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publishing forum
The Undercurrents Series of Music Business Educational Forums is
designed to assist musicians, songwriters, bands and music industry
professionals with continued growth and knowledge of the music /
entertainment industry. These forums and the information provided
is practical rather than legalistic in its approach and should not be
used as a substitute for legal advice in relation to any particular
matter. Undercurrents, Inc. accepts no liability for any
errors or omissions.
What is a Publisher?
What does a
Music Publisher Do?
Why Get a
Publishing Deal?
Who
Should Get a Publishing Deal?
Split Income - Songwriter / Publisher
Types of
Publishing Deals
Co-Publishing
Agreements
Administrative
Agreements
Publishing Contract Terms
WHAT IS A MUSIC PUBLISHER?
Songwriters used to earn all their songwriting income from publishing by selling
sheet music. Even as radio and television replaced the piano in the
parlor, music publishers continued to play an important role as popular singers
continued to rely upon established songwriters to provide their material.
However, with the advent of rock and roll (and especially the Beatles) popular
recording artists began to write more of their own songs. Since that time, the
music publishing industry has taken on a less important role. Nevertheless,
music publishers continue to perform several important functions which you
should be aware of.
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WHAT DOES A MUSIC PUBLISHER DO?
Today,
music publishers are concerned with administering copyrights, licensing songs to
record companies and others, and collecting royalties on behalf of the
songwriter. Some of the more important music publishing activities are listed
below:
Mechanical Royalties
The term "mechanical royalties" initially referred to royalties paid whenever a
song was reproduced by a mechanical device (remember that one of a copyright
owner's exclusive rights is the right to authorize the reproduction of his or
her work). The term "mechanical royalties" was applied to the reproduction of
songs in music boxes, player pianos rolls, and later, phonograph records. This
term is still used, and "mechanical royalties" now refers to royalties paid for
the reproduction of songs on CD, DAT, audiocassette, flexi-discs, musical
greeting cards, and other devices sold on a "per unit" basis.
The amount of money a record company must pay for a mechanical license is
generally set by the Copyright Royalty Tribunal. This rate is sometimes referred
to as a "statutory" rate. The current statutory rate is $.0695 per song. This
means that a single song can generate just under 70 cents for every 10 records
sold. Unfortunately, it is record industry custom to pay only 75% of the
statutory rate to new or moderately successful songwriters. This means that a
typical songwriter may generate a little more than 50 cents for every 10 records
sold. After the publisher collects this money from the record company and takes
its share of the income, a songwriter may receive as little as half of this
amount.
Foreign Monies
Foreign countries sometimes have different laws governing the collection and
distribution of mechanical royalties. As a result, it is often necessary for
publishers to enter into agreements with a foreign publisher (or
"sub-publishers") to collect a songwriter's mechanical royalties in that
territory. After the sub-publisher takes a cut (anywhere from 15% to 25%) the
rest of this foreign income is divided between the publisher and the songwriter
according to their agreement.
Synchronization Licenses
Whenever a song is used with a visual image, it is necessary to obtain a
"synchronization" (or "synch") license permitting the use of that song. Music
publishers issue synch licenses to television advertisers, motion picture
companies, video manufacturers and CD-Rom companies. A portion of this money
(usually 1/2 the net proceeds) is paid to the songwriter.
Transcription Licenses
Because radio is not a visual medium, the use of a song as part of a radio
commercial requires a separate license, known as a "transcription license."
Sometimes songwriters are able to negotiate provisions in their publishing
contract preventing their songs from use in certain contexts, such as ads for
alcohol, tobacco, political campaigns or other uses the songwriter may find
offensive.
Print Licenses
Although sheet music sales have diminished over the years, many songs are still
available in print form. These include books of songs by specific artists,
instruction books or compilations of hits within a given genre (i.e., "100
Country Hits of All Time"). The music publisher issues print licenses and
collects this income from the sheet music company, while the songwriter receives
a small royalty derived from the sale of his or her song in print form.
Administration and Registration of Copyrights
Because music publishers generate money by licensing copyrighted compositions,
they must also perform various administrative tasks involving copyright
transfers and the registration of musical copyrights with the U.S. Copyright
Office. As mentioned previously, registering your copyright with the U.S.
Copyright Office provides added protection to copyright holders (If you've
recently wandered onto the Fine Print, you may want to link back to my earlier
column on "Registering Your Copyright").
Public Performance Royalties
A copyright owner also has the exclusive right to authorize the "public
performance" of that work. This is why radio and television broadcasters must
enter into licenses with performance rights organizations such as BMI, ASCAP and
SESAC. These performance rights organizations collect income on behalf of
songwriters and music publishers whenever a song is publicly broadcast. A future
column of the Fine Print will discuss these performance rights organizations in
more detail.
Even though music publishers do not collect this performance rights income,
publishers remain entitled to 50% of the money received by BMI, ASCAP, SESAC and
others. Publishers also register songs with these performance rights
organizations.
"Song Plugging"
This obscure term refers to music bizzers who promote the compositions of
others. This may involve convincing popular artists to cover your song, or
talking Disney into using your latest tune in their next animated feature.
Translations
Publishers may also authorize translations in order to generate income from
cover versions of a particular song in foreign countries.
Obtaining a Record Deal
Music publishers are usually generally most in signing established songwriters
or recording artists who write their own material. However, some publishers may
be willing to sign new songwriters or bands without a record deal. If a
publisher believes an undiscovered artist will one day sell lots of hit records,
they may help the artist record demos and assist in trying to land a major
record deal. If the artist gets signed, the music publisher will hope to see a
reward for its investment in the form of mechanical royalties, public
performance royalties and other derivative income. A publisher may even be
willing to contribute to tour support or provide extra promotions money in order
to generate future publishing income from record sales and airplay.
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WHY CONSIDER A PUBLISHING DEAL?
The main
reason is money. Music publishers may be willing to pay a substantial cash
advance for a songwriter's past, present or future material. In exchange, the
publisher will own a percentage of that artist's musical copyrights and keep a
percentage of money these songs earn.
Of course, publishers are unlikely to pay an advance unless they believe they
can make a profit on the deal. Like everyone else in the industry, music
publishers are in the business of buying something of yours in order to sell it
to others at a profit. Unfortunately, many artists do not realize how valuable
their publishing rights are. The history of the music business is littered with
sleazy promoters who paid pennies for songs that later generated millions in
income.
Not every artist needs a publishing deal, and some artists may be better off by
avoiding traditional publishing deal altogether. Many different publishing
options may be available to an artist today. Some publishers may be willing to
enter into a more limited "co-publishing" deal, and "administration" deals may
be available for independent artists who seek to retain their valuable
copyrights. The next column of The Fine Print will look at each of these deals
more closely.
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SHOULD I ENTER INTO A
PUBLISHING DEAL?
Actually, not every artist needs to enter a publishing deal. It may be wiser to
first obtain a major record deal before finding a music publisher. Conversely,
publishers may want nothing to do with an artist who doesn't have a record deal
or some other guaranteed way to generate income. In addition, some artists may
prefer to hold on to their copyrights and let administration agencies collect
their publishing income.
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SONGWRITING INCOME SPLIT
WITH A PUBLISHER
With the
exception of print music, income from musical compositions is generally split on
a 50/50 basis between the music publisher and writer. The publisher's half of
this income is called the "publisher's share," and the writer's half is the
"writer's share."
To illustrate how this works in the real world, let's take the following
example. Imagine a publisher collects approximately $.52 (52 cents) in
mechanical royalties from the sale of one of your CDs ($.52 = 10 songs x $.0695
cents per song x 75% rate for "controlled compositions"). Assuming there are no
collection costs deducted off the top, the publisher's share comes to $.26 (26
cents) and the writer's share also comes to $.26 (26 cents).
This financial split is a basic, but important, concept. When discussing
publishing income, be sure to remember this distinction between "publisher's
share" and "writer's share."
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TYPES OF MUSIC PUBLISHING DEALS
STANDARD
PUBLISHING AGREEMENTS:
Standard music publishing deals come in several varieties. These include
song-by-song publishing deals for specific compositions, and exclusive
songwriter agreements which may last for a fixed period of years (usually 1 year
with options to extend the term). These publishing deals may cover all songs
written by an artist, or just those songs commercially released during the term
of the agreement. Under either arrangement, the publisher becomes the copyright
owner of the songs. In exchange, the Publisher may pay the artist an advance
based upon the potential value of the compositions. Subsequent income generated
from these songs is then be split, usually on a 50/50 basis. After the publisher
recovers its advance, the artist is paid the "writer's share" of net income
received, while the publisher retains its publisher's share.
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CO-PUBLISHING AGREEMENTS
Co-publishing deals are similar to the above arrangement, except the artist (or
the artist's publishing entity) co-owns a percentage of the copyright along with
the publisher. It is common for both parties to each own 50% of the copyright,
though percentages can vary from deal to deal. In a co-publishing deal, the
songwriter's publishing entity also receives a percentage of the "publisher's
share" of income. Thus, using the above hypothetical, an artist would receive
the "writer's share" of the publishing "pie" (i.e., 26 cents), while also
receiving up to half the net income from the publisher's share of the publishing
"pie." (i.e., an additional 13 cents) Although co-publishing deals are sometimes
better than standard publishing deals, not all co-publishing deals are in the
artists best interest. For instance, some independent record labels require new
artists to enter into a co-publishing deal with the label's "publishing" entity.
(Ironically, few major labels require this of their artists). Even if you are
offered an additional advance for such a deal, you should resist it! Here's why:
1) The record company's goal here is to reduce the amount of money payable to
you from record sales (since the record company gets to keep 50% of the
"publisher's share" of mechanical royalty income);
2) Independent record labels may lack the experience and resources to promote
your songs like an independent publishing company;
3) An independent publisher has more incentive to demand and accounting and
collect publishing income from your label; and
4) It may actually be in your interest to retain these copyrights and enter into
an administration deal instead.
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ADMINISTRATION AGREEMENTS
In an
administration deal, the publishing administrator collects income and also helps
promote the songwriter's catalogue. An administration deal may last for a
specific period of time (i.e., 3 years) or for one year with several options to
renew. When the term is over, all rights revert back to the artist. A publishing
administrator is typically paid by deducting a percentage of the income it
collects on behalf of the artist. After deducting this administration fee
(anywhere from 10% to 20% of the gross proceeds) the administrator distributes
100% of the remaining net income to the songwriter(s). As an incentive to
promote your songs, some administrators may also charge a slightly higher
collection fee for income earned from cover songs. In some cases, a songwriter
may receive as much income from a co-publisher as a publishing administrator.
However, while a co-publisher may be able to offer a generous advance, an
administration deal can provide an artist with greater financial and artistic
control. There are also many advantages to retaining the copyright to your
songs. For example, if your first record sells only moderately but your next CD
becomes commercially successful, you may gain greater leverage to negotiate a
favorable publishing, co-publishing or administration deal at a later date.
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Publishing
Contract Terms
The main terms:-
1. The amount of songs/compositions the writer is expected to deliver during a
specific period and that the writer is signed exclusively to the publisher.
This is usually tied to a specific product i.e., an album of X songs written by
the composer and/or co-writers
2. An Initial Period - usually 1 year with options to extend if the songs have
not been delivered, recorded or released, depending on the wording of the
contract.
3. Exclusive Extensions and Options - which will include further minimum
commitments and time periods. If signing to the publishing arm of a record
company these terms may reflect those in the deal and both may co-terminate at
the same time.
4. The territories and period during which the Publisher may control and
exploit the songs delivered in the agreement. 10 - 15 years or shorter for
successful writers is pretty standard, the shorter the better as at the end of
term the songs are returned to the writer who can then choose to exploit the
songs themselves or assign them to a new publisher.
5. A retention period for songs delivered to the publisher and not exploited
during a reasonable period of time should be included which then allows these
particular works copyrights to be returned to the writer.
6. Territories is the term for the right to publish in various countries.
Assuming negotiation is possible the writer may wish to sign agreements with
other publishers or set up their own publishing operation in certain countries.
7. Royalties to be paid to the writer and the basis that these are calculated.
This can be either a percentage of 'gross' or 'net' receipts. If the publisher
will only agree to pay on the 'net' receipts received in the UK it is usually
possible to negotiate a percentage of the gross retained by sub-publishers will
be set at a reasonable level, otherwise the writer who shares the income will
not receive very much!
8. Percentage of Royalties - for most writers this ranges between 60% and 80%
of gross income which also applies to the publishers share of performance
income. 50% of gross performance income is also paid direct from PRS if the
songwriting performer is a member. These figures are reduced in the case of
'cover' versions (songs not recorded by the writer as an artist), although there
are exceptions to this.
9. Advances - this is an income paid to the writer, sometimes in
instalments,
in advance of receiving royalties on songs written. These reflect delivery and
release of a product similar to a record deal although there are other
alternatives, i.e., instalments linked to signing a publishing deal and/or
record deal. The publishers advance is repaid only when royalties are received
from exploitation of the product, if it doesn't sell the writer will often be
expected to repay the advance at the termination of contract depending on the
terms of agreement.
10. The definition of an acceptable record deal should make provision for
signing with alternative companies other than the five majors.
11. The waiving of moral rights and full assignment of the copyright in the
songs subject to the agreement by the writer to the publisher. Clauses should
be included to prevent usage of work which has been detrimentally and materially
changed, i.e., the addition of parodic, lewd or derogatory words to the original
lyrics.
12. Publishers Obligations - Vague wording to the effect that the publisher will
use reasonable endeavours to exploit the songs delivered by the writer are pretty
standard as most publishers like to keep their contractual obligations to a
minimum! Occasionally a publisher will agree to provide home studio equipment,
demo facilities, tour support or large equipment costs but any expenses like
these are expected to be recoupable. a) Registration of works to worldwide
collecting societies to ensure collection of income should be undertaken by the
publisher on behalf
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Sample
Publishing Contract
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