Music Publishing – Publishing Agreements
In a previous article, we discussed copyright basics, and because you’re the hottest songwriter out right now, you’re being offered deals to enter into co-publishing and administrative agreements by major publishing companies. However, what exactly is a co-publishing or administration agreement and which one is best for you?
Before that question is answered and we talk more about co-publishing and administration agreements, it’s important for you to understand what a publisher and/or publishing company does. As a songwriter, your energy is best spent creating great “works of art” to enlighten the mundane lives of your fellow human beings, however, this is a business and the job of a publisher is to take care of your business by making sure you get paid when your musical compositions or songs are commercially exploited. Publishers will exclusively, and on your behalf, collect mechanical royalties (which are payable to you by record labels that commercially release your songs); issue licenses to third-parties who want to use your songs; and will collect from those third-parties all monies owed to you. Additionally, publishers will also seek opportunities to place your songs with other artists and in television, films, commercials, etc.
The co-publishing agreement is probably the most common publishing agreement used by publishing companies. In this type of agreement, the songwriter and music publisher are co-owners of the copyright in the musical compositions. In return for an up-front payment or advance to you, the publisher will retain fifty (50%) percent of the publisher’s share of the income which actually equals twenty-five (25%) percent of the total overall income generated by your ownership interest in a song. I know it sounds confusing (believe me – it took me forever to get this concept in my head when I was a young attorney), but it breaks down like this:
You write a song (let’s say both lyrics and music) and that song is equal to one hundred (100%) percent. Fifty (50%) percent of that song is considered the writer’s share (don’t ask me why…it just is!) and the remaining fifty (50%) percent is considered the publisher’s share (again – please don’t ask why!). This is the portion of the song that is the subject of a co-publishing agreement negotiation. The language in a co-publishing agreement will ask for fifty (50%) percent of the copyright in return for payment of an upfront advance to you. What that clause really means is that the publisher is asking for fifty (50%) percent of the fifty (50%) percent of the publishing share which is equal to twenty-five (25%) percent. Whew! (Hope you get it – because I’m not repeating it again!)
This means that you, as the songwriter, get to keep seventy-five (75%) percent (i.e., fifty [50%] percent of the writer’s share plus twenty-five [25%] percent of the publisher’s share) of the publishing income generated by your song and the publisher keeps twenty-five (25%) percent for themselves.
In addition to the advance that is paid to you (which advance must first be recouped by the publisher before you can be paid your share of the publishing income), co-publishing agreements will require that you deliver to the publisher a certain number of songs (for them to exploit on your behalf) during each term of the agreement. Called a “minimum delivery commitment,” this clause means that the term or contract period will not end until the minimum delivery commitment (“MDC”) has been fulfilled. If not negotiated properly, this clause can mean that the term of a co-publishing agreement never ends if you do not fulfill the MDC! So make sure that the minimum delivery commitment is realistic. If you happen to be a recording artist signed to a major label, the minimum delivery commitment can sometimes be based on the delivery of an album rather than just individual songs.
Another very important point to consider when negotiating a co-publishing agreement is what’s known as the “reversion clause.” Traditionally, publishers would retain an ownership interest in the copyright to a song in perpetuity. However, many publishers are agreeing to allow for the copyright ownership to revert back to the songwriter usually seven (7) to twelve (12) years after the term has expired and after they’ve made a substantial return on their initial investment.
In an administration agreement, the publisher does not receive an ownership interest in the copyright, and only gets the right to administer and collect the income generated by your songs on your behalf. These administration rights last for a limited amount of time and unlike co-publishing agreements where the publisher keeps twenty-five (25%) percent of the gross publishing monies, the publisher gets ten (10%) – twenty (20%) percent. However, keep in mind that administrative deal advances are usually much smaller than co-publishing deal advances such that entering into an administrative agreement may make sense if you’re already an established songwriter who may not need a large upfront advance or the extra placement services that a major publisher can offer. Once the term expires, administration rights to the songs revert back to you.
Lastly, whether you’re selling thousands of songs on iTunes or have only 10 followers on Facebook, be careful of ever signing a “work-for-hire agreement.” A song is considered a “work-for-hire” when, pursuant to a written agreement, a third-party pays you to write a song. By signing such an agreement, you as the songwriter, never existed in the eyes of copyright law and the person who hired you now owns the song as if they wrote it themselves! Your “employer” will credit himself/herself as the writer of the song and will earn all the publishing monies generated by that song. You will often be paid a one-time fee, but if the song “blows up” and sells millions, you won’t share in any of the publishing income the song earns – so make sure an attorney reviews any such agreement before you sign it!
So, to recap – in a co-publishing agreement, you get seventy-five (75%) percent of the gross monies generated from the commercial exploitation of the song, but share in the ownership of the copyright with the publisher whereas in an administration agreement, you get eighty (80%) – ninety (90%) percent of the gross monies, but you own one hundred (100%) percent of the copyright. And with a “work-for-hire” agreement, you only get your fee for writing the song, but no publishing income generated by the song and no ownership interest. So which one of these deals is better for you as a songwriter?