MUSIC PUBLISHING — AN INTRODUCTION (Part 2 of 2)

This article is part 2 of an overview on music publishing. In the last article I discussed what music publishers do and the types of income they collect. This column looks at typical publishing deals that are available.

SHOULD I ENTER INTO A PUBLISHING DEAL?

Actually, not every artist needs to enter a publishing deal. It may be wiser to first obtain a major record deal before finding a music publisher. Conversely, publishers may want nothing to do with an artist who doesn’t have a record deal or some other guaranteed way to generate income. In addition, some artists may prefer to hold onto their copyrights and let administration agencies collect their publishing income.

HOW IS SONGWRITING INCOME SPLIT WITH A PUBLISHER?

With the exception of print music, income from musical compositions is generally split on a 50/50 basis between the music publisher and writer. The publisher’s half of this income is called the “publisher’s share,” and the writer’s half is the “writer’s share.”

To illustrate how this works in the real world, let’s take the following example. Imagine a publisher collects slightly more than $.68 (68 cents) in mechanical royalties from the sale of one of your CDs (actually 10 songs x $.091 cents per song x 75% rate for controlled compositions = 68.25 cents. I’ll round off the extra ¼ cent for purposes of this article). Assuming there are no collection costs deducted off the top, the publisher’s share comes to approximately $.34 (34 cents) and the writer’s share also comes to approximately $.34 (34 cents).

This financial split is a basic, but important, concept. When discussing publishing income, be sure to remember this distinction between “publisher’s share” and “writer’s share.”

WHAT TYPES OF MUSIC PUBLISHING DEALS ARE AVAILABLE?

Standard Publishing Agreements

Standard music publishing deals come in several varieties. These include song-by-song publishing deals for specific compositions, and exclusive songwriter agreements that may last for a fixed period of years (usually 1 year with options to extend the term). These publishing deals may cover all songs written by an artist, or just those songs commercially released during the term of the agreement.

Under either arrangement, the publisher becomes the copyright owner of the songs. In exchange, the Publisher may pay the artist an advance based upon the potential value of the compositions. Subsequent income generated from these songs is then split, usually on a 50/50 basis. After the publisher recovers its advance, the artist is paid the "writer’s share" of net income received, while the publisher retains its publisher’s share.

Co-publishing Agreements

Co-publishing deals are similar to the above arrangement, except the artist (or the artist’s publishing entity) co-owns a percentage of the copyright along with the publisher. It is common for both parties to each own 50% of the copyright, though percentages can vary from deal to deal.

In a CO-publishing deal, the songwriter’s publishing entity also receives a percentage of the “publisher’s share” of income. Thus, using the above hypothetical, an artist would receive the “writer’s share” of the publishing “pie” (i.e., 34 cents), while also receiving up to half the net income from the publisher’s share of the publishing “pie” (i.e. an additional 17 cents).

Although CO-publishing deals are sometimes better than standard publishing deals, not all CO-publishing deals are in the artists best interest. For instance, some independent record labels require new artists to enter into a CO-publishing deal with the label’s “publishing” entity. (Ironically, few major labels require this of their artists). Even if you are offered an additional advance for such a deal, you should resist it! Here’s why:

The record company’s goal here is to reduce the amount of money payable to you from record sales (since the record company gets to keep 50% of the “publisher’s share” of mechanical royalty income);
Independent record labels may lack the experience and resources to promote your songs like an independent publishing company;
An independent publisher has more incentive to demand and accounting and collect publishing income from your label; and
It may actually be in your interest to retain these copyrights and enter into an administration deal instead.

Administration Agreements

In an administration deal, the publishing administrator collects income and also helps promote the songwriter’s catalogue. An administration deal may last for a specific period of time (i.e., 3 years) or for one year with several options to renew. When the term is over, all rights revert back to the artist.

A publishing administrator is typically paid by deducting a percentage of the income it collects on behalf of the artist. After deducting this administration fee (anywhere from 10% to 20% of the gross proceeds) the administrator distributes 100% of the remaining net income to the songwriter(s). As an incentive to promote your songs, some administrators may also charge a slightly higher collection fee for income earned from cover songs.

In some cases, a songwriter may receive as much income from a co-publisher as a publishing administrator. However, while a CO-publisher may be able to offer a generous advance, an administration deal can provide an artist with greater financial and artistic control. There are also many advantages to retaining the copyright to your songs. For example, if your first record sells only moderately but your next CD becomes commercially successful, you may gain greater leverage to negotiate a favorable publishing, CO-publishing or administration deal at a later date.

Law Office of Alan Korn