Music Publishing – Co-Publishing And Administration Agreements
As a songwriter, you just got one of your songs “placed” or recorded by a major recording artist! The song is called “I’m Nice” and it’s a hit and music publishing companies are blowing up your phone offering you co-publishing and administration deals! You’re like, “WTF?!” and decide to call your favorite entertainment attorney because you have questions that need to be answered. So here we go!
What does a music publisher do?
In essence, the job of a music publisher is to ensure that as a songwriter your songs are commercially exploited and that you get paid when they are! Music publishing companies will usually have the exclusive right to administer your songs and to collect any monies due to you from the commercial usage of the songs on your behalf. For example, a music publisher will collect “mechanical royalties” on your behalf. Mechanical royalties are paid to you by a record label when they sell your song to the general public. A music publisher will also collect the “publisher’s” share of performance royalties payable to you when your song is “publically performed,” for example, on the radio. In other words, “I’m Nice” is earning you publishing income! Publishing companies will also actively seek to license your songs to third parties such as advertising, television and cable companies so that they can exploit your songs in commercials, films and movies. Finally, a music publisher will seek placement of your songs with other recording artists.
What is a co-publishing agreement?
A co-publishing agreement is an agreement in which you, the songwriter, and the music publisher are the co-owners of the copyright in the songs that you write. This is the most common agreement you will often receive from a major music publisher. The music publisher will pay you an upfront payment or “advance” and in return the music publisher will own 50% of the “publisher’s share” of the copyright in the songs. Financially, this actually equals 25% of the overall total publishing income generated by the commercial exploitation of your songs. It’s a bit confusing to understand but it breaks down like this:
Let’s assume that you wrote both the lyrics and music to “I’m Nice.” The song in total is equal to 100%. Half of the song, or 50%, is considered the “writer’s share.” The other half, or 50%, is considered the “publisher’s share.” (Don’t ask me why – it’s just the way it is!) Becoming a co-owner of the publisher’s share is what the music publisher pays you an advance for. In other words, there will be a clause in the co-publishing agreement which states that 50% of the copyright will be assigned to the music publisher in return for payment of an advance to you. This means that the music publisher receives 50% (or half) of 50% of the publisher’s share, which equals 25% and becomes a “co-publisher” of the songs – get it?
As the songwriter, you keep 75% (i.e., 50% of the writer’s share plus the remaining 25% of the publisher’s share) of the copyright. Keep in mind, however, that before the music publisher pays you 75% of the publishing income it collects, it will first recoup the advance paid to you upon signing the co-publishing agreement.
In addition, the co-publishing agreement will require that you write and deliver to the music publisher a minimum number of songs during each term of the co-publishing agreement. This is called the “minimum delivery commitment” (“MDC”) and the term will not end (or alternatively be “suspended”) until the minimum number of songs has been satisfactorily delivered. Your entertainment attorney has to negotiate this provision well, as it could mean that the term of the co-publishing agreement may never end if you do not fulfill the MDC. If you’re a signed recording artist and write your own songs, major publishers will often base the MDC on the delivery of albums rather than individual songs. In either case, if the MDC is not fulfilled, you may find yourself stuck in a “music publishing limbo.”
Finally, your entertainment attorney should ask for a “reversion clause” to be included in the co-publishing agreement. A reversion clause allows for copyright ownership of the songs to “revert” back to you after a certain period of time (usually 7 – 10 years) after the term has expired so long as the music publisher has recouped the advance and made a significant return on its initial investment.
What is an administration agreement?
In an administration agreement, the music publisher will not have an ownership interest in the copyright, but instead will receive a percentage of the income that is generated by the commercial exploitation of your songs. The music publisher only has the right to exclusively administer and collect your publishing income but will not actively try to commercially exploit your songs or seek placements. This “admin” right lasts for a limited period of time (generally 3 – 5 years) and the publisher will only receive 10% to 20% of the gross publishing income, unlike in a co-publishing agreement, where the music publisher receives 25% and is also a co-owner of the copyright. Generally speaking, most administration advances are smaller than co-publishing advances and the music publisher must also first recoup any advance it pays you before paying any publishing income it has collected to you. An administration agreement makes sense if you are already an established songwriter and don’t need an upfront payment or a music publisher to exploit your songs. When the term expires, the administration rights to the songs revert back to you.
What is a “work-for-hire” agreement?
Although not usually offered by a reputable music publishing company, as a songwriter be wary of signing a “work-for-hire” or a “work made for hire” agreement. A work-for-hire agreement is offered when a third party pays you to write a song for them or on their behalf. If you sign such an agreement, you give up full ownership to the copyright of the song to the person who hired you. All income generated from the commercial exploitation of the song will be paid to the employer and the employer can even credit themselves as the writer or author of the song for copyright registration purposes. So “I’m Nice,” which is climbing up the charts, will generate no income for you save for the initial fee you received for writing it! Make sure to have your entertainment attorney review any “work for hire” agreements before you sign on the dotted line!
So in summary, remember that in a co-publishing agreement, you are entitled to 75% of the gross monies that are earned from the commercial exploitation of “I’m Nice.” You will also share in the ownership of the copyright to “I’m Nice” with the music publisher. In an administration agreement, you will keep between 80% to 90% of the gross monies earned, but you maintain complete ownership of the copyright to “I’m Nice.” Finally, with a work-for-hire agreement, you would only receive a one-time fee for writing “I’m Nice.” However, you will have no ownership interest in “I’m Nice” and will not share in any publishing income generated from it! So be careful and choose wisely!