MUSIC PUBLISHING CONTRACTS The following extracts are from “Music Business” (Shane Simpson, Colin Seeger) Warner Bros. 1994, and have been reproduced with the kind permission of the authors. This material may not be reproduced without express permission.

1.

What is Music Publishing About? -

It is different to the record business

-

3 Things *

controlling copyrights in musical works (songs)

*

exploiting those copyrights (i.e. by licensing commercial and other uses)

*

administering the flow of income from the users of the copyrights to the copyright owners

-

At page 157 of “Music Business” - beginning of Chapter on the “Anatomy of a Music Publisher” (i.e. the various players and their respective functions)

-

Not all songwriters are performers (and vice-versa)

-

Good publisher can:*

appraise a songwriter’s compositions and have a sound knowledge of what is happening and who is recording to be able to “marry up” a songwriter’s songs with the right Artist. (eg. John Farnham’s “Whispering Jack” Album was made up of songs from a range of songwriters who are not necessarily with the same publisher)

*

understand their songwriter’s potential and try to find commissions for that songwriter (eg. to score a film etc.)

© Simpsons Solicitors Suite 1202, 135 Macquarie Street Sydney NSW 2000 AUSTRALIA

Telephone: (61 2) 9247 3473 Fax: (61 2) 9247 3442 email: [email protected]

2.

-

*

don’t miss many opportunities for their songwriters and the songs they hold rights to.

*

negotiate the licence deals for the use of the copyrights they “own” or administer.

*

arrange for the transcribing of recorded musical works (where the song is reduced to a material form by recording it rather than “scoring” it on paper)

If you are the songwriter and the recording artist of that song, you get royalties under two agreements:*

royalties from publishing income under your publishing agreement for your musical composition; and

*

royalties under your recording agreement for the exploitation of the recording of that musical composition. (Eg. Billy Joel, Elton John, silverchair etc.)

2.

-

Later, every time that same song is recorded by anyone else, the songwriter gets “mechanical royalties” for records made by that other artist and for every other use of a recording of that song.

-

A good song-writer can make a lot of money from a small number of hit compositions - especially if it is recorded and/or “covered” by wellknown artists.

Co-Composing - Composing and Writing with Others -

Use written agreements wherever possible - don’t forget, oral contracts are binding.

-

determine who owns which rights (eg. copyright in music/copyright in lyrics) and in what proportion (which usually determines the proportional entitlement of each author to the income from that song)

© Simpsons Solicitors Suite 1202, 135 Macquarie Street Sydney NSW 2000 AUSTRALIA

Telephone: (61 2) 9247 3473 Fax: (61 2) 9247 3442 email: [email protected]

3. -

especially important where the song is a true collaborative thing - i.e. it is impossible to separate each other’s contribution to the song - in this case, unless you decide otherwise, the co-writers/composers will own copyright in equal shares. E.g. “Words and Music by X and Y” - implies joint authorship and ownership.

3.

-

Additional writers brought in to finish off a song should be contracted in writing wherever possible

-

Accidental Co-writers - quite common these days *

eg. where band members get together in a home studio and “build up” the finished song together.

*

if their contributions cannot be separated, then, in absence of an agreement, each will own copyright in that song in joint and equal shares.

Types of Publishing Agreements -

Term Publishing Agreement - In a nutshell, a publisher gets copyright to all songs written by the songwriter during a particular period, for exploitation during a specific Term and in return for certain royalties.

-

Single Song Assignment Agreement - especially for beginners songwriter transfers the copyright in a song or songs (already written) to a publisher for an agreed period and for agreed royalty arrangement.

-

Administration Agreement - generally only used for experienced and established writers.

© Simpsons Solicitors Suite 1202, 135 Macquarie Street Sydney NSW 2000 AUSTRALIA

Telephone: (61 2) 9247 3473 Fax: (61 2) 9247 3442 email: [email protected]

4.

THE MOST COMMON AND MOST COMPLEX OF THESE: [N.B. At end, you will be given an opportunity to negotiate the essential terms of your publishing deal.] A.

TERM PUBLISHING AGREEMENT

A.1

USUAL TERMS 1.

Duration *

duration of the period of exclusive songwriting

*

duration of the period during which the publisher can exclusively exploit the copyrights in the songs it acquires during the songwriting period and any other songs “assigned” or “licensed” to the publisher under the agreement.

1.1

The Term The term of the publishing agreement is the period during which you, the composer provide your exclusive services as songwriter/composer to the publisher. The contract will usually require ownership (assignment) or control (exclusive licence) of all your copyrights that either:-

come into existence or

-

will become available during the songwriting term. [This will include works written by you during the term, prior to the date of the agreement and not previously licensed or assigned to another publishing company, and prior to the date of the agreement and which were previously licensed or assigned to another publishing company, where the rights revert to you during the songwriting term.]

© Simpsons Solicitors Suite 1202, 135 Macquarie Street Sydney NSW 2000 AUSTRALIA

Telephone: (61 2) 9247 3473 Fax: (61 2) 9247 3442 email: [email protected]

5. -

1.2

Options to extend the (songwriting) sometimes be included.

Term may

*

Should only allow exercise of option if a minimum performance requirement has been met by publisher/ further Advance?.

*

Keep number and duration of Options to a minimum.

The Retention Period A retention period is usually included in all term publishing agreements. It is the period immediately following the end of the (songwriting) Term, during which the publisher may retain ownership and/or control of all the copyrights it acquired from you during the term. ***AVOID RETENTION PERIODS “FOR THE DURATION OF COPYRIGHT” N.B. Your exclusive commitment to the publisher lasts only for as long as the term and, therefore, is over when the term expires.

2.

Territory

3.

The Advance No rule for determining the proper amount of an ADVANCE, except what the market will bear. One basis for setting the amount is to make a realistic estimate of the royalty that your publishing is likely to earn over a reasonable period. This is probably the maximum amount that you could realistically expect as an advance.

© Simpsons Solicitors Suite 1202, 135 Macquarie Street Sydney NSW 2000 AUSTRALIA

Telephone: (61 2) 9247 3473 Fax: (61 2) 9247 3442 email: [email protected]

6. If a writer cannot demonstrate a history of successful songs, the advance will be a matter of sheer guesswork. BUT, if you have a recording contract and are going to record an album of self-written material, you are well on the way to getting a good publishing deal because you have more bargaining power. The amount of the Advance is governed by factors such as:*

whether the publishing/record company is a Major or an Independent,

*

the amount of promotion that the publishing/record company is committing to the project and generally what the “vibe” is for the material. In fact, there may be several publishers interested, in which case you could select not just the publisher you like best but the most generous.

Hugely successful songwriters (not in Australia though) have been paid hundreds of thousands of dollars in publishing advances. Very exceptionally, even new songwriters who have a recording contract and the “vibe” can receive very significant advances if the bidding war gets out of hand but these are very exceptional. (Eg. Barbara Griffin) A publishing contract with NO advance? Ask yourself if there is a good reason for doing the deal anyway? If you can’t think of one, this may not be the deal for you. A huge advance is not everything. *

All too often, writers insist on squeezing the last dollar out of the advance and overlook the other more important terms of the deal.

© Simpsons Solicitors Suite 1202, 135 Macquarie Street Sydney NSW 2000 AUSTRALIA

Telephone: (61 2) 9247 3473 Fax: (61 2) 9247 3442 email: [email protected]

7.

4.

*

An advance is only the pre-payment of money that you expect to earn anyway. RECOUPABLE

*

It is more important to negotiate other matters such as the royalty splits and the degree of control that you wish to retain, than using the publisher as a credit card.

Recoupment All advances paid by the publisher will be recoupable from the writer’s publishing earnings. LOOK AT YOUR CONTRACT to see WHAT ELSE IS RECOUPABLE. *

Many contracts state that any money paid by the publisher on behalf of the writer is deemed in advance and is therefore recoupable. The problem is in determining exactly what expenses are paid “on behalf of the writer”. The only funds that should be recoupable without prior mutual agreement are advances and any amount you have specifically asked to be spent on your behalf and agreed in writing (maybe charged to your royalty account).

*

5.

Demo costs are always a subject of contract negotiation. Publisher’s policies as to the recoupability of demo costs vary widely. Most will advance money for demo costs provided the advance is recoupable. Non-recoupable or partly recoupable payments are harder to get unless you have some negotiating clout.

Productivity Commitment It is still common for publishers to insist on the delivery of a minimum number of compositions a year (about 10 - 12), even though this does little to raise the overall quality of the compositions, especially if the composer has to whip a couple together at the last minute to meet the deadline.

© Simpsons Solicitors Suite 1202, 135 Macquarie Street Sydney NSW 2000 AUSTRALIA

Telephone: (61 2) 9247 3473 Fax: (61 2) 9247 3442 email: [email protected]

8.

A.2

*

often requested where the advance is significant and the publisher has a term of say only 3 years. It wants to make sure that it is getting something for its money and something with which to work.

*

N.B. Many agreements specify that unless the writer delivers a minimum number of works in a contract year, that year will be deemed to extend until the minimum commitment is delivered.

SOME ADDITIONAL TERMS OF THE PUBLISHING AGREEMENT Assignment/Exclusive Licence of Copyright By an assignment, all of the rights in all your compositions are transferred to the publisher. You no longer own your work. Writers with some clout may convince the publisher to accept an exclusive licence of the copyright rather than an assignment. More important considerations are:*

How long are you tied up to this publisher as songwriter? (Term)

*

How long will your songs be tied up with this publisher (Term plus Retention Period)

*

What do you expect your publisher to achieve?

*

What does this publisher expect from you?

*

What controls do you maintain over your works (and reputation)?

*

What INCOME will you earn from this deal? (Advances and Royalties)

*

How can you ensure that you can get your rights back if the Publisher breaches the Agreement? (eg. don’t pay etc.)

The rights assigned or exclusively licensed to the publisher (which will be sole and exclusive) for the territory include: © Simpsons Solicitors Suite 1202, 135 Macquarie Street Sydney NSW 2000 AUSTRALIA

Telephone: (61 2) 9247 3473 Fax: (61 2) 9247 3442 email: [email protected]

9. (a)

The right to grant licences to perform the compositions publicly subject to the rights of APRA.

(b)

The rights subject to obtaining your prior written consent to make adaptations, additions, alterations, arrangements and translations of the compositions in whole or in part.

(c)

The right to grant mechanical licences.

(d)

The right subject to obtaining your prior written consent to grant nonexclusive synchronisation licences.

(e)

The right to use the titles of the compositions for all purposes in connection with the compositions.

(f)

The right to publish, print and reproduce the compositions.

(g)

The right to licence others to use any of the above rights.

(h)

The right to collect any other income relating to the compositions.

Limitations on Publisher If you want to withhold any rights from the deal, or put limitations on the publisher’s powers to exercise certain rights this is the place to do it. For example you may wish to limit the right of the publisher to licence your musical compositions for the promotion of third party goods and services (i.e. only with your prior written permission). Limitations on Power to Deal The Publisher must be able to license the rights because that is one of the functions of a publisher. Writers always argue that, because of the personal relationship needed with their publisher, the publisher should not be allowed to assign rights except as part of an internal corporate re-arrangement or the sale of the catalogue as a whole. BUT, No need for Publisher to have the power to assign all or any one of those rights (not without your prior written consent). © Simpsons Solicitors Suite 1202, 135 Macquarie Street Sydney NSW 2000 AUSTRALIA

Telephone: (61 2) 9247 3473 Fax: (61 2) 9247 3442 email: [email protected]

10. Publisher promises and warranties Your publisher should agree to use reasonable endeavours to exploit the compositions and exploitation as such means use all reasonable endeavours to: (i)

assist in obtaining a recording agreement.

(ii)

obtain covers of the compositions.

(iii)

collect all income arising from exploitation of the compositions during the retention period, and

(iv)

protect the copyright and all like rights in and to the compositions.

Publisher’s Obligation to Exploit [VERY IMPORTANT] No matter how the publisher acquires its rights the writer has to be assured the publisher will be active and not just be in the business of building up a catalogue as a business asset. Reversion of Rights for Failure to Exploit - Most publishing agreements now contain clauses giving the writer the right to get back the copyrights in any works the publisher does not exploit. e.g. if a particular work has not appeared on a record, or been synchronised into a film soundtrack, within say 2 years after its delivery to the Publisher then the writer can get the work re-assigned.

© Simpsons Solicitors Suite 1202, 135 Macquarie Street Sydney NSW 2000 AUSTRALIA

Telephone: (61 2) 9247 3473 Fax: (61 2) 9247 3442 email: [email protected]

11.

Royalties With respect to income arising from and directly attributable to covers and synchronisation licences which the publisher procures, the royalty is normally a variable one. For example, it may be 70% of the nett royalties received, or 80% where such licences are procured by the writer. This recognises the fact that writers often find their own film and television work or cover recordings. Where they do, there is no justification in the publisher enjoying a bigger share of the income. Public Performance Income APRA pays a minimum of 50% “(the writer’s share)” of the public performance and broadcast income it collects, direct to its member writers and the balance to the relevant publisher. If there is more than one writer, APRA will divide it in the proportions as notified by the writers or their publishers. Most publishing agreements provide for the publisher to pay though a proportion of the publisher’s share to the writer. It is usually the difference between the standard writer’s share ("50% of APRA fees") and the percentage payable to the writer under the contract of the publisher’s income from other sources. e.g. if the usual split is 75/25 under the contract, then on public performance income, the writer should receive 50% of the publisher’s share (i.e. 25% of the total paid out by APRA for the particular song) in addition to the 50% paid directly as the writer’s share.

© Simpsons Solicitors Suite 1202, 135 Macquarie Street Sydney NSW 2000 AUSTRALIA

Telephone: (61 2) 9247 3473 Fax: (61 2) 9247 3442 email: [email protected]

12.

Overseas Income The Sub-Publisher’s Commission The provision of overseas income is always detailed in the publishing agreement and you must take particular care to make sure that you are getting your fair share. Some publishers are third party publishers, licensed by your publisher to administer and exploit your works in that sub-publisher’s “territory”. As the sub-publisher is working in its own backyard the theory is people know the industry better there and would be better at exploiting your work than a publisher would be. All sub-publishers charge a commission for administering your copyrights. The commission is usually between 10% and 15% of the total royalty income collected by that sub-publisher (“the gross”) depending on the terms of the sub-licence. “Nett Receipts” vs “At Source” Great care must be taken in working out the basis upon which overseas income will be divided between the writer and the writer’s publisher. There are two basic methods—”nett receipts” and “at source”. *

Nett receipts deals work on the basis that your royalty is calculated as a percentage of the money actually received by your publisher in Australia. The nett receipts figure at least in the case of royalties earned outside Australia, is reached after deduction of the subpublisher’s commission from the total amount of income earned from its territory.

The sub-publisher will retain its permitted percentage, deduct any withholding tax required under law and remit the balance to your publisher.

© Simpsons Solicitors Suite 1202, 135 Macquarie Street Sydney NSW 2000 AUSTRALIA

Telephone: (61 2) 9247 3473 Fax: (61 2) 9247 3442 email: [email protected]

13. To calculate your royalty your publisher will multiply the nett receipts by the percentage in the publishing agreement, after converting the nett receipts to Australian currency. *

“At source” If your overseas income is calculated “at source” it means that your percentage is based on the gross receipts in the overseas territory, only allowing specifically nominated deductions (e.g. withholding or other taxes. )

True “at source” accounting provides for your royalty to be calculated on virtually 100% of the gross generated in the sub-publisher’s territory and disregards the sub-publisher’s percentage. To calculate your royalty, your publisher will multiply the “at source” amount by the percentage in the publishing agreement, after converting the amount to Australian currency. *

The advantage of “at source” accounting is that you know what deductions your publisher may apply before the division of income is made.

With a nett receipts deal, you may have less knowledge of, or control over any amounts which will be deducted before the money gets back to Australia. In such a case all you can do is specify the maximum amount that you will permit as a sub-publisher's royalty deduction. Creative Control All writer agreements have clauses giving the publisher some right:*

to alter the works, add new lyrics, translate them into other languages, license them for others to use and so on.

The publishers quite correctly say that these are rights they need, to maximise the financial potential of the work. The writers also correctly state their professional reputation is inherently intertwined with their work and © Simpsons Solicitors Suite 1202, 135 Macquarie Street Sydney NSW 2000 AUSTRALIA

Telephone: (61 2) 9247 3473 Fax: (61 2) 9247 3442 email: [email protected]

14. that alteration and uses can detrimentally affect their professional reputation. *

ONLY WITH YOUR PRIOR WRITTEN PERMISSION (if possible)

Almost all publishers in Australia will agree to include clauses protecting the work’s integrity, but you have to ask for them. As usual, how readily these requests will be met will be influenced by your bargaining power. Most publishers as a matter of course, consult their writers before varying a work or authorising new words or music to be written. *

the right to license the work to synchronisation, both with film and television programmes and into commercials.

ONLY WITH YOUR PRIOR WRITTEN PERMISSION (if possible) All reasonable publishers are prepared to give the writer certain power of control over these areas. The degree of control depends very much on the trust the writer has for the publisher and the respect the publisher has for the writer. Accounting The Publisher’s obligations:*

prepare statements of your account calculated as at the end of every 6 months usually;

*

provide the statements and pay royalties due to you for that accounting period within 3 months after that accounting period

(N.B. AFTER RECOUPMENT) *

give you an opportunity to inspect the publisher’s accounts and records relating to your agreement.

Termination For breach (eg. non payment of royalties) © Simpsons Solicitors Suite 1202, 135 Macquarie Street Sydney NSW 2000 AUSTRALIA

Telephone: (61 2) 9247 3473 Fax: (61 2) 9247 3442 email: [email protected]

15. For bankruptcy II.

SINGLE SONG ASSIGNMENT This is perhaps the simplest publishing deal of all. Single song assignments are usually offered by a publisher so it can acquire a particular song though sometimes they are offered to new writers who have not yet established their reputations as songwriters but who have produced a couple of good strong compositions. These deals can be a stepping stone towards a long term, more comprehensive relationship. The “Rights Period” - is the total period for which the publisher owns or controls your copyrights under a single song assignment agreement. If the deal is merely for an assignment or licence of specific works you don’t have a separate term and "retention period”, merely a Rights Period.

III.

ADMINISTRATION DEALS These are deals which are usually only available to writers who are established and have an attractive catalogue or to people who are in a position to acquire copyrights from other writers, such as record producers. Such people do an administration deal because of the administrative services that the publisher can provide, the added financial backing of the publisher and the additional opportunities an active publisher may have for obtaining film synchs and covers. In such a deal, the publisher will provide the administration necessary to register the songs, grant licences, collect, account for and distribute the income and provide some finance but both parties are expected to find opportunities for exploitation of the catalogue.

© Simpsons Solicitors Suite 1202, 135 Macquarie Street Sydney NSW 2000 AUSTRALIA

Telephone: (61 2) 9247 3473 Fax: (61 2) 9247 3442 email: [email protected]