Before I get into the complexities of how all of this works, consider the email I received from Forrest Lee Jr., a songwriter, touring guitarist and background vocalist who has recorded sessions in Nashville, Austin, Seattle and various other markets. A friend recently told him that he heard one of his songs, "Second Hand Smoke," on Country Music Television, so Forrest started watching the cable music channel closely. Sure enough, he found that they were using his songs in several shows.

Forrest wasn’t sure how his music ended up on the channel, so he started investigating. "After pondering for several days and finally e-mailing anybody I had ever sent my material to," he says, "I got a message from Pump Audio stating that it was their dirty work that cracked open the door. I had signed a non-exclusive deal with them in or 2001. Four years later they found an outlet for my material. I just received my first royalty check for three placements, which occurred six to nine months ago. I’ll have to wait another six months for the next check, which will include all of the shows in the last semester. In the CMT show ‘Popularity Contest’ alone, they were using ‘Second Hand Smoke’ for the intro to every episode, and it ran a full 60 seconds! Then throughout the episodes, there were numerous snippets of several other songs I had totally forgotten about."

Now understandably, Forrest doesn’t want everyone to know how much money he makes off of this stuff. But he certainly isn’t complaining. And he did tell me that he makes between $10 and $100 for each five-to-10-second use on CMT. That can really add up. "I know several people that make a LOT of money doing this type of work," Forrest says. "One friend has four songs in a movie that came out several years ago. It’s on TV less than 100 times per year. He makes roughly $10,000 a year because of that movie alone."

Now do I have your attention? Long after you’ve spent that (often) piddly up-front payment, a successful movie or TV show might just earn you a nice steady stream of cash generated by royalty payments and collected on your behalf by performing rights organizations (PROs) such as ASCAP, BMI or SESAC (if you own copyrights and are not a member of one of these groups, you need to join up… now!).

Forrest Lee Jr. belongs to BMI (and seems quite happy with it), but all PROs collect royalties due their members and generally do a great job. In the context of movies, you won’t get anything for films shown in the U.S. (unless it’s part of your licensing deal, which is unlikely), but a portion of international box office receipts actually do flow back to PROs. So if you get a song in an internationally released movie that does well overseas, you could receive a nice check at the end of the year.

But the real gravy comes when you get a song in a TV show or in a movie that ends up on TV. That’s because PROs negotiate licenses with every broadcast and cable channel out there on their on their members’ behalf.

So every time a network airs something with your song in it, you get paid. Various factors, including which PRO you belong to will determine the amount. I spoke with ASCAP Executive VP Todd Brabec, who outlined four main areas that ASCAP uses determine how much members receive for use of their music on TV.

The Network - Not all TV networks are created equal. At the top of the food chain are the three major broadcast networks: ABC, CBS and NBC. They pay the highest rates to ASCAP. Fox, WB and Paramount pay a bit less. After that, the cable channels all pay different amounts based on their revenues and other factors, going all the way down to the smallest broadcast stations, which pay the least amount.

The Time - Prime time evening usage (from 7 p.m. to 1 a.m.) pays the most- 100 percent of ASCAP's negotiated license fee. Usage during the afternoon pays 75 percent, and morning usage pays 50 percent.

Type of Usage - How your song is used on TV can make a huge difference in how much money you get. ASCAP has several categories. As you might imagine, a theme song on a sitcom is going to pay a lot more than the song playing in the background during a dialogue scene at night.

Number of Uses - This is pretty easy to understand. If the movie or TV show is shown once, you get one payment for use of your song. If it's shown 20 times, you get 20X that payment, and so on. So suffice it to say, if you wrote the theme song to a hit show that gets played thousands of times in re-runs, you're gonna be raking it in. Big time.

Variables like these mean that rights holders can receive everything from a few bucks to thousands of dollars, depending on the situation. "All of these have different values in the ASCAP system," says Brabec.

In case you're wondering, PROs don't hire hundreds of people to monitor TV music 24 hours a day. Instead they use information documented on the network's cue sheets to determine usage and payment. They audit cue sheets and even do random checks to verify that they are accurate.

Just the same, it’s not a bad idea to make certain that you have a specific provision in your licensing contract that entitles you the right to request an audit of cue sheets. After all, PROs are looking after thousands of members, not just you. "You have to make sure the cue sheets are done correctly," says Ken Burry, a partner at Greenberg Taurig’s entertainment practice in Los Angeles. "That’s very important. A lot of money gets lost if the cue sheets are incorrect."

At the end of the day, it’s really hard to know how much money you will collect in performance royalties because so many factors are at play. "There is a certain amount of unpredictability," notes Oren Warshavsky, a music lawyer at Gibbons, Del Deo, Dolan, Griffinger and Vecchione. And because ASCAP, BMI and SESAC all have different systems, one song’s 3 co-writers—each with a different rights organization—would receive different amounts of money for the same exact placement.

Take ASCAP and BMI, for example. While they both use cue sheets to track usage, BMI tends to emphasize flat-rate payouts for specific uses while ASCAP focuses more on a shared and weighted system of distributions. The differences are far too complicated to describe here. But how you expect your music to be used on TV will help determine which PRO best suits your needs. Do your homework, and call each organization to get details. Compare BMI’s and ASCAP’s system, and don’t forget SESAC, which does great work for its members as well.

Oh, and just to confuse you a bit more, consider this: If you actually appear onscreen in any capacity (such as in the background playing your song in a coffee shop during the scene), then an entirely separate stream of royalties kicks in based on collective bargaining rules governed by the American Federation of Television and Radio Artists and the Screen Actors Guild, including payments for every time your performance airs. Those fees can become a nice chunk of change in their own right and would be in addition to performance royalties collected by ASCAP, BMI or SESAC.

In the end, music licensing is a crazy, confusing world. But it can be a great way to get some extra exposure, upfront cash and yes… a nice stream of income on the backend. Now that you have some understanding of the contracts and backend logistics involved, you know of the rewards and some of the pitfalls. So what do you have to lose? Ask questions; learn as much as you can, send out your CDs and seize the opportunity - it's the only way to get a seat on the gravy train.

(Mike Grebb is a writer, journalist and singer/songwriter based in Washington, D.C. He just completed his debut solo record, Resolution, which is available at www.mikegrebb.com, as well as digitally on iTunes, MSN Music, Musicmatch, Yahoo! Music Unlimited and other sites. You can also be his friend on MySpace! www.myspace.com/mikegrebb).