion, but what happens if your download takes off into some big numbers?

    Can someone explain if I'm understanding the math correctly or am misinformed. I love the idea of the article…just want to make sure its realistic.

    Matt

    7 Years Today

    • Chris R. at CD Baby

      Matt, I'm pretty sure your figures are off a bit. The statutory rate for DPDs (mechanicals for downloads) is 9.1 cents per song. So it'd be $.91 for a ten song album of cover songs. For one song,… 9.1 cents.

  • http://mmsounds.com/ Moyzie

    Hi

    I have a question regarding cover songs not mentioned in this article, I have remixed a song called working class hero by John Lennon, what I don’t know is weather I can release this as a cover because I have used the original vocal. The original is an acoustic track with guitar and vocal; I have added drums bass and keys and re-arranged the track. Can anyone tell me if I can release this track legally?

    You can find the track using this link and clicking on the album “Mankind”

    http://mmsounds.com/index.php?option=com_content&…

    Any help much appreciated.

    • Chris R. at CD Baby

      Hey Moyzie,
      In order to use any sampled part of the original sound recording, you'd need to clear it with the company who controls the copyright for the original master. They do NOT have to grant you permission. I'm pretty sure that they can demand any price they want for granting you the right to use the sample. And knowing the Beatles, it might be an uphill battle. That being said, if the track is really great, they may be interested.

  • http://www.lhuntgallery.com L.HUNT

    I have two questions. If you are selling the cover song via digital download you will have no idea how many are going to sell, if any. Do you pay the license up front, and if so how will you know how much it will be if you don't know how many will sell? Or is there a base cost to start off with? When a .99 cent purchase is made does the 9.1 cent royalty get taken out by CD Baby or iTunes or do you keep tabs and pay yourself? Also, what if you slaughter the song and it embarasses the writer, can they pull the license or track from you?

    • Chris R. at CD Baby

      Well, if you've paid your mechanical royalties, and if your version does not change any of the basic elements of the song (melody, lyrics, etc.), then "quality" (a subjective term), or lack-thereof, is not something for which the publisher or writer can prevent you from selling your cover of their song. As for the licenses, yes. You pay upfront, regardless of whether you sell any or not. Once you've sold through your initial quantity, you can go back to Limelight to renew.

  • http://leonidlevinmusic.com Leo

    Can i obtain licenses for DPD without renewing it every year?

    • Chris R. at CD Baby

      That might be something you can work out directly with the publisher, but otherwise, I'd recommend contacting Limelight about options. Pretty sure it is all based on sales-quantity, though.

  • http://michaelmiles.org Michael

    Frankly, the article sounded more like a promotion for Limelight's services under the guise that you *might* make money off of your cover songs. With approximately $.10 per digital download as a base cost, and then factor in the cut that iTunes and other digital retail services take from your average $.99 sale, you really don't get much bang for your buck. If my take from iTunes averages $.40 per song purchase and it basically costs me $.10 per song for royalties, I'm only taking home $.30 on the dollar per song.

    Spell that out further, if I sold all 1,000 downloads off iTunes, I walk home with about $300 in my pocket at the end of the period. To make the equivalent ($300) from selling *originals* through CDBaby's digital downloads, I only need to sell a little over 400 mp3's. If I were able to sell all 1000, I'm walking home with $400 more in my pocket per 1000 units sold.

    Honestly, if you're willing to only take home $.30 per mp3 unit sold, you're better off spending that $.40 differential in properly *targeted* Facebook advertisements to drive more prospective fans to your FB page and entice them to purchase your music from CDBaby.com. IMHO, advertising is a wise investment; lining the pockets of some publisher and a has-been musician who now makes appearances on B-list celebrity reality TV shows is not. :)

  • http://www.ingdom.comwww.dialthemusical.com mark from ing

    We used to do some killer covers in our set… particularly a version of Dear Prudence that knocked everyone out. But we dropped it because we started hearing from the street that we were getting known "as that band that plays Dear Prudence." What is the point of that? Sure, I know that plenty of bands do the covers routinely to get going but I think that at the end of the day it is detrimental to your career as a songwriter. I'd rather take the slow and steady approach to getting a reputation for our songs. Also, one time we pressed up a small batch of promo cds with a cover tune on it to give away at a gig we did and went through the process via Harry Fox Agency. It wasn't cheap. I think we had to pay something like 75 cents per disc pressed. The bill came to $75 as I remember and that was just for 100 discs we gave away. So it can add up.

  • http://www.javajazzmusic.com Myron Brown

    We do almost exclusively covers, and while we're not getting rich, we are pleasantly surprised by the digital sales we have experienced. We did not start out with a marketing strategy based upon covers, but over time we sort of reverse engineered the strategy they suggest in this article.

    Some thoughts from our experience:

    1. Bring something original and unusual to a work horse. All our songs are solo vocal, solo acoustic guitar. So they are stripped down to their basics (many of the original recordings of old standards are cluttered up with unnecessarily complex arrangements featuring strings and what not). Think of a song like "Over the Rainbow": we all love the song, but try putting the Judy Garland version on the playlist for your next cocktail party and see what happens.

    2. Bring something original to an unexpected cover of a band with a cult following. I can't give away the goods too clearly on this one, as we are still developing it.

    3. Record covers that appeal to an occasion (we just sold "My Funny Valentine" a few days before Valentine's Day. Or, for example, if you have an Irish band, record a kick ass version of "Finnegan's Wake", or something like that, and sit back and watch the sales rack up each Paddy's Day.

    The last part of the strategy should be to ensure that the covers serve as entry points to the rest of your catalogue. So, for example, it would do no good for us to record Finnegan's Wake, because the people who to buy that are not going to know what to do with a catalogue that is otherwise all jazz standards.

    Check us out on CD Baby, iTunes, Napster, or wherever, "Anissa Caprina", and if it helps your strategy, I'll tell you that for some reason, it is our versions of "Theme from New York, New York", "Misty", and "Antonio's Song" that sell over and over again.

  • http://www.7yearstoday.com Matt

    Chris,

    Thanks for clarifying the pricing. I went back and looked at Limelights pricing and saw I made a stupid mistake. I mistook $.091 for $.91. Completely my bad, thanks for setting me straight. Now I'm sold on the idea!

    Matt

    7 Years Today

  • http://undakova.com David

    Sounds awesome. Never thought of this before. As someone who DJed a lot I can relate to performing certain classics that you can't find on itunes even better and more current for todays audiences. Interesting stuff.

  • http://www.javajazzmusic.com Myron Brown

    To mark from ing,

    There is something honorable in your attitude, but given the perspective of old age, would you rather look back on your career as the being the guy who played in the band that did a killer version of Dear Prudence, or the guy who says that when he was young he played in a band that, apparently, no one cared about? That is, if your originals do not stand out when compared with killer version of a B-list Beatles song, maybe your originals simply aren't crossing the threshold yet? I mention this only because it took me a long time to realize that there are many, many ways to find enjoyment from the music industry, and while many of us envision ourselves one way (songwriter, performer, etc.) our actual aptitude may lie somewhere else. I hope that your originals pan out for you, and you achieve your dreams, but if something is working, I encourage you to remain open-minded as to where your destiny is taking you.

  • shagg

    I agree with the guy above saying this seems to be more of just a promotion for limelight. But limelight is only for selling is US not UK so it would have been nice to see some kind of alternative. I can see lots of people going paying for limelights service from the UK from this campaign and not realising they havent cleared there cover songs still and adding them to there distribution thinking everything is hunkydory! Be Careful people!

  • SKIZA

    suppose I sell a CD with 10 songs. one of them is a cover.

    will I pay royalties only for that specific cover song?

    Also, how does Limelight tracks my download?

    • Chris R. at CD Baby

      Yes. You would only pay mechanical royalties for the one cover song. If you want to be really professional, you could pay the other mechanical royalties for your original songs to yourself and send yourself a royalty statement. Haha. As for tracking, you should write Limelight to get specifics. I THINK (and this is just a guess) that you are on a kind of honor system as far as the quantity of DPDs you've licensed and when it is time to renew, but they have the right to audit sales reports and such. Again, just a guess. You should write them for specifics.

  • SKIZA

    Thanks Chris for the fast prompt. Are there any other services other than Limelight? paying up-front without even knowing if and how much will I sell, is a bit problematic for me.

    I don't mind paying a reasonable "setup" price and royalties, as long as the quantity is not a part of their formula.

    p.s: 100% royalties of my original songs will be owned by my wife anyway :)

    • Chris R. at CD Baby

      You can also check out http://harryfox.com/index.jsp. But they'll make you pay upfront too. If you want to pay as you go, you'll have to arrange that with the publisher directly, but they might give you the runaround or ask you to go through Harry Fox or Limelight.

  • Larry

    I understand that the cover version cannot change any of the basic elements of the song (melody, lyrics etc) but can it be an instrumental (elevator music) version without the vocals of the original song?? – Larry

  • http://www.songclearance.com Alex Holz

    Really great feedback here – thanks for the comments everyone (one of the best things about DIY Musician is the open forum).

    To answer some questions:

    @shagg – in the UK, you would contact PRS for Music. Typically the online music services handle the right on your behalf. The US is simply an anomaly to the way the rest of the world handles mechanical rights. You would still need a license for physical discs being made there which you would handle direct between the manufacturer/copyright society.

    @Skiza – There are other options (including DIY via compulsory licensing). Limelight makes the process easier and you can start with a low minimum (25 units – $2.28 in publishing royalties) if you're unsure. As for sales, it's on the honor system. We have no access to your sales data, though the renewal process makes it easy to renew as you need.

    @Larry – You can do an instrumental version no problem as long as you have a mechanical license.

  • Larry

    Thanks! I will check them both. Curious… does Limelight do the very same thing as Harry Fox or, if not, how is it different? – Larry

  • http://www.lisabmusic.com Lisa B (Lisa Bernste

    Thanks, folks. I've always used Harry Fox for both pressed-CD and digital mechanical licenses. With Harry Fox, I just paid a flat, lump-sum fee up front. I vaguely remember it being $50 for a year (as I recall, they license digital mechanical royalties by time period — I could be wrong, though). Their site was very easy to navigate online. I also pay my indie cowriters an equivalent royalty, to honor our mutual professionalism and labor. And yes, covers are a smart idea. My cover of "What's New, Pussycat?" is a relatively good seller and a great entryway for folks to the rest of my tunes. But I did it because I wanted to do it as an artist, not as a marketing ploy.

  • http://www.javajazzmusic.com Myron Brown

    After cogitating, more thoughts . . .

    "2. Bring something original to an unexpected cover of a band with a cult following. I can’t give away the goods too clearly on this one, as we are still developing it."

    Without giving away where we are going next, I thought of several good examples of this, including: Devo's version of "Satisfaction", which led people to "Whip It", and the entire careers of bands like Big Daddy and Dread Zeppelin. It's like the world is aching for one of you trad rock Irish bands to do an album of all U2 covers, arranged for acoustic guitar, tin whistle, Irish pipes, and bodhran.

    Also, as for how much you can change a song before it becomes a derivative, and compulsory licensing will not cover it, it all depends. Clearly an acoustic version is fine. It also depends on the artist and catalog, I suspect. Try writing your own lyrics to a Beatles song, and I suspect the copyright holders will not be impressed by your compulsory mechanical license. We did a Cole Porter tune, and completely redid everything, turning it into a blues tune. We were quite concerned about releasing it without better legal advice. After months of getting nowhere, we finally were forwarded to the person whose purview this is. The long and short is that after some exchanged, we were cleared to release it as a cover. During the exchange, we raised the issue of the Sheryl Crow version of Begin the Beguine, from the DeLovely soundtrack, which certainly influenced us in out re-imagining of a Cole Porter standard. The word from the people who know was that that version was cover, and the "derivative" never entered the discussion.

    Now, let me babble on just a bit more about that. DeLovely was a biopic, and I have long suspected that copyright holders of an aging catalog probably spend their own money to sell their product to a new generation (think of the Elvis people bankrolling part of "Lilo and Stich"). Now, I think that if you or I were to have conceived of, recorded, and released Sheryl Crow's version of "Begin the Beguine" without getting prior approval, we could have had our asses nailed to a legal wall if the Cole Porter Trust had deemed it in their interest to go after us. But biopics are major way of breathing new life into old catalogs (and hallelujah for that, having watched biopics for greats like Porter, Johnny Cash, Ray Charles, Jerry Lee Lewis, and more). The point I want to make is the large gray area and the importance of doing due diligence to track down authorization. Sheryl Crow's version of "Begin the Beguine" might breathe new life into the Porter catalog, and by accepting it as a cover, the trust gets all the royalties. Our bluesy version of a Porter classic might sell a hundred copies at the outside, which is not in their interests to squash. But if by wild miracle, it sells a million copies, then we would have been at their mercy, had we not kept searching for proper approval. It's a game, and they have the power and we are ants. But my experience is that they are willing to gamble that the ants might have something, but protect yourself and get the proper approval first. That's my considered opinion on doing covers where you have greatly played with the chords, melody, and/or words.

  • http://www.javajazzmusic.com Myron Brown

    In response to Michael,

    I applaud your cynicism and encourage you to focus it on political outlets, like the JFK assassination and 9/11 theories. Really. This world is a dangerous place.

    The article might be an attempt to push people toward services like Limelight, and so what? Even if that were true, the moderators have tolerated multiple references to HFA, which we use. Limelight might not have even existed when we did our first mechanical licenses.

    But assuming you are correct, and the whole piece was just guerilla marketing for Limelight. Let's examine the arguments further. As for royalties on each permanent digital download, this is what we are paid by CDBaby: $0.96459090. For each digital stream, via sites such as Napster, we are paid $0.01044283. We don't make money.

    But I think that point of the article is that we all dream of the day when we do make money, and that using cover songs as a part of a strategic marketing campaign could help. The author mentions "He Who Shall Not Be Named"-Bieber. I remember Devo and Big Daddy

    There is no question that our strategy toward a fat deal with a record company has been to establish credibility by producing a series of CDs that demonstrate our professionalism. Where we are amateurs, they can add professionalize. Approach a record company with a demo of all originals, and no track record, and see what kind of deal they offer you. We perceive the benefit of recording covers as establishing a record of credibility. Others, like Devo, used it as a magnet to draw people immediately to their originals.

    So, the bottom line from me is that, even if this is just written and promoted by a Limelight flunkie, the basic message isn't wrong. There are opportunities in using covers. And even mark from ing isn't all wrong. The scuttlebutt in the industry was that Depeche Mode fought hard to keep their record company from releasing their cover of "Route 66" in the USA, because they didn't want American audiences to know them as a a cover band. There isn't a hard rule that doing covers is either good or bad, and even the bottom line, financially, isn't necessarily the final word. It's all about getting noticed for all the right reasons, and if covers can help, then do it.

    • Chris R. at CD Baby

      Just to clarify one aspect of this debate, CD Baby IS partnered with Limelight to make cover song clearances easier for indie artists. So if you want to call this piece a "plug," you're right in one sense, as we believe we're drawing attention to a really useful service. We're proud of the partnership and absolutely think Limelight is a great option for anyone who wants to secure mechanical licenses. That being said, CD Baby always wants you to know you've got options, thus the discussion about Harry Fox and directly negotiating with publishers.

  • http://www.steeltropics.com/ Tom

    Good info Chris, thanks

  • http://www.cirkestra.com Peter

    Let's not forget the 4th way to make money from covers: When another artist covers YOUR song. It's mailbox money, you also receive performance royalties from these covers from airplay, etc.

  • Nicco B

    Many of us forget it was a cover "Take Me to the River" that established the very original Talking Heads.

  • SKIZA

    OK, after checking out HFA, I think I will use Limelight. for 2 major reasons:

    1. with HFA, It seems I am still responsible for obtaining license authority from each publisher that owns part of the cover song, even tho they state that the specific song is 100% Licensable on HFA Songfile…

    on the other hand, It is stated that Limelight can license 100% of any composition.

    2. I can securely use PayPal to checkout on Limelight (HFA do not have that option)

    another BIG question for me is:

    Will it be better to sell the cover song as a SINGLE, or as a part of an EP or Album (meaning 10 songs are original and the cover song is a bonus)?

    Thanks again,

    SKIZA

  • http://www.songclearance.com Alex Holz

    Nice to see all the comments re: these ideas/methods — agreeing or disagreeing is certainly everyone's prerogative. They are employed by several key record labels, but there is very little written about the subject for the indie artist.

    @Myron – You'll see in Pt. 2 how Jeff Buckley is my personal favorite example (much better than "He Who Shall Not be Named – Bieber"). Buckley took "Hallelujah" in a direction Leonard Cohen didn't and Cale had mostly hinted at. Devo is a great mention and worth noting (added to my "must purchase again" list). Regardless if you choose Limelight, covers are a creative way to seek out new inspiration, break out of songwriting doldrums, and add to the "marketplace of ideas" (albeit within reason — no rewriting lyrics of course). Best of luck with any future releases!

    @Peter – Absolutely. Always great to see a nice check in the mail when tunes you wrote see royalties! In fact, this leads nicely into Cash for Cover Pt. 2 (some of the "alternate" ways to direct digital download sales). I always like mentioning SoundExchange (if you control the master recordings and haven't registered, you may want to check it out – http://www.soundexchange.com)

  • http://www.songclearance.com Alex Holz

    @SKIZA – Glad to hear it! I love the idea of a cover single (you can maximize the "Popularity by Association" part mentioned earlier. HOWEVER, if you're using the cover song to draw attention to your original music, it may be best to put it alongside a larger album. Can't go wrong either way, just a question of what you're aiming for.

    @Nicco B – Good call.. another awesome cover I need to add to the "must purchase again digitally" list.

  • http://www.nickmatteramusic.com Nick Mattera

    Great information. Any musician out there trying to promote your music w/out the help of a label or publicist can really use the helpful information. If you're talented & are able to write & perform your own music I'm sure you perform a few covers of some of your favorite songs. Why not have some fun & record a couple covers & throw them out on the Internet to drive potential listeners to you.

  • http://members.cdbaby.com CD Baby Admin

    Thanks, Myron.

  • Christophermiller

    That makes a lot of sense and it makes a lot of cents!
    Chris Miller