[Editors Note:This article was written by Justin Jacobson, Esq. UPDATE: Check out Part 2 of this series here.]
In a prior two-part series, we examined the traditional songwriter and music publisher relationship, including reviewing some standard clauses that an artist would find in many publishing arrangements. In this first installment, we will explore a few other contractual relationships that can exist between a music publisher and a songwriter, including an administration agreement, a co-publishing contract, and a sub-publishing agreement.
An administration “deal” is one of the more straight-forward relationships within the music publishing world. In this type of arrangement, the songwriter does not assign any of their publishing or ownership rights in their compositions to a music publisher or any other third-party. Instead, the writer retains these rights and merely contracts with the third-party for them to act as their “administrator” for a specified time period.
The administrator is commissioned to handle the formalities related to the exploitation of the musician’s composition as well as to protect and enforce the rights in the song. Some matters that an administrator assists with can include registering of the compositions with the correct Performing Rights organizations, registering the finished pieces with the U.S. Copyright Office, maintaining the books and records, negotiating and issuing licenses to other parties for the work as well as collecting any and all royalties earned in the territories it is authorized to cover.
Essentially, the administrator handles all the paper-work related to the licensing and monetization of the song in exchange for a specific fee or percentage of earnings. This fee is referred to as an “administration fee” and is usually 5-15% of the income generated from the musical compositions. However, in certain instances, the administration fee could be more or less, depending on the extent of services provided by the third-party to the songwriter. Sometimes, the company may make an advance payment to the owner in exchange for the administration right. This advance payment is then usually recouped from the amounts collected by the administrator.
Additionally, these kinds of administration arrangements are usually exclusive to that particular party. This means that the administrator will be the only entity with these types of rights; so, this effectively means that no other party may issue any licenses or collect any of the writer’s publishing royalties for the same compositions. The agreement can apply to a particular composition, several compositions, or an artist’s entire music catalogue.
In situations where the songwriter and music publisher desire a more elaborate relationship, a co-publishing arrangement might be suitable. One main difference between an administration “deal” and a co-publishing “deal” is that in a co-publishing agreement, the music publisher and the writer may co-own the copyrights in the compositions. In practice, this means that the music publisher acts as both a traditional publishing company as well as an administrator of the works.
This type of deal is different than most traditional publishing deals and is generally more beneficial to a songwriter. That is because the agreement provides the writer with their entire songwriter share as well as a percentage of the “publisher’s share” in the composition. This means that the writer could potentially have 100% of the songwriter share and 50% of the publishing share in one song. When looking at the entire song’s publishing split, this means the writer gets 100% of the “writer’s share” of publishing revenues, which is equivalent to 50% of the total song’s earned publishing revenues as well as 50% of the publisher’s share of publishing revenues, which constitutes the other 50% of the publishing revenues earned through the exploitation of the song. Consequently, the writer will earn 75% of the income instead of 50%.
In addition, a co-publishing agreement may be utilized when two or more songwriters collaborate to create a song. The copyright in the created “joint work” is initially co-owned by the authors of the copyright; however, when each writer transfers his or her share to their respective publishing company, the publishers then become the co-owners of the copyright in the song. Therefore, in many situations, especially where multiple established artists are involved, the composition is often owned and/or administrated by two or more publishers as each writer typically has their own music publishing arrangement in place.
Generally, each co-owner has the right to grant non-exclusive rights in the entire song to a third party, without the knowledge or consent of the other owner. This non-exclusive grant of rights is limited to exploitation in the United States; as in countries outside the United States, it may differ and instead may require consent from all co-owners of a work to issue any third-party licenses. When a non-exclusive license is issued by one party, this party must account and make payment to the other co-owners in their proportionate shares of the work.
In co-publishing agreements, a major decision between the various publishers that co-own one song could be which publisher will exclusively “administer” the song. That is because administration is a valuable right as if one publisher collects all of the income earned from a song that company may then earn interest on the amounts collected until the date on which it is required to pay royalties to the other publisher and the writers. The issuance of licenses is why an exclusive administrator is a good idea.
In the next installment, we look at the potential administration options within a co-publishing agreement as well as an examination of sub-publishing. It is important to be aware that each individual has different requirements, so it is best to consult with a qualified attorney or professional when determining the best course of action for a particular musician.
This article is not intended as legal advice, as an attorney specializing in the field should be consulted.