It is used to let parties know who has the right to handle your publishing.
When you first register a songwriter with Songtrust, we ask you if you are already affiliated with a Performing Rights Organization (PRO). The reason we do this is because if you are already affiliated, we need to generate and send out an Letter of Direction (LOD) on your behalf.
In order for us to collect the royalties your songs are generating, we need to first inform your PRO and other collection societies around the world that you are giving us the right to manage your publishing. That is exactly what the LOD does - it grants us, Songtrust, the administrative rights for yourself and your publishing entity (if you have one) the ability to collect on your behalf. An LOD does not grant us ownership of your work. Once a collection society has received your LOD we then can begin the registration process for your songs in that territory.
Below is an example of what an LOD could look like -
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