Music publishing agreement series; (part 21) A few other contracting points

The points discussed in previous articles should always be in the back of your mind when negotiating your publishing agreement. Unsurprisingly, the most important of these are: the term and options, exclusivity or non-exclusivity, ownership and reversion of rights, the royalty split, territory, the rights transferred, creative control, the publisher’s stated obligations, termination of the contract and “out” clauses. When weighing these core issues up in your mind, you should try to create a balance of fairness between you and the publisher.

But you should not, while doing so, forget to take into account other ancillary issues which could just tip the balance of fairness. They include: length of notice period in a contract with an “out” clause (30 days, or longer?); the possible triggering of rights assignment only on the fulfilment of a suspensive condition (e.g. getting you a record deal), proper crediting of the composer as author of the work, retention of interest in derivative works commissioned by the publisher and credit therefore, payment terms (especially from synch licensing deals, including the questions of the purchase price, bonuses, “back end” profit participation, residuals in the original film production, and in sequels, remakes, trailers and spinoffs), and post-term rights, duties and obligations (i.e. what survives the termination and whether there will be ongoing indemnification obligations, insurance and other obligations by the publisher). These details are not to be forgotten.

Some other points to help you get the best out of your publishing agreement

You should communicate constantly with your publisher. Supply him with marketing information, approved photographs and blogs. Help him to help you.

You must become (if you are not already) a member of SAMRO (and/or, if you have your own publishing company, CAPASSO). You must ensure that your publisher registers all your songs with these organisations. SAMRO and CAPASSO make regular royalty distributions. If you ever do not receive a timeous royalty statement from them, you should have your publisher contact them immediately. Better still, don’t wait for your publisher to do it for you – do it yourself but keep him informed.

Under a standard publishing agreement your publisher is entitled to receive or retain a higher royalty than normal for getting another artist to record your composition as a so-called “cover recording.” But what if you (as opposed to your publisher) are the one to introduce one of your songs to another recording artist or producer? Then it is only fair that your publisher does not take the increased cut (or perhaps any cut at all).

Deal with this in advance when negotiating the contract, and if you fail to achieve that, you will not have much success in getting him not to treat that song as a “cover recording” when authorising the other artist. In my opinion, any licensing deals at all that are done by the composer and not the publisher, should carry a reduced share, if any share at all, for the publisher. But this should be stated in the contract.

Always be aware of the date on which your publisher is obliged to exercise his option to extend the term of the agreement. Keep your manager and (if you have one) your attorney, advised of the relevant dates and facts. Occasionally, publishers do apply the wrong date or, indeed, forget to exercise an option at all. A failure by the publisher to exercise an option may mean that you are free of the contract, but it may not, if the agreement obliges you to send an option warning notice to the publisher, or if the contract states that the option is presumed to be exercised if nothing else is said.

If you ask your publisher for additional monies, remember that unless the publisher agrees otherwise, those additional payments will almost certainly be recoupable from your royalties. There might be occasions when it would be appropriate for those additional monies to be paid on non-recoupable basis, like using them for marketing the compositions. Make sure all these matters are properly documented in the contract.

If the publisher only retains the copyright for a limited period of time (the “limited right period”), it is vital that you monitor the expiration of that period. Make certain that you acquire reversion of rights, in writing, on the agreed date. This is one of the most common litigation issues in publishing contracts – make it clear.

Whenever you collaborate with anybody else (whether a group member or some other person) in the writing of a song make sure the various composers agree to their respective “splits”, that the agreement is reduced to writing and that your publisher and SAMRO are notified of it. Be very careful with “partially completed songs.” Your publisher may be the copyright owner of such songs even though you might complete the composition of them at some later date when he is no longer your publisher. You might well have a situation where two different publishers are claiming ownership of the same song. If you want to avoid this situation, deal with it up front in the contract.

Remember, that the contract may require that the lyrics of your compositions are not defamatory or obscene. (This is a standard contractual term, despite the recent trend to have obscene lyrics). If obscene lyrics are your thing, delete this clause. (Also, of course, the lyrics must be 100% original or you will be in breach).

If you are VAT-registered, remember to invoice the publisher for VAT whenever advances and royalties are paid to you. If you begin to enjoy substantial success, consider taking expert taxation advice and also consider with your manager the possibility of re-negotiating the agreement. Income tax is fully payable on your royalty income. As a general rule, it is generally preferable for songwriters who are also recording artists to obtain additional funding from their record company rather than their publisher.

I say this because very few recording artists (unless they are extremely successful) tend to recoup their royalty accounts from the record company (this is because recording costs and video production costs, as well as advances, are recoupable) Consequently, if you have the choice between asking your publisher and your record company for some additional funding you should ask your record company, so that the recoupable costs under the publishing agreement are kept down to a minimum, thereby allowing your publishing royalties to come on stream much quicker.