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October/November 2014

by David McLaughlin

The Lawful Truth: Publishing Agreements – Part 2

by David McLaughlin

The Lawful Truth: Publishing Agreements – Part 2

In the last issue’’s The Lawful Truth column we looked at the basics of what a Publishing Agreement is and how, despite being not as widely known or understood as some other agreements in the music industry (such as recording contracts), they are nonetheless one of the most important contracts you can sign these days to help make sure you get the most out of the music you release.  

We talked more specifically about some of the important provisions to be aware of in Publishing Agreements such as the term of the agreement and providing for certain situations in which a publisher must get your permission before allowing your music to be used.

Following on from those highlighted issues, another very important aspect to a Publishing Agreement is the territory to which it applies. For instance will the publisher have the worldwide right to represent your music or rather will their rights just be limited to say Australia and NZ? Although many publishers will want worldwide rights it’s important to have them convince you they actually have the contacts, relationships and infrastructure in place that will enable them to actively represent, promote and protect your music throughout the world.

Even if you are confident that a publisher can represent you worldwide, make sure you pay careful attention to the fees that will be payable to any third parties the agreement allows the publisher to have help from in the promotion of your music overseas. If these are not kept in check they can quickly make a big dent in the final money you’ll get paid.

On the issue of payments generally, it’s important to be aware that the amount of royalties payable to you under a Publishing Agreement will vary depending on the type of use that is being made of your songs. For instance there will be a difference between the royalty paid to you in respect of income received if your song is used in a movie compared to the amount paid if your song is covered by another recording artist, or released as sheet music.

In some cases the royalty payable to you will also be increased if it was you who sourced the particular opportunity. And just to clarify that last statement, yes I’’m afraid it is correct that even if you do discover or develop an opportunity for a third party to make use of your songs, the publisher will still take their cut of the income.

Because of the variation in royalties payable for different uses of songs it is hard to specify the kind of royalty rates you can expect. Rates will also to a degree depend on the bargaining power that you have with a publisher. An already well-known and established songwriter could expect to negotiate a better deal with a publisher than a relatively new and unknown artist could. Very generally speaking you would commonly expect royalty rates to sit somewhere between 60% and 80%, meaning that you as the songwriter can expect somewhere between 60% and 80% of the income earned from the use of your songs.

There are of course exceptions. For instance the royalty you receive for the use of your music in sheet music form will generally be considerably lower than the ‘ball park’ figures I’’ve suggested above.

Whereas royalty provisions in a Publishing Agreement deal with how much you will get paid, another important issue to make sure you clearly consider is when and in what manner you will actually be paid these royalties. In other words make sure it is well defined how often the publisher is required to account to you for any royalties owed. This will usually be on either a three-monthly or a six-monthly basis. You should also make sure that as part of the accounting provisions of your Publishing Agreement you have the ability to audit the financial records of the publisher to ensure you are receiving all royalties you are in fact entitled to.

Another very important term that every Publishing Agreement should have is a requirement for the publisher to actively work towards finding uses for your songs. A Publishing Agreement doesn’’t necessarily have to provide that a publisher must get your music placed or used in certain ways, as this is after all really outside of their ultimate control, but a publisher should at least be able to demonstrate they have made all reasonable efforts to find opportunities for the commercial use of your music. A failure on their part to live up to this requirement could ultimately give you grounds to terminate the agreement.

Clearly defining who is responsible for taking action against any infringement or illegal use of your songs while your songs are under the publisher’’s control is also important. Is it the publisher’s responsibility to take such action or do they just have the option? If just the publisher has the option then it should be clearly provided at what point the right to take action reverts to you. After all you don’’t want to be in a situation of not being able to pursue people who are using your songs without permission when your publisher has, for whatever reason, indicated they won’’t be following this up themselves.

David McLaughlin is a specialist music lawyer with Auckland law firm McLaughlin Law (www.mclaughlinlaw.co.nz).  Disclaimer: This article is intended to provide a general outline of the law on the subject matter. Further professional advice should be sought before any action is taken in relation to the matters described in the article.

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