Music Publishing

What is a music publisher?
     A music publisher is your royalty collector and your copyright administrator. A publisher exploits your copyrights and collects and pays all your royalties (except for performance income). It does this by obtaining ownership and administrative rights to some or all of your copyrights. Thus, a music publisher is basically a company that takes care of your music business, allowing you (the song writer/artist) to concentrate on your creative aspirations and goals. The artist’s strength generally lie in the creative domain, and the publisher’s specializes is administrating your catalouge, collecting royalty monies, plugging your songs, making copyright deals and paying you your royalties from all sources of income.
-What is a publishing agreement?
    A "music publishing agreement" is a copyright contact that a song writer signs with a music publishing company. Per this publishing agreement, a publisher is assigned certain designated copyrights . In accordance with the terms of the publishing deal, a music publisher basically "owns" or "rents" some (or all) of your songs for a certain period time and in a certain territory, administrating and exploiting your musical product as much as possible in order to generate more income for you and them. A music publisher agreement seeks to either assign or license certain songs to a music publisher to either own and/or administrate for a designated time and in a specified territory. Thus, a music publishing agreement is an agreement between a songwriter (who owns the copyright in songs) and the music publisher (which seeks to own or administrate the songs.)
-What are the major types of publishing agreements out there?
    The seven (7) basic music publishing contracts are:

(1) Single Song Agreement: A single song deal is an agreement between the writer and the music publisher in which the writer grants certain rights to a publisher for one or more songs. In single song deals, the writer is paid a one-time recoupable advance.

(2) Exclusive Song Writer Agreement ("ESWA"): Under the ESWA or "staff writer" contract, the song writer generally grants all of the publisher’s share of the income to the music publisher. The writer’s services are exclusive to the music publishers for a specified period of time. Thus, any compositions written within that period belong to the music publisher. These deals are usually offered to writers with some degree of success. Because the writer has a track record of writing hits, the publisher feels confident that it will recoup its investment. In return for signing away exclusive rights to some or all the writer’s songs, the writer gets paid by the publisher a negotiated advance against future royalties. The advance amount naturally depends on the writer’s bargaining power and on the competition in marketplace, if any. Under a staff writer deal, the writer is paid on a weekly or quarterly basis. An ESWA can be either tied to a record contract, or independent of a record contract.

(3) Co-publishing Agreement ("Co-pub"): The co-publishing ("co-pub") deal is perhaps the most common publishing agreement. Under this deal, the songwriter and the music publisher are "co-owners" of the copyrights in the musical compositions. The writer becomes the "co-publisher" (i.e. co-owner) with the music publisher based on an agreed split of the royalties. The song writer assigns an agreed percentage to the publisher, usually (but not always), a 50/50 split. Thus, the writer conveys ½ of the publisher's share to the publisher, but retains all of writer’s share. In a typical "75/25 co-pub deal," the writer gets 100% of the song writer’s share, and 50% of the publisher’s share, or 75% of the entire copyrights, with the remaining 25% going to the publisher. Thus, when royalties are due and payable, the writer/co-publisher will receive 75% of the income, while the publisher will retain 25%.


(4) Administration Agreement ("Admin"): An administrative agreement takes place between a songwriter/publisher and an independent administrator, or between a writer/publisher and another music publisher. In an "admin deal," the songwriter self-publishes and merely licenses songs to the music publisher for a term of years and for an agreed royalty split. Under this agreement, the music publisher simply administers and exploits the copyrights for another publisher/copyright owner. Only the most popular song writers can even consider asking for an admin deal. Under this coveted arrangement, ownership of the copyright is usually not transferred to the administrator. Instead, the music publisher gets 10-20% of the gross royalties received from administering and exploiting the songs for a certain period of time and for a certain territory.

(5) Collection Agreement: A collection agreement is like an admin deal where the writer retains the copyrights, except that the publisher does not perform exploitation functions; like an accountant or business manager, it merely collects and disburses available royalty income.

(6) Sub-publishing Agreement: These are basically music publishing deals in foreign territories between a US publisher and a publisher in a foreign territory. They are like admin or collection deals (with no ownership of the copyrights being transferred to the subpublisher), but limited to one or more countries outside the US. Under this publishing deal, the publisher allows the subpublisher to act on its behalf in certain foreign territories. Often, they are limited to a group of countries, such as European Union (EU), GAS (Germany, Austria, Switzerland), Latin America, etc.

(7) Purchase Agreement: Under this agreement, one music publisher acquires in whole or in part the catalouge of another music publisher, sort of like a merger of companies. In this case, a "due diligence" investigation is done to determine the value of the catalogue.
---------How much do music publishers get paid?
    In exchange for a typical co-publishing deal, the music publisher is traditionally paid 50% of the "publisher’s share" of all royalty Income, which is income from mechanical and synchronization royalties. For your performance income, since those monies are collected by PRO’s, music publisher usually get only 25%. For print music, publishers usually get 20% on the marked retail price, and 10% to 12½ for folios. With the agreed publisher’s share of your copyright royalties, your income is used to pay their overhead and operating expenses, (e.g., office, staff, equipment, supplies, payroll, taxes, insurance, etc.)
----------What are some of the main deal points in a music publisher's agreement?
    Most of the various types of music publishing contracts contain similar basic paragraphs in common cornering the advance, royalty payments, copyright ownership, and warranties and representations. These are the key issues that should be addressed and clarified.

(1) Term: The "term" is the length of the agreement. The duration can be based on calendar ("contract years") years or on albums ("LP’s"). For example, the contract year term in a staff writer deal is usually one year with a certain number of options. Another frequently encountered contract year term would be the longer of 12 months or until a specified number of songs have been delivered. An LP-based term is based on the albums written by the composer, not on years. While recording agreements with major labels usually range from 5-8 years, co-publishing agreements are shorter, only about 3 to 4 years in duration.

(2) Territory: While it may be possible for some established writers to limit the publisher’s rights to certain territories by way of an "admin deal," a "worldwide" territory is common for single-song contracts and "co-pub" deals. This allows the publisher to maximize its earnings on your songs by either adding it to the songs already in their subpublishing agreement, or by assigning the songs to various subpublishers around the world.

(3) Scope & Compositions: A co-pub deal can be for a single composition, an album, or an entire catalogue. The deal can include past, present and future songs. The "scope" clause specifies which songs are part of the publishing deal by expressly defining "composition" in a certain manner. It explicitly identifies in the body of the agreement which compositions will be included and excluded. If you are the writer, it is more beneficial to try to exclude previously released songs and limit the scope to songs written during the term of the publishing agreement. If existing songs are required, try to get a higher advance. This compositions clause may also determine if the writer has the right to collaborate in writing the songs and, if so, how the collaborative works are to be co-owned/co-administered.

(4) Advances: An "advance" is a sum of money paid by the publisher to the song writer for conveying to the publisher copyrights to a song or a collection of agreed songs. The royalty advance is frequently the most important issue to the writer. The only reason a writer would ever want to convey his/her copyrights in songs would be in return for money and to share in the future royalties from the songs. Therefore, if a publisher ever asks you for money for your own songs, it is not a genuine or legitimate publisher. A publisher should always offer you money to own or administrate any part of your songs, unless it is small indie publisher with no money. The amount of the advance is based on the degree to which the publisher believes that it can earn royalty income off your songs through successful exploitation. If the publisher believes your songs are going to be big hits, it may offer a lot of money. If not, the advance will be commensurately less. Market forces also often drive up the level of advances.

The advance is usually "nonrefundable and recoupable." Advances are "nonreturnable" because if the writer does not earn any royalties, the writer need not pay the advance back. "Recoupable" means if the writer’s songs generates sufficient royalties to pay back the advance, the publisher gets to "recoup" its advance. Once the writer is "recouped", all additional income collected is split between the writer and the publisher in accordance with the agreed share. The only song writer royalty a publisher cannot recoup is income form public performances.

Advances may be contingent or automatic. For example, an advance may be based immediately upon signing the publishing agreement ("on execution"). Alteratively, an advance may be paid when a single song or album reaches certain sales or chart positions.

An advance is payable usually as a flat sum, e.g. $25,000. Or, it can be paid out as a per centage (%) of earnings on previous albums, with minimums and maximums ("min-max’s").

(5) Delivery: In return for the royalty advance , the song writer must "deliver" a certain amount of musical compositions during the term. Where substantial advances are involved and the number of compositions is specified in the term, a music publisher may often insist that the compositions be released on a record in the US by a "major" record label.

(6) Ownership: The ownership of the copyright is perhaps one of the most important terms in a publishing deal. Under a single song agreement or ESWA deal, the publisher typically acquires 100% copyright ownership, worldwide, for life. Under a typical co-pub deal, the writer becomes a "co-publisher" with the music publisher on a 50/50 split, but the publisher has exclusive administration of the songs throughout the world. No ownership rights are granted in either admin, collection, or subpublishing agreements.

(7) Royalty Splits: The division of royalty income is just as important as ownership of the copyrights. In a single song deal, the royalties are usually split 50/50 between the writer and publisher, except for print income for which the writer usually receives 5¢ to 10¢ per copy sold. Similarly, under a typical "copublishing deal, there is usually a 50/50 split, which becomes a "75/25 deal." Under this deal, the co-publisher-writer gets 100% of the writers share of income, and 50% of the publisher’s share, or 75% of all income. If an admin or collection deal is possible, the royalty splits are usually 85% to the writer, 15% to the administrator. Sometimes, it is possible to negotiate a more favorable split in a co-pub or an admin deal once the writer has been recouped, or reaches certain pre-determined levels of income and success.

The calculations of your royalty splits will also be dependant on whether your royalties are calculated on an "at source" or "receipts" basis. As a song writer, always try to get an "at source" deal to maximize your income.

Print royalties are usually paid on the basis of "net paid sales", which means on gross shipments, less returns, for which the publisher received payment.

And, remember, no payment of royalties is paid to either the publisher or the writer for promotion copies of your songs.

(8) Administration: In exchange for giving you an advance against future royalties, the music publisher will be conveyed the writer’s "administrative rights." This clause grants the music publisher the right to control and exploit your composition. Publishers do this by granting mechanical licenses, synchronization licenses, and print rights. Additional provisions allow the publisher to collect the money from the rights that are granted to third parties. There is usually an "administration" fee charged by the administrator/publisher. Frequently, the admin fee is 10% to 25%. This fee is usually deducted off the top of either the gross receipts from the compositions or from the gross publisher’s share of income.

(9) Costs: The deductions from gross royalty receipts will often be the subject of negotiations. Obviously, as the writer you will want the music publishers to absorb as many fees as possible, For example, ask your publisher to waive fees charged to the publisher by Harry Fox Agency or CMRRA. If they do not agree to this, try to avoid the middle-man charge by having the music publisher agree to license directly to affiliated record companies, or perhaps to only the "majors." Other expenses that are negotiated are the copyright registration fees and the costs of lead sheets and demos, etc.

(10) Restrictions:There are a number of creative rights that a writer may choose not to convey to the publisher, and for which the writer may want to retain prior approval. Sometimes a writer can place limitations on the right to use his or her name and likeness (right of publicity). For example, a writer may insist that his songs not be used commercially in conjunction with tobacco or alcohol companies, feminine hygiene products, etc. If this restriction is allowed, the publisher will usually insist the writer must regularly supply the publisher with approved photographs and bios, and will want to use any materials approved or deemed approved for use by the writer’s record company. Or, a writer may not want any translations, adaptations or arrangements of the songs without prior approval. Often a writer who is also a recording artist may want a clause not allowing the publisher to issue "first-use" mechanical licenses with out the writer’s approval. This restriction is usually limited for periods of 6- 9 months, and applies only where the writer contemplates recording the song. Other restrictions could include limiting the publisher from commercially exploiting any demo recording, or from issuing mechanical licenses "below rate." Another provision would be to preclude any synchronization licenses without approval, or no use of the title of a song on any film/TV/stage production without writer consent. A writer can sometimes also limit the publisher’s right to settle copyright infringement or other lawsuits against the writer without the writer’s consent. If you have sufficient clout, you may even restrict your "grand rights" and "merch rights", so that a publisher cannot (without your permission) use your songs in a theatrical dramatization, or cannot license you songs on any merchandise.

(11) Reversion: Under US Copyright laws, the length of time a music publisher is allowed to retain ownership of and/or administrative rights to the post-1978 copyrights acquired during the duration of the publishing agreement is thirty-five years. At the end of the 35-year term, the copyrights "revert" back to the writer. Thus, the term, "reversion." The provision that specifies the writer’s right to regain the copyrights is called a "reversion clause." Sometimes a writer can negotiate a reversion clause that allows the copyright to revert sooner than under normal circumstances.

A reversion clause may be negotiated where the publisher fails to pay the royalties properly or on a timely basis. In the past few years, a growing trend has emerged with some music publishers in co-pub deals to agree to return copyrights to some leveraged writers after 25, 15 , or even 5 years. Alternatively, reversion may occur the later of "term plus x amount of years." If you cannot get a reversion clause based on years, try to get one based on your performance.

(12) Costs of Litigation:As in many recording agreements, there are often "Warranties," "Representations" and "Indemnification" clauses in publishing agreements. Under these provisions, the writer promises that all the songs on your albums are original and agrees to reimburse the publisher in case they are found not to be originals. Similar "warranties" and "indemnification" clauses exist in the recording agreements between the artist and the record company. At a minimum, try to avoid or limit the indemnification clause, under which a writer agrees that if the music publisher is sued for copyright infringement, the writer agrees to reimburse them for all their court costs, legal expenses and attorneys fees. Instead, try to get provisions that obligates the publisher to bring all necessary litigation in order to collect your monies and/or to prevent or cure infringements. Ask the publisher to advance and absorb all costs of litigation against third parties.

(13) Audit:Typically, publishers send royalty payments semi-annually (twice a year) at six-month intervals, usually within 45 days after the end of each six-month period. This means if the music publisher pays based on a calendar year, the writer should be paid in about mid-August and mid-February. To protect the writer, there should be an audit clause which allows the writer (or his/her financial representatives, such as a CPA, accountant, and/or lawyer) to examine and inspect the music publisher’s royalty statements and books at certain times to make sure royalty payments are accurate. Insist on one. There are usually restrictions imposed in audits clauses as to the times and frequency of audits. Try to get a longer "contractual statute of limitations" on audits and law suits, instead of the short ones usually proposed. Ask for a right to inspect the statements, books, and records 2-4 times per year. Ask for the right to audit licensees directly. In case an underpayment of royalties is found after an audit, try to include a provision that ensures your audit costs will be reimbursed, in whole or in part.
---------Who collects my royalties?
    Royalties are collected depending on the nature and source of the revenues. There are four (4) potential types of royalties in the music recording and music publishing industry:

(1) Mechanical Royalties: Domestic (US) mechanical royalties are collected by domestic record companies for records sold. Foreign mechanical royalties are collected from foreign Performance Rights Organization ("PRO") by sub-publisher(s) for records sold in their territory.

(2) Performance Royalties: Domestic (US) performance royalties are collected by one of the three main Performance Rights Organization: (1) ASCAP; (2) BMI; and (3) SESAC. These PRO’s issue blanket licenses to music users for publicly performing their songs in the operation of their businesses and broadcasts. To ensure prompt and timely payment of performance income from a PRO, each songwriter and music publisher must first join as a member and properly register their songs and current whereabouts.

Foreign performance royalties are collected by foreign, government-owned PRO’s. To ensure prompt and timely payment of performance income from a foreign PRO, each songwriter and music publisher should enter into a "sub-publishing" agreement and properly register their songs and current whereabouts with the sub-publisher in each territory their songs are performed. The foreign performance societies contact each sub-publisher in their territory and request they designate an agent for the performance rights in all their songs. They then contact the users of those songs in their territory (e.g. local radio stations, nightclubs, TV, etc.), and grant them performance licenses to use all the songs of all the sub-publishers they represent. The foreign PRO’s then collect and pay the publisher’s share of performance income to sub-publishers, and pay the writer‘s share to one of the American PRO’s (ASCAP, BMI or SESAC), which then pays the artist. If there is no foreign sub-publishers, the publisher’s share eventually is paid to the US music publisher via one of the American PRO’s, but this process takes much longer.

(3) Synchronization Fees: Synchronization fees are collected by the song writer and/or music publisher that grants a synchronization license to users or broadcasters of the songs, which then create a derivative audiovisual work in the form of movies, TV programs, commercials, etc.

(4) Print Music Income: Print music income is collected by the song writer and/or music publisher that grants a print music license to music printers which then prints sheet music or folios.
---------How are royalties calculated?
    Royalties are determined and divided according to their type and source. They are calculated and divided as follows:

Mechanical Royalties: Record companies pay the publisher mechanicals based on the amount of phonorecords sold. Sales of sound recordings are determined by the record companies through Sound Scan and other sales reporting systems. Unlike most countries, which base mechanical royalties on percentages, US mechanical royalties are calculated on a penny (¢) basis per song. Record companies pay the recording artist either a current minimum statutory penny rate, or a "reduced" penny rate. The current statutory rate for a U.S. copyright is 7.1¢ per song. This minimum rate is effective until January 1, 2000, after which it will go up every two years until 2006, at which time it will remain at 9.1¢ per song until changed.

However, recording artists rarely get maximum (statutory) rates from their US record companies. This is because most of their the domestic recording or production contacts usually contain a standard "controlled composition" clause which allows the record company to pay the artist and/or music publisher less than the minimum rate for songs written or "controlled" in whole or in part by the recording artist. This negotiated or "reduced" mechanical royalty rate is generally a percentage of the minimum compulsory license rate, up to a maximum number of songs. A common example is 75% (of 7.1¢) per song, with a cap of 10 songs, no matter how many songs are recorded and released on the album. This negotiated "min stat x 10 rate" is collected by the music publisher, which then pays the residual to the recording artist per their publishing agreement.

Before the artist/songwriter eventually receives their "reduced" US mechanical royalties, there are numerous withholdings by the recording company pursuant to the artist’s recording contract. There are frequently several clauses that give away "freebies" and eat away at the artist’s basic royalty rate (e.g., getting paid on less than 100% of units sold, receiving no royalties for "free goods" or promotional CDs, or for "non-controlled" songs, getting a lower royalty rate for CD’s, cassettes, and record club or budget records, giving free licenses for promotional music videos, etc).

There are also other provisions in the recording contract that delay and reduce payment of royalties. For example, most record companies pay mechanicals on a quarterly basis, i.e., 60 to 90 days after each quarter. Moreover, a certain percentage of the reduced royalty rate is withheld by the record companies in "reserve against returns",.i.e. in case of over shipment and returns.

After the record company takes out its numerous deductions and withholdings, it pays the mechanicals royalties to the music publisher, if any. Under a typical "co-publishing" deal, American music publishers also deduct their 25% publisher’s share and sometimes take out "administrative" deductions. Sometimes, a music publisher may also deduct for using the services of a third party to help administer and audit compositions or catalogues.

Foreign mechanical royalties are calculated differently from domestic mechanical royalties. Unlike in the US (where musical compositions are licensed on a cent per-song basis), foreign mechanical societies grant mechanical licenses for the entire record based on a percentage of the wholesale or retail price, regardless of the number of songs. The rate of foreign and/or domestic mechanical royalties paid to the songwriter is determined by the US publishing and/or sub-publishing agreement by specifying in those contracts whether the writer will be paid by an "at source" or "receipts" method of calculation. "At source" means the percentage paid to the sub-publisher is based on earnings in country where earned (e.g. England), which is considered the "source". "Receipts" means the percentage of the foreign mechanicals paid to the sub-publisher is based on earnings in country where received (e.g. USA).

(2) Performance Royalties: Each quarter, the US PRO’s first deduct from gross receipts a small administrative fee for "operating" expenses. They may also get reimbursed for payment of fees to foreign societies for their sub-publishing percentage. Then the remaining net performance fees are divided among the participants of the same PRO, depending of the amount of their respective radio and TV air play. After "weighing" the air play, the PRO then bypasses the music publisher and pays all of the net "writer’s share" performance income to their songwriter member writer directly, with the music publisher getting paid their "publisher’s share" separately.

The amount of public performance monies collected by the PRO’s depends on their survey and consensus of how many times your songs were played, when, and on what type of medium. The amount of blanket license fees charged to music consumers and received by the U.S. PRO varies, as each have their own unique monitoring systems and detection techniques based on either a random survey, census, sampling, or digital detection method.

ASCAP uses the random survey and consensus method to detect performance royalties. In contrast, BMI uses a scientific sampling method of tracking performances. SESAC relies on cue sheets for TV royalties, but, utilizes a more accurate and cutting edge method of detecting radio performances. It uses digital pattern recognition technology created by Broadcast Data System (BDS), the same company that monitors radio air play and that Billboard magazine relies on to help determine chart positions.

Under a "standard" co-publishing deal, and per a letter of direction to the PRO with which the author is affiliated, the song writer gets 100% of the writer’s share, and 50% of the publisher’s share, or 75% of all performance royalties. The music publisher gets the "publisher’s share" of performance royalties, or 25%.

(3) Synchronization Fees: Unlike mechanical royalties, synch fees are purely negotiable and are not regulated by statute; they are strictly contractual and vary greatly in amount depending on the usage, subjective importance of the song and production, and medium used. Ranges can vary as low as free for an unsigned artists for an unknown and un-released song for a local public TV program, up to $250,000 or more for a major artist’s hit song featured in a high-budget feature film. Generally, however, synch fees are determined and negotiated by custom and practice based on a number of objective and subjective factors.

(4) Print Income: Domestic (US) print royalties are paid by printers to the song owner that granted the print music license (usually the music publisher). The print licenses are usually non-exclusive and limited to three to five years in duration. For a single-song sheet music, publishers are usually paid 20% of the marked retail price (or about 70¢ @ $3.50 retail price). Folio royalties are paid at 10% to 12½¢ of the marked retail price (or about $14.95 to $16.95). There is usually an extra 5% of marked retail price for personality folios, which requires an additional license or consent for the right of publicity.

Foreign print music is collected by the foreign sub-publisher(s), which base their charge depending on whether they actually manufacture and sell the material. If they do, they generally charge from 10% to 15% of the marked retail selling price. If they license out the print music, the sub-publisher retains the same percentage as all other income (15% to 25%), and remits the balance to the writer.

If a folio is the selected work from a single songwriter, only that writer’s music publisher receives the print royalties. If the writers on a folio collection vary, different music publishers will receive their pro-rata share. For example, if one publisher owns 10 songs from a 20 song collection, it gets 50% of the (10% to 12.5%) royalty.

Under a standard "co-pub" deal, after taking their 25% share, the music publisher pays the artists 75% of their pro-rated share. For personality folios, the extra 5% for the use of name and likeness (if any) is paid directly to the artist.