Striking The Best Publishing Deal

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Striking the Best Publishing Deal
by Richard B. Jefferson, Esq.


As a Music Attorney, the question that I am most frequently asked by Songwriters and Music Producers who have been presented with a Publishing Deal is, "How do I know if this is the right deal for me?" As with everything in the music industry, publishing deals can be complex. The following questions and answers are meant to help Songwriters analyze the conceptual issues of a potential publishing deal.

What is a publishing deal?
The basic understanding of a publishing deal is that a Publisher is offering a Songwriter a business arrangement. The Songwriter agrees to assign to the Publisher all, or part (called a co-publishing deal), of the copyright ownership in his or her compositions, and the Publisher, in exchange, agrees to handle the administrative and other business functions in connection with the compositions, such as registering the finished compositions with the U.S. Copyright Office, soliciting people and companies that will license the compositions, completing the necessary paperwork to issue licenses, securing licensing payments, and ultimately paying the agreed upon portion of the income generated to the Songwriter. Aside from the financial aspect, the Songwriter also benefits because he or she can focus on his or her craft, writing and/or composing music.

How does a Songwriter know if a particular Publisher is the best choice?
The answer to this question depends heavily on the Songwriter's status and what services are required from a Publisher. For new and somewhat successful Songwriters, it is usually important to contract with a Publisher that provides music placement services in addition to administrative services. Administrative services are the routine tasks of processing paperwork and managing the income generated from licensing the compositions, so realistically there is not much difference in administrative services from company to company. In fact, many Songwriters just have their business managers or attorneys handle this function until it becomes overwhelming because these professionals are already being paid to deal with the paperwork on some level and there is no need to add another hand in the financial pot until it is necessary. A Publisher's music placement services are what distinguish publishing companies. A Publisher that has valuable relationships with record companies and music supervisors is the right place for a new or emerging Songwriter because the Publisher will use these relationships to lobby for its songwriter's music to be recorded by successful recording artists, to secure motion picture or television scoring opportunities, and to set up collaborations between its songwriters and more successful songwriters and producers. Music placement services may not be as crucial for established Songwriters because they likely have the connections needed to attract opportunities.

How much income should a Songwriter expect to get from a publishing deal?
Publishing Deals consists of an advance payment and backend compensation. Publishers used to be willing to give advances to successful Songwriters up to and exceeding $150,000. The generous advance usually made the Songwriter less critical of the other terms in the Publishing Deal because he or she would get a check as soon as the deal was signed. Lately, advance payments have shrunk significantly (or disappeared altogether) so the cost/benefit analysis of the Publishing Deal as a whole is much more crucial. Today, successful recording artists are lucky to secure advances over $50,000 and nowadays Publishers favor making periodic payments instead of lump sum payments. In my opinion, a well-negotiated deal with a smaller advance is actually much better in the long run for Songwriters because advances are really nothing more than loans against future royalties.

As for back end compensation, a standard full service Publisher typically retains 50% of income generated from exploiting the compositions (with exceptions for certain streams of income). A Publisher that performs administrative services and some music placement services will retain from 15%-25% of the income generated depending on the services provided, and a pure administration deal retains between 10%-15%.

What should a Songwriter watch out for in a publishing deal?
A Songwriter needs to make sure that the Publisher who is offering the Publishing Deal has a track record of being able to do what it is proposing to do for the Songwriter, securing opportunities that will make money and gain exposure. Publishing companies are relatively easy to set up so a Songwriter needs to do research on what the offering Publisher has done for other songwriters before committing. A Songwriter has to be careful about entering into any deals that tie up his or her copyrights. If the offering Publisher is somewhat new and tries to give a Songwriter the hard sell, the Songwriter may be better off limiting his or her involvement at first to see how well the Publisher actually performs (i.e., a non-exclusive agreement or a single song agreement).
The key to finding the right Publisher is to research its reputation. An easy way to see how a Publisher treats its songwriters is to examine the careers of other songwriters that have gone through a deal with the Publisher. The last thing a Songwriter wants to do is enter into an exclusive Publishing Deal with a Publisher that is incapable of securing opportunities.

I personally have come across small publishing companies that are out to sign talented songwriters and serve more as a broker instead of a Publisher, by immediately shopping the talented songwriter to the large publishing companies. The small publishing company will then, of course, want to be compensated if a deal is made, which usually results in the talented Songwriter getting less than his or her worth. In my opinion, it makes more sense for the talented songwriter to just be patient and wait for the right time and situation.

What other critical terms are in a Publishing Deal?
There is no "standard" publishing agreement so every term needs to be analyzed individually. Three of the more crucial terms in a Publishing Deal include: 1) length of contract (which should be based on delivered songs per year and not last more than 3 or 4 years), 2) territory (which can be divided up into a number of different ways), and 3) Reversion of copyrights (the time of reversion depends on the Songwriter's leverage.)

It is also very important for a Songwriter to know the many streams of publishing income that exist so that the Publisher does not combine multiple income streams with broad language resulting in a Songwriter ultimately receiving less money than he or she is entitled. The Songwriter's attorney will know how to avoid this issue during negotiations. Examples of different royalties and fees that are generated from the sale and use of compositions, domestic or foreign, include income in connection with records, motion pictures, home video/DVDs, video games, television commercials, television series, ringtones and ringbacks, radio commercials, internet, books and periodicals, cover music, greeting cards, Broadway musicals, karaoke machines, video jukeboxes, public service announcements, computer and board games, dolls and toys, audio books, theme parks, and corporate presentations.

What about digital rights?
Most Publishers are well aware of income related to digital rights (i.e., downloads, streaming). A Songwriter needs to make sure that these rights are not reduced in any way by what is called a new media royalty, which usually pays only 80% of the normal income. Publishers sometimes attempt to justify a reduced rate for unproven media where there is an uncertainty of how the new media will pan out in the future. Digital rights are now very established and should be paid at the same rate that any other traditional stream of income is paid.

How do attorneys and managers usually get compensated with regards to publishing deals?
If a reasonable advance is proposed in a Publishing Deal then an attorney may agree to negotiate the deal for a set percentage of the initial advance (typically between 5% and 10%). If there is a small advance or no advance offered then attorneys must charge an agreed upon hourly rate to negotiate the deal. Managers are almost always paid on an agreed upon percentage basis (typically between 15% and 20%).

Richard B. Jefferson, Esq. is a partner at Fagerholm & Jefferson, a Professional Law Corporation located in Burbank, California (http://www.fjlawcorp.com). The firm has represented publishing companies and writers in publishing and administrative matters, such as Master P Music, Ballr Publishing, First N Gold Publishing, Master P, Trick Daddy, Trina, and Krayzie Bone. The majority of the firm's clients are small to medium-sized companies in all areas of the Entertainment Industry.

For additional questions or comments you can email Attorney Jefferson at: [e-mail]

Richard B. Jefferson, Esq.
Fagerholm & Jefferson Law Corporation
3500 West Olive Avenue, Third Floor
Burbank, California 91505
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http://www.fjlawcorp.com