PUBLISHING
AGREEMENTS
- by Chris Taylor
An excerpt from Chris Taylor's
book, "R U Experienced?:
An Introduction to the Music
Business by the People Who
Live It", published in '98.
Publishing, while a simple
concept, can be an incredibly
complex part of the
music business. I really
can't propose to cover the
many complexities in this
short chapter and would
urge the reader to see some
of the further recommended
reading sited throughout
this book in order to get
a firm grasp on this woolly
subject. The following is
intended for general information
only and cannot take
the place of detailed legal
advice applicable to particular
circumstances.
Readers who have specific
questions should consult
legal counsel.
Songwriting and publishing
is where the true money
is made in the record business.
The rumours abound about
the disparities in successful
bands where some of the
members write the tunes
and the others perform as
mere members
of the band. The songwriters
can afford to fly in the
plane while the
non-songwriter members ride
in the tour bus. Sometimes
the songwriters themselves
are left at the side of
the road when they fail
to protect themselves and
their songs in negotiating
a publishing deal. The discussion
below takes a look at some
of the potholes along the
road.
INTRODUCTION
In order to fully understand
publishing we must first
understand the sources of
publishing income and their
relative importance. There
are primarily 4 sources
of publishing income: Mechanical
Licensing Fees, Performance
Royalties, Synchronization
License Fees and Print/Other
Income. Following a brief
discussion of these four
areas we will proceed to
analyse some typical
provisions found in the
Publishing agreement.
MECHANICAL
LICENSING FEES
This is the primary source
of income for songwriters
and publishers. In Canada,
every time someone makes
a recording (CD, Cassette,
12" whatever) of one of
your songs they must pay
a mechanical licensing fee
to the Canadian
Mechanical Rights and Reproduction
Agency ("CMRRA")
(see Chapter _____ for a
full discussion on CMRRA).
The current fee
today is 6.6 cents per track.
For example, if Polygram
or even your independent
record company like
Squirtgun or Sonic Unyon
manufactures a record with
14 of your songs on
it they must pay a mechanical
licensing fee to CMRRA of
14 x 0.066= 0.93 per record.
If they manufactured 5,000
records they would have
to pay: 5,000 x .93= 4,650.00.
It's easy to recognize that
the numbers can really add
up when you start to sell
a significant number of
records.
Other countries have companion
societies to CMRRA (Harry
Fox Agency in the States)
and they also collect the
mechanical royalties on
your behalf. After deducting
an administration fee they
pass on your royalties to
the CMRRA who ensures that
you get your cash.
PERFORMANCE
ROYALTIES
The second most important
source of songwriting income
comes from performance income
(see Chapter _____ which
discusses this topic in
more detail). This is income
you receive as a result
of radio or television airplay
or the use of your music
in live performances.
The users of music (i.e.
radio stations, nightclubs,
etc.) pay fees to the Society
of Composers, Authors and
Music Publishers of Canada
("SOCAN") for the use of
music. This is a huge pool
of cash which SOCAN distributes
to its members: songwriters
and publishers. SOCAN distributes
this cash based on complex
formulas and statistical
samplings of music used.
Generally, the more your
song has been used, the
more you are paid. Payments
are made on a quarterly
basis.
SOCAN has international
counterparts throughout
the world (ASCAP and BMI
in the States) who collect
similar royalties on your
behalf and ensure that you
are paid whenever your music
is used throughout the world.
It is difficult to calculate
exactly how much performance
income will be generated
by a particular song but
a rule of thumb throughout
the industry is that a number
1 single on the Billboard
charts is worth as much
as a 1,000,000 in performance
income whereas a number
1 single on the Canadian
charts can be worth as much
as 100,000.
SYNCHRONIZATION
LICENSE FEES
Simply put, whenever someone
wants to use your music
in conjunction with an audio-visual
image (i.e. in a film, television
show or computer game) they
must pay for the rights
to do so. Generally, in
Canada this license is negotiated
with the CMRRA who pay this
money to the songwriter
and publisher after deducting
a small administrative fee.
The fees for synchronization
licenses vary widely depending
on a number of factors including,
the budget of the entire
project, the positioning
of the song (i.e. does it
figure prominently in the
film? Is it the title theme
song?), and the popularity
of the individual artist
and song.
It is difficult to set out
general fees in this area
but a good friend of my
mine once gave me a formula
as follows:
entire budget of the film
/ 100 = music budget music
budget / # of songs /
2 = money available for
synch license
A film with a 4 million
dollar budget has a 40,000
music budget and might use
12 songs throughout the
film. This leaves approximately
1,666.67 for the synch license.
When you factor in the music
supervisor's percentage
you are probably left with
around 1,500.00 for the
synchronization license.
This formula is not going
to be accurate all the time
due to the factors I have
outlined above but at least
it gives you a sense of
the ballpark on this point.
The bigger the budget, the
bigger the artist, the bigger
the money.
PRINT
AND OTHER SOURCES OF INCOME
A detailed discussion of
print income is beyond the
scope of this book. Generally,
music publishers "farm out"
the aspect to companies
dedicated to selling printed
music. These are generally
song books that you can
buy in the music store when
you need to learn the words
to a particular song or
if you want to figure out
a difficult chord progression.
Before the wide use of the
phonograph and the radio,
this was the primary way
for a songwriter or publisher
to earn money. Today this
source of income is increasingly
declining in importance
for obvious reasons. The
money paid out on this source
is typically expressed as
a percentage rate of suggested
retail list price around
10-20%.
"Other
sources of income" do not
play such an important role
at the present time but
the advent of new technologies
may result in future income
streams we could never dream
of. Although the four most
important income streams
are listed above, it is
important to address this
area when negotiating publishing
agreements. Some agreements
choose to select a current
income stream by analogy
and apply it to "any and
all future income streams
whether known or not at
the time of this agreement".
DIFFERENT
DEALS
Publishing agreements come
in many different shapes
and sizes. A songwriter
may sign with a publisher
for a single song, a period
of time, for a whole catalogue
of songs, or an agreement
could be coterminous with
a recording contract commitment.
The songwriter will need
to determine what deal is
best suited. A single song
agreement offers low commitment
and low advances but leaves
the songwriter free to work
with whomever they please
thereafter. The sale of
the catalogue of songs may
offer a sizeable advance
but the songwriter may find
that some of the tunes get
lost in "the shuffle". Finally,
a deal which is coterminous
with a recording contract
may also offer sizeable
advances but it is dependent
on the songwriters success
as a recording artist.
All of these deals have
very unique qualities and
a detailed analysis of their
contents will be required
in all cases. I have attempted
to assemble a common set
of issues which arrive in
most of the publishing deals
outlined above.
ADVANCES
Advances are the cornerstone
of most publishing agreements.
A sizeable advance may provide
a sufficient floor for the
Artist to survive in the
early stages of a burgeoning
career. An enthusiastic,
intelligent publisher can
be invaluable asset to have
in your corner (see Chapter
____, Š..). A publisher
who merely sits back and
collects money for you is
probably not what you're
looking for unless you're
in desperate need of advance
monies.
Advances range widely and
may hinge on a major release
for the Artist within a
particular period or certain
success levels thereafter.
In Canada a typical advance
of 75,000 would break down
as follows: 25,000 for signing
the contract with the publisher,
25,000 upon the signing
of a recording agreement
with a major record label,
25,000 upon the formal release
of the record. In the U.S.
it is not unusual to rates
at 10 times those listed
above.
The advances are typically
recouped against money earned
from the songs.
TERM
As referred to above, the
term of the publishing agreement
will vary depending on the
type of deal. A single song
agreement can be for the
life of the copyright of
the song. A publishing agreement
for all songs written by
a particular songwriter
will normally be for an
initial period of 1 year
plus four or five option
periods (for a total commitment
of 6-7 years). These options,
as under the typical recording
agreement, will be possessed
by the publishing company.
This means that at the end
of the first year the publishing
company can drop you or
they can choose to exercise
their option and continue
to claim rights to your
songwriting output for a
particular period. Normally,
the Artist doesn't¹t possess
any option power. In other
words, the Artist can't
force the publishing company
to extend the contract.
ROYALTIES
The money from songwriting
is generally paid out as
follows: 50% to songwriter,
50% to publisher. If the
songwriter is her own publisher
she keeps 100% of the mechanical
royalty. If the songwriter
enters into a publishing
agreement with a publishing
company the publisher will
normally take _ of the publishing
share and the songwriter
will retain _ of the publishing
share and all of the writer's
share. Essentially, under
a typical publishing agreement
the songwriter ends up with
75% of the income from the
songs while the publisher
ends up with 25% of all
the income from the songwriting
pie. It is important to
stress that although this
is the most typical breakdown,
the percentages can be divided
up any way the parties see
fit.
REVERSION
- PERFORMANCE OBLIGATIONS
Normally the publishing
company will bargain to
maintain rights to the songwriting
output during the term for
the life of the copyright
(life plus 50 years, see
Chapter ___, Š..). This
means if you signed a publishing
contract which granted the
publishing company rights
to your songs for the life
of the copyright the publishing
company would continue to
make money off your songs
for the rest of your life.
A recent trend in publishing
contracts is to have the
copyrights in the songs
revert to the songwriter
after a period of time,
i.e. 10 years or 7 years,
especially if the copyrights
have not been exploited
for a period of time. An
Artist might be able to
negotiate this type of clause
with a smaller publisher
that is not providing a
substantial advance or where
the songwriter is a sought
after commodity. An Artist
should obviously be on guard
against giving away his
publishing "forever" where
songs may end up doing nothing
after 5 or 6 years. When
an Artist requires copyrights
to revert to his full possession
after a period of time where
the publisher is given a
fair chance to exploit the
copyrights, the Artist can
shop the songs to other
parties who may show more
enthusiasm about exploiting
the songs.
A songwriter may also be
able to negotiate some sort
of performance clause into
the publishing deal. A performance
clause would require a publisher
to generate a certain amount
of income from the songs
prior to being able to exercise
any options under the agreement.
This keeps the publisher
on their toes and saves
the songwriter from a publishing
arrangement that has gone
stale.
MORAL
RIGHTS
The publishing company will
want to be able to do whatever
it wants with the songs
the songwriter has provided
under the terms of the agreement.
For example, the publisher
may want to use the songs
in television commercials,
as part of a political campaign,
or in movies. In addition
the publisher may want to
alter some of the words
slightly to make the song
more marketable in certain
territories or may want
to translate the song into
a different language altogether.
Negotiation on this issue
will vary depending on the
different philosophies of
the parties involved and
their relative bargaining
power. Artists that take
a strong stance on the publishers'
freedom in this area may
find themselves without
a deal. More often than
not, the publisher will
agree to limitations on
its freedom in respect to
the use of the songs for
political purposes or in
X-rated films. Finally,
parties may agree on a higher
degree of freedom on the
publishers' part where the
Artist is in an unrecouped
position. When the income
derived from the songs has
eclipsed advances provided
to the Artist then the Artist
may be granted with a right
of pre-approval prior to
the use of the songs in
situations which might be
disagreeable to the Artist.
CONCLUSION
The songwriter/publisher
relationship can be a fantastic
partnership when the publisher
has a strong belief in the
material being written by
the songwriter and actively
seeks out income generating
exploitations of the songs.
If the publisher is merely
sitting back and collecting
the songwriters' money the
parties should consider
an administrative deal rather
than a publishing agreement.
An administrative deal involves
the publisher merely collecting
the songwriting income for
a fee which much less than
what an active publisher
takes for its services.
The streets aren't always
paved with gold but hopefully
this brief introduction
will help you avoid costly
pit stops along the way.
For
further information contact:
Chris Taylor, Barrister
& Solicitor
PAUL SANDERSON & ASSOCIATES
Direct Line 1+ 416.971.6571
EMail: tayl206@ibm.net
Web Site: www.sandersonassociates.com
