Nigel’s Music Business Blog 10

The blog this week will look at music publishing.

We will look very briefly at a few types of music publishing agreements and then focus on some of the more interesting clauses in a term music publishing agreement (also known as an exclusive songwriter agreement.) It should be noted that it is the songwriter in the band who makes the real money as he will have an income stream along with the rest of the band from sales of the recordings and from touring and merchandising but will also have an additional income stream from uses of the songs he has written and which may have been recorded by the band and other artists. It should also be noted that the band agreement should deal inter alia with how the income from songwriting is to be divided up between the band members. If this is not dealt with in the band agreement there could (and in all likelihood will) be disputes over who is entitled to the income from the music publishing. 

Let us ask ourselves firstly what does a publisher do? A publisher helps to promote, exploit and administer a composer’s works and collect in the monies due from their exploitation (along with the assistance of the music collecting societies the Performing Right Society (PRS) and possibly the Mechanical Copyright Protection Society (MCPS.) (PRS and MCPS are known together as PRS for Music.) We will look at the role of collecting societies in a future blog. 

Historically a music publishers’ main source of income was from sales of sheet music. Although this is still an important source of income it is essentially a secondary source of income for musical compositions. The primary sources of income for musical compositions are performing rights, synchronisation licences (known as synchro licences) which are licences which permit a song to be used in timed relation to television or film footage, and mechanical licences which are licences which permit a song to be recorded and released for sale to the public.  

The majority of composers need a publisher’s services as they are not able to promote their songs on their own. A good song needs to be exploited to make money and most composers do not have the contacts time or experience to get their songs out to the relevant people in the music and entertainment business who can help them make money from their compositions. In addition a publisher deals with all the paperwork involved in publishing the compositions and will keep track of and collect in all the income due from exploiting the works which is something a composer may not have the time or ability to do. For many composers one of the main reasons why he would need a publisher is that the publisher will usually pay the composer an advance which is non returnable but is recoupable from future royalties ie: the composer is not required to return the advance or any part of it if the publisher does not recoup the advance out of the income earned from exploiting the compositions.

Let us now have a brief look at some different music publishing agreements. 

An Administration Agreement 

An administration agreement is an agreement whereby one party, the composer retains 100 per cent of the copyright in his works but uses a publisher to promote the works, to grant any licences which he is authorised to grant under the terms of the administration agreement and to collect in and distribute the income from the exploitation of the works throughout the world. The publisher will when dealing with third parties act as the composer’s agent. 

An administration agreement may be used where the composer is established, his works are in demand, and he wants to retain all the copyright but he does not have the time or the ability to exploit the value of his works to their maximum potential, nor does he have the ability to perform all the necessary administrative chores which go with exploiting his works. The publisher who is acting here as an administrator will receive an administration fee in the region of 15 to 25% of all the income earned during the agreement.  

A Co-Publishing Agreement 

A co-publishing agreement is an agreement where two or more people have a share in the copyright of the works. For example, an established songwriter may be prepared to assign for a period of time some of the copyright in his works in exchange for a non returnable but recoupable advance and for a share in the publishers’ income.  If the composer has 100 per cent of the copyright in his works he may be prepared to assign for a period of time 40 per cent of the copyright to a publisher in exchange for a 50:50 split in the publishers’ income from these works.

If the works in the first year of a co-publishing agreement earn £200,000 income the split between the composer and the publisher will be as follows:-  Composer (60 per cent of copyright).  £120,000 due to composer ie: 60 per cent of £200,000.  Publisher (40 per cent of copyright).  £80,000 due to publisher ie: 40 per cent of £200,000, BUT the £80,000 is shared 50:50 between the composer and the publisher. So the publisher is entitled to £40,000 and the composer is entitled to £40,000.  

FINAL ACCOUNT FOR YEAR 1. Composer due £160,000 (£120,000 plus £40,000).  Publisher due £40,000 (£80,000 minus £40,000 due to the composer under the 50:50 split of the publishers’ share). 

(Note 1. Often a publisher would pay a non returnable but recoupable advance to the composer under the agreement.

If this were the case here the £40,000 due to the composer from the publisher would be used to recoup the advance).  

(Note 2. The co-publishing agreement may provide that the publisher may deduct certain items eg: an administration fee of 15% from the £80,000 before the 50:50 division occurs).

Apart from the division of copyright ownership and the division of the publishers’ share of income between the publisher and the composer a co-publishing agreement will deal with many other contractual matters. One particular area that will be dealt with and which needs to be considered in detail are the administrative arrangements involved in publishing.

For example, will the publisher have the exclusive right to administer the works, or will the publisher have the exclusive right to administer the works but with restrictions which stop him from granting certain types of licence without obtaining the composer’s consent?  

Another example of where co-publishing may occur is where two composers are each bound under publishing agreements to different publishers decide that they want to collaborate to write songs together. The composers respective publishing agreements will contain provisions dealing with collaborating with other composers but if the collaboration is to go ahead their publishers will need to sort out how the copyright, income division and administrative arrangements will work. 

A Sub-Publishing Agreement 

A publisher based in England may not be capable of exploiting a composers’ works in certain territories and will need to appoint publishers in these territories to enable the works to be exploited worldwide. A publisher who is not capable of exploiting a composer’s works in certain territories will enter agreements with foreign publishers based in these territories, known as sub-publishing agreements, whereby the sub-publisher will be granted the right by the publisher, which will usually be in the form of a licence, to exploit the works in a particular territory and collect the income from the exploiting the works in that territory.

A composer who wants to sign to a publishing company which is part of a worldwide group of publishing companies may find that the publisher wants to appoint companies within the group to sub-publish his works. There should be no problem with this provided the composer is prepared to allow the publisher to appoint sub-publishers and provided the sub-publishing agreements are negotiated at arm’s length and so do not contain terms which are more favourable to the sub-publisher than would be found in a sub-publishing agreement between a publisher and an unconnected sub-publisher. (A publisher based in England should obviously not be permitted to appoint a sub-publisher for England.

If the composer wants to sign to a publisher who wants to do this he should question the publisher’s ability to be a publisher and should seriously consider looking for another publisher to publish his works).  A sub-publisher will be appointed by the publisher for a specified period of time which is usually between 3 to 5 years.

The term of the sub-publishing agreement including any rights extension period (we will deal with the rights extension period in a future blog) should not exceed the term plus the rights extension period of the publishing agreement. The sub-publishing agreement should contain detailed provisions as to what the sub-publisher can do and in what territory the sub-publisher can do it.  

A sub-publisher will, for the term of the sub-publishing agreement and for the territory defined in the sub-publishing agreement, fulfil the role of the publisher for the compositions which are the subject of the sub-publishing agreement.

The sub-publisher will promote, exploit, administer and collect in the monies relating to the compositions covered by the sub-publishing agreement. (with the assistance of the foreign equivalent of PRS and possibly the foreign equivalent of MCPS).

The sub-publisher may possibly pay the publisher a non returnable but recoupable advance for the right to administer the compositions covered by the sub-publishing agreement. In return the sub-publisher will earn commission on the money received from the exploitation of the works in the territory.  

A Term Publishing Agreement / Exclusive Songwriter Agreement.  

A composer who is not a recognised composer will usually be offered one of two types of publishing agreement, either a single song agreement or a term agreement. A single song agreement is as the name suggests a publishing agreement for a specific song. A term agreement is one whereby the composer agrees to write exclusively for the publisher for a period of time and the copyright in the compositions will belong to the publisher for the term stated in the publishing agreement.  

I hope you now have an understanding of what is meant by each of these music publishing agreements. The next blog will look at some of the clauses which might be found in a term publishing agreement/exclusive songwriting agreement. (I do not intend to look at any of the other agreements in any further detail.)