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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 ____, ..). 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'tt 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 ___, ..). 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

 

   
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