Ownership | Types of Contracts | Term | Royalties | Reversion | Auditing | Default

Arbitration | Indemnification | Assignments | Trust | Re-Writes | Name & Likeness

Many songwriters look at a song publishing contract, find it full of strange words and long sentences, and promptly give up trying to make sense of it. This is plainly an error, not only because the contract is of vital importance to your livelihood, but also because as contracts go, a song publishing contract is relatively short and simple.

Other writers do take some time to read the contract, but on finding that they are to be given the customary 50-50 split of royalties, are satisfied that they have a fair deal and look no further. This is also an error. There are many other important provisions of a publishing contract, some of which may reduce the 50-50 split or make it difficult or impossible to actually collect your share. And of course, money isn't the only thing that matters.

This chapter will explain the main provisions of a song publishing contract, explain how they operate and why they are important, and indicate ways to avoid trouble in the future by insisting on the right provisions at the outset.

Ownership

The purpose of a publishing contract is to transfer legal ownership of the song from the writer to the publisher, to specify the compensation to be paid for that transfer, and to set other important terms of the relationship between the writer and publisher. Many writers, who naturally consider a song their own property, are surprised to learn that a publishing contract actually transfers legal ownership of the song to the publisher. But this is standard practice and no cause for alarm. Moreover, the law still considers the songwriter the "beneficial owner" of the copyright, and as the song's author you retain a number of other important rights.

Types of Contracts

There are four general types of publishing contracts: single-song contracts, exclusive contracts, co-publishing contracts, and for hire contracts.

As the name implies, a single-song contract conveys ownership of just one song. The contract can also be used to transfer several songs, just by listing them on the contract. Even though it can transfer many songs, it is called single-song primarily to contrast it with another common type of contract, the exclusive contract.

While the single-song contract is sort of a one-shot deal between writer and publisher (even if it covers a number of songs), the exclusive contract contemplates a more intimate, ongoing, long term relationship. The exclusive contract usually lasts for a number of years, and requires that everything written by the writer during that time period is automatically conveyed to the publisher. The writer works exclusively for the publisher, and is forbidden to give songs to anyone else during the contract period. In exchange for this exclusivity on the part of the writer, the publisher usually compensates the writer with a salary, or advances against future royalties, or some combination of the two. If the money is sufficient, the writer can work full time as a songwriter. This kind of arrangement is the dream of many a songwriter.

A modified version of the exclusive contract is a co-publishing contract. This kind of contract is increasingly common for writers who have a good track record, or good bargaining skills, or who are also recording artists - that is - provide the publisher with built-in capacity to make records, rather than making the publisher go out and find recording artists for the writer's songs. Like the regular exclusive contract, the writer works exclusively for the publisher for a number of years, However, instead of giving the publisher ownership of the entire song, the publisher owns just half the song (an undivided fifty percent), and the writer retains half. So, the songs are "co-published". This means the writer is paid half of the publisher's share of royalties as well as the writer's share. It also means the writer may have more control over licensing the song. This will become more clear after the discussion of royalties, below.

The last type of contract is radically different from the three just mentioned. This is the "for hire" contract, for works "written on a for hire basis". This kind of contract is typically used in the film, television and advertising industries for songs written specifically for a particular project. Outside those industries, for hire contracts should be strictly avoided. Even within those industries, writers with sufficient clout try to avoid such contracts if they can.

For hire contracts are to be avoided because under copyright law, the "author" of a work made for hire is the employer rather than the actual writer. Copyright law gives authors many rights, some of which may not be waived or given away by the author, even if he signs a contract purporting to do so. In a for hire situation the writer's only rights are those spelled out in the contract. And there is no right of termination, discussed further below.

Under the copyright law there are two kinds of works made for hire:

1. a work prepared by an employee within the scope of his or her employment; or
2. a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work...if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.

Fortunately, simply stating in a contract that a work is a work made for hire will not make it so. The underlying facts and circumstances must also be in accordance with the requirements of the law. That is, the writer must actually be an employee, with a regular salary, working under the supervision of some type of manager. Or, the work must be used in a film or TV program or advertisement. A writer who signs a single-song contract will usually be able to show a judge or jury that none of these circumstances existed when he or she signed the contract or wrote the song. So, even if a contract says the work is to be for hire, the court may well refuse to enforce that provision. Of course, waiting for a judge or jury to make that decision is very costly and risky. The best course of action is delete the provision from the contract before signing it.

The remaining sections of this chapter examine the provisions found in most song publishing contracts, as well as provisions that should be in your contracts to avoid or limit problems in the future.

Term

The term of a contract is the time period during which it will be in force. It is the number of years a writer gives the song to the publisher to own and exploit. The term should not be confused with the "reversion period", which will be discussed below.

There are many forms of publishing contract in circulation today, and they say many things about the term of contract. Some say "forever" and some say "for the duration of the copyright" (recall Life Plus 70). Some contracts are so old and obsolete that they still refer to the "renewal term" of copyright, which applied only to works created before January 1, 1978.

Regardless of what a particular contract may say, U.S. copyright law states that a writer (or his or her heirs) may terminate a contract with a publisher and get the song back (unless it is a work for hire contract!) upon the soonest to occur of:

Therefore, regardless of what your particular contract may say about the term of contract, you (or your heirs) are entitled to recapture your song after the time period referred to above. Recapture is not automatic. The writer must send a certain written notice to the publisher during a specified time period prior to the date of termination. You can be sure that many writers, or their heirs, forget to send the notice, or do it improperly, with the result that the publisher keeps the song for the entire duration of copyright.

A very important limitation on the right to terminate is that termination will only have affect in the U.S. The publisher will retain rights to the song in all foreign territories, and will continue to collect royalties from those territories and divide them up in the old way. In order to recapture the entire song throughout the world, and collect all royalties, you need to provide in the contract that the entire contract will terminate effective throughout the world, after the time period referred to above. Also, by putting this in the contract, when the time comes, no notice need be sent. The termination and recapture are automatic.

Royalties

Royalties, of course, are the payments made to songwriters by publishers. These payments are generally made only if the song has generated earnings from the sale of recordings or printed music, or from being used in films, TV or advertising.

It is by now traditional and standard that publisher and writer split royalties 50-50. It was not always thus. Sixty years ago, a one-third share for writers was very common. One of the achievements of The Songwriters Guild was to make the 50-50 widespread. But there is nothing immutable about 50-50. It is standard, but nothing in the law requires it. A writer could lawfully negotiate a better (or worse) split. We will now consider various kinds of royalties derived from songwriting.

Viewing copyright from the perspective of technology, as I like to do, one can see that historically, printed copies were the first kind of copies of songs to be made. Printing on paper certainly pre-dates records, tapes, films and TV. For many years, printed copies were the only kinds of copies that could be made, and the only kinds of copies referred to in song publishing contracts. Lawyers being an extremely conservative breed, most publishing contracts contain print royalty provisions that are essentially unchanged from the years before electricity. For the sale of ordinary sheet music, known as "piano copies", you get a flat rate of so many pennies per copy. Today, a fair flat rate is between 12¢ and 15¢. This would be based on "net sales", that is, all sales minus returns. You will find many contracts in use out there today still providing for 5¢ per copy.

The Songwriters Guild contract uses a method more favorable to writers. The writer is paid a percentage of the wholesale price of sheet music, beginning at 10%. The advantage of this method is that when the wholesale price goes up, the royalty goes up. The rate is not simply frozen at 12¢ forever.

Furthermore, the Guild contract provides that after 200,000 copies are sold, the rate increases to 12%; after 500,000 copies are sold, the rate increases to 15%. This is obviously very good for the writer.

For larger books that contain many songs, commonly called "folios", the usual method of royalty payment is to allocate 10% of the wholesale price to royalties. Each song then receives an equal share of that 10%. For example, imagine a folio with 30 songs and wholesale price of $15:

$15 x 10% = $1.50 allocated to royalties
$1.50 ? 30 = 5¢ per song per folio sold

As with piano copies, one could provide for increased royalties as certain sales levels are reached.

To get really sophisticated, one could provide that only "royalty-bearing" songs in the folio will be counted count. That is, songs for which the publisher is obligated to pay a royalty. Suppose that out of 30 songs, five are in the public domain and no royalty need be paid. Only 25 songs are subject to royalty. Your royalty increase by a penny a copy:

$1.50 ? 25 = 6¢ per song per folio sold

Increasingly, music publishers don't actually print music themselves. They sub-contract the job to three or four specialists in music printing, who publish the vast majority of music printed in the country. The music publisher grants a license to the print publisher, just as it grants licenses to record companies, film producers, ad agencies, and so on. The music publisher receives a royalty from the print publisher, just as it receives royalties from record companies, film producers and ad agencies. So, some say, why bother with this pennies-per-copy formula? Why not just have the publisher pay the writer 50% of the publisher's net receipts from the print publisher, just as it pays the writer 50% of the publisher's net receipts from record companies, film producers and ad agencies?

Personally, I like to arrange things this way. Since all royalties are treated the same, it makes the song publishing contract simpler and shorter, because you don't need long, separate paragraphs on print royalties. I have never heard a strong argument for the pennies-per-copy formula. As far as I can see, nothing but inertia and conservatism stops people from adopting this method. If anyone has a strong argument for pennies-per-copy, I'd like to hear it.

While the print royalties are usually treated in the pennies-per-copy manner, all other kinds of royalties are subject to the traditional 50-50 split. That is, 50% of what the publisher receives is paid to the writer (or all the writers, collectively), and 50% is retained by the publisher. The 50% paid to the writer is commonly referred to as the "writer's share", and the 50% retained by the publisher is referred to as the "publisher's share".

When discussing royalties, it is vitally important to be precise about what shares you are referring to. If someone offer you 25%, you need to ask "25% percent of what?"

What types of royalties are subject to the 50-50 split? Special terms are used in the industry to describe different kinds of royalties.

Mechanical royalties are those derived from the mechanical reproduction or copying of a song. Historically, the first kind of mechanical reproduction was player piano rolls. Also covered are greeting cards that carry a musical microchip, and, in some cases, videotapes that contain the song. However, the overwhelming majority of "mechanical" products today are vinyl albums, cassette tapes and compact discs. A "mechanical license" is the term for the contract or license from the music publisher to the record company allowing the record company to make a record using the song. The publisher grants the record company "mechanical rights".

While mechanical rights may have started in the era of player piano rolls, it is a concept flexible enough for the 1990s. In December, 1995, a lawsuit over the use of songs in cyberspace was settled by CompuServe and Frank Music Corp., which brought the action with the financial support of the Harry Fox Agency. Frank Music alleged that CompuServe infringed on its copyrights in certain songs by, without permission: (i) allowing its subscribers to upload into CompuServe's database recorded versions of songs owned by Frank Music; (ii) maintaining those recordings in the database, and (iii) allowing its subscribers to download those recordings. Since the case was settled, it did not result in a judicial decision on the legal issues in the case. In making the settlement, however, CompuServe essentially acquiesced that its activities did amount to unauthorized copying of the song.

In the settlement, CompuServe agreed to make a significant payment to Frank Music for the downloading of songs, and also entered into what is being called the first mechanical license in cyberspace. The license provides that CompuServe's site managers must obtain the mechanical licenses from the copyright holders prior to downloading songs, and, very significantly, CompuServe agrees to guarantee the financial obligations of the site managers to the copyright holders.

This case clearly demonstrates the flexibility of copyright law, in which old concepts are readily adapted to new situations.

Synchronization royalties are those derived from the use of music "in timed relation" or "synchronization" with visual images, as in films, tv programs, videos or advertising. The producer acquires "synch rights" by virtue of a "synch license".

Electrical Transcription describes the use of music in wired music services such as Muzak^¨.

In addition to specifically mentioning the above sources of royalties, many contracts add language to cover "any other source now known or hereafter to come into existence." Such a clause recognizes the continuing progress of technology, as illustrated by the CompuServe case mentioned above. However, some contracts do NOT say that all future uses will be covered. Contracts often say that only the uses specified will be covered. This is highly undesirable, and a writer should try to have such a clause changed before entering into such a contract.

Finally, all good contracts provide that royalties from foreign sources, as well as domestic sources, are to be divided 50-50. Some contracts fail to mention this. A contract should not be signed unless is expressly provides for proper division of foreign royalties.

If a publisher receives royalties directly from a record company, without the services of a collection agent or other middleman, those royalties are referred to as "gross royalties". However, a great many publishers belong to the Harry Fox Agency or use other collection agents, and these agents collect a small commission for their services. Publishers usually get writers to bear half the cost of this commission (this is negotiable). When the publisher pays a commission to an agent, the amount actually received is called the "net". The writer is actually paid half of the "net".

Currently, the commission charged by the Harry Fox Agency is 4.5% of the gross. Here is a simple example:

When handled properly, the "net" royalty is an acceptable provision in a publishing contract. But there is room for abuse. The fee claimed by the publisher might be more than the 4.5% actually charged by Fox. Or, the so-called collection agent might be the publisher's brother-in-law who really did nothing. The Songwriters Guild contract offers protection from these two possibilities. First, it limits the fees that may be charged: 5% for mechanicals and 10% for synch. Second, it provides that the collection agent must be one that "is acting for a substantial part of the industry and not under the exclusive control of the Publisher..."

Reversion

In a business that may be more complex than you had realized, here at last is a very simple, eternal rule. Never, never, never sign a contract without a reversion clause. NEVER! Here is the scenario:

You sign a song over to a publisher. He tries to get it recorded for a year. Nothing. He gives up on the song. Never thinks of it again. Works on other people's material. You want your song back so you can give it to another publisher. Too bad. The publisher has no obligation to return it to you. He doesn't have to plug it, and he doesn't have to return it. So where does that leave you? Absolutely nowhere.

Suppose by an enormous exertion you go out and manage to get the song recorded. He is still the publisher. He issues the mechanical license and collects the mechanical royalties. You get 50% and he gets 50%. If that record leads to other recordings, and film and television and advertising and sheet music, through no effort of the publisher, he still gets 50% (by this time, he has done some work, in licensing and collecting). Things go on this way until you terminate the song, 35 or 40 years from now . Not a pretty picture.

The solution is a reversion clause. If, by the end of a certain time period, the publisher fails to get the song recorded on a real commercial album, or placed in a film or television program or advertisement, then the publishing contract terminates and you get the song back (i.e., it reverts to you). The Songwriters Guild contract provides for a period of one year, plus another 6 months if the publisher elects to pay you $250. Frankly, and to be fair to music publishers, in today's music business, with big artists often taking more than a year between records, I have no trouble with 2-year reversion periods. I think 3 years is excessive, but with an energetic and well-connected publisher, it might be worth it.

Reversion clauses come in all shapes and sizes. Some require the writer to send the publisher a written notice in order to get the song back. I don't see why you should need to do that.

Some require you to repay any advances that might have been paid to you, or expenses the publisher might have incurred in promoting the song. I suppose I might understand the first part, but would certainly argue against it. The second, it seems to me, is definitely a part of the publisher's cost of doing business.

The kind of recording to be secured can be an interesting subject of negotiation. You don't want it to be some phony record, of which 100 copies were pressed up in the basement and delivered to the publisher's family and good friends. You want a real record. You might say it needs to be a record on a major label (i.e., Warner, Sony, etc.), or a label with distribution by a major label. I think it's going too far to require that the record reach the Hot 100, or earn a certain amount in royalties. On the other hand, if a publisher promises you a record by a certain artist, I think you should hold him to it.

Auditing

Auditing is the means by which a writer makes sure that the publisher has properly and fully paid all the royalties that are owed. Usually this requires an experienced certified public accountant to personally visit the office of the publisher to examine and make copies of its financial books and records.

Some contracts do not contain any audit clause, and some lawyers think this may not be such a bad thing. An audit clause that is restrictive will limit your rights. If you sue a publisher, based on a contract with no audit clause, the judge may let you conduct a fairly extensive audit, one that will be more thorough than the contract might have allowed. So, a good audit clause is better than a bad audit clause, but so is none at all. I would always recommend getting a good audit clause.

One limitation on auditing that is fairly common is a requirement that any audit of a royalty statement must be performed within one year after the writer's receipt of that royalty statement. The purpose of this is to discourage you from auditing by making it expensive to send in your CPA year after year.

Some clauses will say one year after the publisher sends the royalty statement, meaning that the clock starts even if the writer doesn't actually receive the royalty statement. How is the writer supposed to object to something he never even sees? Maybe the statement is lost in the mail. Maybe the writer is out on tour and doesn't get home for six months.

I have seen an audit clause with a time limit as short as 90 days! Send in your auditor four time a year!?!

Also, the language of these clauses doesn't always wave a red flag to the uninitiated as to its meaning and effect. For example:

Said royalty statements and payments, in the absence of written objection thereto by the Writer(s) within six (6) months from receipt, shall constitute an account stated as to all royalties due for the period encompassed by such statement and/or payment.

Is it obvious to you what that means?

The solution to the time limit problem, naturally, is to try to have the time extended. If a limit in the contract did not exist, under general contract law you would be entitled to go back through sixty ears of royalty statements and payments (six years is the statute of limitations in lawsuits based on breach of contract). Most publishers probably won't agree to extend the limit to six years. But you might get two or even three. Any little bit helps. You pay your auditor once every three years instead of once every year. By the way, the cost of a good audit probably starts at $5,000.

There are a hundred other picayune ways a talented lawyer can draft an annoying auditing clause, making the writer crawl through hoops and jump over barrels. There is no point in reviewing them all. You or your attorney should fight them. It can get to the point where you should ask the other side whether they view you as a partner or an enemy. If this is how they want to do business, maybe you should steer clear of them.

The Songwriters Guild contract has very interesting and useful royalty and auditing provisions, which I will review briefly.

Upon your written request, the publisher has to furnish you with details of the sources of royalties, the types of uses made, the recording artists, the number of copies sold, the fees received, the rates paid, the titles of albums, films or the like, and so on. This solves the problem of the brief and uninformative royalty statement. Sometimes, having this information is enough to satisfy your curiosity about the amount you received.

Audits may occur "from time to time". There is no time limit, other than the usual six-year statute of limitations.

The auditor will have access to the books and records of Harry Fox, record companies or other licensees, so he can follow the "paper trail". Usually an auditor is limited to reviewing just the internal books and records of the publisher.

Finally, if an audit reveals an error of 5% or more, the publisher must pay for the audit, subject to certain limits.

Default

Default is what happens when a party to a contract fails to perform an act he is obligated to perform. An example in the field of music publishing would be the failure of a publisher to pay royalties correctly and on time. "Default" is not substantially different from "breach". It is one type of a breach of contract, consisting of the failure to perform a required act.

Broadly, there are two types of breaches or defaults: material and immaterial. A material breach is one that so strikes at the heart of the agreement that the aggrieved party is justified on declaring the contract terminated (rescinding the contract) and taking back whatever he may have given to the breaching party. An immaterial breach is less severe; the aggrieved party may be entitled to some sort of compensation or payment from the breaching party, but he is not entitled to completely rescind the contract.

An actual court case will illustrate these ideas, and clearly demonstrate the usefulness of a well drafted default provision in a song publishing contract. The case involved a the country music standard, "Tumblin' Tumbleweeds", by Bob Nolan. Nolan believed that he was not being properly paid by the publisher. He sued, not only for the royalties owed, but also to rescind the contract completely and take back the song and its copyright.

The evidence showed that for the six years prior to the lawsuit, the publisher had paid Nolan just 26% of what he was actually entitled to. Among other things, the publisher totally failed to pay royalties earned in foreign countries, and royalties from the sale of song books. There was also evidence that the failure to pay was the result of negligence and oversight, rather than intentional underpayment.

Nolan argued that the publisher's obligation to pay royalties was at the very heart of his publishing contract, and because of the failure to pay he was entitled to rescind the contract completely and take back the song and its copyright. But the court disagreed. It held that the publisher had to pay the royalties owed, but could continue to keep the copyright because it had at least paid some of the royalties. Rescission of the contract might be justified if the publisher had paid nothing at all. But failure to pay 74% of the royalties due was not a material breach justifying the rescission of the contract. The rule of this case still applies to song publishing situations, even though it seems to encourage publishers to be lazy or sloppy in reporting royalties.

Had Nolan's contract contained a well-drafted default clause, his situation would have been much happier. A default clause identifies events that will entitle the writer to rescind the contract. If the event occurs, the writer can rescind the contract and the publisher loses the song. For example, the Songwriters Guild contract provides that the writer may rescind the contract and take back the song and copyright if either of two things occur:

a publisher refuses to permit an audit within 60 days after a written demand by the writer; or

a publisher fails to pay royalties at the appointed time, and the writer then sends a written demand that royalties be paid within 30 days, and the publisher fails to pay royalties within that 30 days.

Putting the publisher at risk of losing the song if he fails to perform certain actions is a very effective tool for a writer. Unfortunately, actually negotiating such a provision may be very difficult. It depends on the bargaining power of the writer. But without such a provision, you will have to live with the rules laid down in Bob Nolan's case.

Arbitration

Arbitration is a means of resolving disputes outside of going to a regular court of law. It is also generally faster, cheaper and easier than going to court. The rules of evidence and procedure and more relaxed than in court. Also, arbitrators are usually active in the music industry and know more about it than most judges. The awards of arbitrators can be enforced in a court of law.

Whether arbitration will work for you or against you is something you need to consider with your attorney. Which party to the contract is more likely to bring a lawsuit against the other? Are you more likely to sue or be sued? Do you want to make it harder or easier to have a dispute officially resolved? Cheaper or more expensive? In a single-song publishing situation, it is probably the writer who will sue the publisher, for failure to pay royalties. So you might like arbitration, to make it easier for you to bring an action. In an exclusive song publishing situation, it might be the publisher suing the writer, for failing to furnish the required number of songs and to recover advances previously paid. So you might want to make it harder to being an action. On the other hand, if you're going to be a defendant, it's more expensive to defend a suit in court than in an arbitration. Other points to consider are that in arbitration, there is generally less opportunity to conduct extensive discovery (the process of digging around in your adversaries' business). Also there are no juries, and less of a chance for an injunction to compel or prevent your adversary from doing something. You can see that there are many possibilities to consider, and it is best to consult an attorney. There are, however, at least two aspects of arbitration clauses that can be improved upon with certainty.

Arbitration provisions usually state where arbitration will take place. You want arbitration to take place in a city where there are arbitrators who know the music business. That means arbitration in New York, Los Angeles, or Nashville. If your publisher lives in Pittsburgh and wants arbitration in Pittsburgh, that is a problem.

Another important aspect of arbitration is the rules under which it is to be conducted. Although full, formal courtroom rules don't apply, it's not a free-for-all. There are rules, and the rules that you ought to insist on are those of the American Arbitration Association. You don't even need to know what they are or why you want them. The AAA is the biggest and best-known arbitrator in the business, so just ask for their rules.

Indemnification

To indemnify someone means to make them whole; to compensate them for a loss. In a contract situation, you make a certain promise ("I own this car and have the right to sell it to you"), and if you break that promise (the car is actually stolen and the police come and take it away) you will compensate them or make them whole ("here's your money back").

In virtually all publishing contracts, the writers promise the publishers that the songs they are handing over are original and are not stolen and will not infringe on anyone else's songs. Furthermore, the writer agrees that if it turns out a song is stolen and does infringe on someone else's song, then the writer will indemnify the publisher for any loss suffered by the publisher for being sued as publisher of the infringing song.

Indemnification clauses are usually long and complex. For example:

Writer hereby agrees to and does indemnify, save, defend and hold harmless the publisher, its officers, stockholders, directors, agents, employees, licensees assignees and transferees from and against any and loss, claims, actions, suits and demands (including all costs, fees, reasonable attorneys fees and expenses relating to the defense, settlement or other disposition thereof) arising out of or in connection with any breach of any of Writer's covenants , warranties or representations.

Like auditing clauses, lawyers can make indemnification clauses very technical, detailed and demanding. We will review just a few major points.

Make sure it says "reasonable" attorneys fees. Attorneys fees can be outrageous. Promise to pay only reasonable attorneys fees.

Try to avoid promising to "defend" the publisher. Just delete the word "defend". If you promise to defend the publisher, at the first sign of a lawsuit you have spend time and money to hire a lawyer to defend both you and the publisher. Without the word "defend", the publisher has to hire the lawyer, and you can frequently wait until after the lawsuit is completed or settled before having to lay out any money. If you win, you may not have to lay out anything at all.

Assume there is a lawsuit and your side lost and you owe the publisher a large sum of money. There are two common ways this can be repaid. The first, and worst, is that you owe the publisher the money right away, out of pocket. The second, and much better way, is that the publisher is only permitted to recoup the money from future royalties. You have no immediate, out of pocket debt to pay. If the publisher is entitled to a large amount of money, you may not see any royalties for a long time to come. But that is better than having to come up with the cash.

Another issue. Again, there is a lawsuit, your side lost, you owe the publisher a large sum of money, and he will take it from future royalties. The question is, Which royalties? If your publisher has eight of your songs, and one of them was the subject of the lawsuit, can he take the royalties from all eight songs, or just the one that was the subject of the lawsuit. Obviously, the best answer is just the one that was the subject of the lawsuit. You are still paid on the other seven songs. How do you spot the relevant language in your contract? Look for something like this

Publisher may deduct the amount from royalties due under this or any other agreement.

The words "or any other" should be deleted. Of course, if one contract covers several songs, you would need additional language to protect the royalties from those other songs.

Sometimes, the publisher is entitled to withhold royalties in the event a lawsuit is brought, or even if someone just makes a claim of infringement and threatens a lawsuit. First, any amounts withheld should be "reasonably related to the amount of the claim made". Also, any amounts withheld should be released to the writer, with accumulated interest, if no lawsuit is brought within a year from the time a claim is first made. Finally, you should indemnify the publisher only for a real b reach or default by you, not for "any matter or thing which if true could be a breach or default." Usually, you would like to provide that you will indemnify the publisher only for breaches that are "reduced to final, non-appealable judgment or settled with the writer's consent."

As mentioned, indemnification clauses can be complex and technical. Unless yours is simple and you are very comfortable with these concepts, you should probably have an attorney handle this topic for you.

Assignments

An assignment is a transfer of ownership. A song publishing contract is, among other things, an assignment of the song and its copyright from you to the publisher. There are two other kinds of assignment common to song publishing situations; the assignment of songs and the assignment of royalties.

The music publisher thinks of the song as a piece of property to be exploited for financial gain. In some ways is it similar to a player on a baseball team. The ball club wants the freedom to buy and sell and trade its players so as to field the best team possible. A publisher may decide it wants to sell certain songs that it cannot get much done with. Or it may want to sell its entire catalog to a large publisher - to cash out for big money. Buying and selling copyright catalogs has become very big business in recent years. It is the assignment clause in the contract that allows the publisher to do this. But this can create some problems for the writer.

First, it may be that you have developed a close personal relationship with your publisher. He has taught you some of the fine points of songwriting, and you like the ways he has licensed your songs. You don't want him selling your songs to some stranger or a large, cold corporation. Well, too bad. Back in the early part of the century, a disgruntled songwriter tried that argument in court but lost. The court said the relationship between writer and publisher was purely commercial, and if the writer received his royalties, that was all he was entitled to. Personal trust and confidence was irrelevant.

Second, you have no protection against a buyer who is lazy, sloppy, ignorant or crooked. The new owner may not pay royalties correctly, or on time, or plug the song as aggressively as the first publisher. This may happen even if the new publisher is honest and aggressive. Some years ago, the world's largest music publisher, Chappell Music, was bought by another large publisher, Warner Bros. Music. The resulting company, Warner-Chappell Music, has more than 500,000 songs. By all accounts, Warner-Chappell Music is sophisticated, honest and aggressive. But how can its song pluggers possibly give much attention to more than a small fraction of those 500,000 songs? The vast majority of those songs do not benefit from active promotion. And, according to the courts, if the writers receive their royalties, that was all they have a right to expect.

Finally, writers sometimes find themselves receiving royalty statements from publishers they never heard of. When a catalog is sold, the buyer and seller often are not required to tell the writers. So the writer knows nothing until a strange piece of mail arrives. Writers find this disconcerting, but often have little alternative to being pawns on a corporate chessboard, bought and sold without notice, much less giving approval.

There are contractual provisions that will prevent these occurrences, if the writer has sufficient clout to have the publisher agree to them. A "key-man" clause, applicable to many kinds of contracts, provides that if a certain person leaves the company, then the writer has the option to terminate the contract and recover the song. On this topic, the Songwriter Guild contract states that the writer has entered into the contract "in reliance upon the value to him of the personal service and ability of the Publisher in the exploitation of the Composition."

The Songwriter Guild contract also provides that the publisher may not assign an individual song without the writer's prior written consent. But even the Songwriter Guild contract allows the publisher to sell the song, without the writer's consent, if the sale is part of the genuine sale or merger of the publisher's entire catalog. Not even the Songwriter Guild contract would have prevented the Warner-Chappell merger. Most publishers will firmly oppose this kind of provision since sales and mergers are a vital part of the music publishing business. And for many small publishers especially, it is their great dream to build up their catalogs and then cash out to the likes of Warner-Chappell.

A clause that a writer may have a more realistic chance of winning says that any person or company to whom the publisher assigns the song (the "assignee") must be financially responsible, and that the writer will be sent written notice of the name and address of the assignee and the effective date of the assignment. At least this way you have some knowledge of what is happening to you and your songs.

Another kind of assignment involves your royalties. Under standard contract law, you have the right to "assign" to a third party any money you may have coming to you. Suppose you were having trouble paying your landlord or the bank that made your student loan. You have a hit song on the radio, and you know that every six months you are going to get a large royalty check from your publisher. Perhaps you would like to get the landlord or bank off your back today by assigning to them the royalties you will receive in six months.

Your publisher doesn't want any part of this. This month it's your bank. Next months it's the landlord. Next year it's the boat you bought. The next period it's a home mortgage. Your publisher does not want to get tied up in your financial entanglements. So the publishing contract provides that the writer may not assign her interest in royalties without the publisher prior written consent. The contract may also provide that the writer may not assign royalties to more than one party at a time.

If you think assigning royalties may be important to your financial affairs, you may want to fight to change these provisions. For most writers, it is not an important issue.

Trust

One meaning of the word trust, to lawyers at least, is a special relationship in which one person holds or manages property belonging to another, and the owner relies on and places trust in the manager. Some examples of trust relationships are parent and child, husband and wife, attorney and client or accountant and client. In these relationships, the manager is held to a higher standard of honesty and care than if the parties were simply on two sides of a contract.

Songwriters have argued in court that since the music publisher collects royalties on behalf of the writers, the publishers are trustees of those royalties and have higher duties of honesty and care. Courts have uniformly rejected these arguments. What does this mean to the songwriter?

Imagine that you have a hit song on your hands and royalties are flowing into your publisher's bank accounts. Half of those royalties are due to you. However, your publisher is financially inept and is in fact on the verge of bankruptcy. His creditors are banging on his doors. If the publisher was your trustee, the creditors could not touch that money because it is owned by you and is merely held or managed by the publisher. However, the publisher is not your trustee. That money belongs to him. The creditors can go after that money, and you must get on line with all of them and hope that there is enough so that everyone gets most of what is owed to them. You have no special status as against the creditors.

Now imagine that your publisher, for whatever reason, has failed to pay you fully and on time. Recall the Nolan case, where the publisher paid the writer just 26% of what was owed him. The publisher was still entitled to keep the song because the relationship was commercial, not one of trust. If that was an accountant and client, rather than writer and publisher, that accountant might well lose his job and his license and maybe wind up in jail. That is because of the higher standard imposed upon trustees. It is also because the wrongful use of the money of another may constitute the crime of embezzlement.

Most song publishing contracts say nothing on the issue of trust. Therefore, the usual commercial rules apply, and there is no trust relationship. The Songwriters Guild contract provides that monies held by the publisher are held in trust. This protects the writer in the event of bankruptcy. But it also exposes the publisher to the risk of accusations of embezzlement, and this is why most publishers will firmly resist trust provisions in song publishing contracts.

Re-Writes

The general rule is that publishers may not make changes to a song unless the contract expressly permits it. Many writers feel very strongly that they don't want anyone making the slightest change to their work. But there are some good reasons for writers to be a little flexible on this issue.

A recording artist may be interested in the song and want to make a few minor changes, even as minor as changing "he" to "she". Maybe the artist wants to do a little vamping or scat, or put her kid's name in where another name is. Whatever. Artists need a little artistic license, and unless you are the likes of Irving Berlin or Stephen Sondheim, you should probably just let the record get made, any way it needs to get made.

As for publishers, they are supposed to be editors, trying to improve songs to make the more commercially viable. Words may be trite or clumsy. Jokes may fall flat. References may be too obscure. You should be so lucky to find publishers willing to look that closely at your song and think about improving it! Let them do their job. At the least, be open and reasonable.

A typical re-write clause says

Writer hereby approves such changes, adaptations, dramatizations, transpositions, editing and arrangements of the composition and the change of title as Publisher may desire.

As for "adaptations, dramatizations, transpositions, editing and arrangements", you should be so lucky. These are the things that happen to successful songs. They get recorded in foreign languages, and turned into plays, TV shows, Muzak® and arrangements for high school marching bands. This is what a publisher really does to earn its 50%, and you should let it. If you've achieved a certain level of success, and want to begin getting more particular, that's fine. But for beginning writers, I say get your song out there as much as possible, and collect as much as possible.

"Changes" is what usually makes writers nervous. They say, "What if the publisher makes some changes and gives it a new title and says someone else wrote the song?" Only the lowest crook of a publisher would do such a thing. In a case where this actually happened, the writers sued and won and were awarded the writer's royalties on the song. But of course, it took a lawsuit to make things right. So, the best answer is to know who you're dealing with from the outset. Ask questions. Look around. Check references. And copyright your material before sending it out.

This doesn't mean the publisher should have completely free rein. The song should stay basically the same. You might request the right to approve any changes to "the fundamental character" of the song. That is a pretty fuzzy test, but at least it lets the publisher know it can't run wild making big changes to words or music. Also, it's hard to be precise in a contract on an artistic and subjective subject, so that language is about as good as you're going to get.

Another tack to take is to provide that if the publisher feels a substantial re-write is necessary, the writer shall have the first opportunity to do it. Other writers will be brought it only if the writer, with the genuine direction and assistance of the publisher, fails to adequately improve the song. Also, any writers brought in will be paid out of the publisher's share of royalties, not the writer's, unless the writer agrees otherwise.

Name & Likeness

Some contracts provide that the publisher shall have the right to reproduce and publish the writer's name, photo, portrait or other likeness for such uses as publicity and promotion. Many writers will tell you that they are happy enough just to see their names spelled correctly on liner notes, let alone having their pictures used on albums or sheet music.

One important point on this issue is to provide that you have prior approval of all the photos or likenesses that are to be used. But in reality, your picture probably isn't going to be used unless you are also the recording artist. So this clause isn't really very relevant. If you have strong feelings about it one way or the other, by all means express them and try to change the contract accordingly. But unless you are the recording artist, chances are this will never become an issue.

Back to "Songwriter's Guide" Table of Contents

top of page | home | firm profile | practice areas | attorney profiles | mission statement
community profile | career opportunity | information request form | resources | what's happening

Site hosted and maintained by Arrow Web Design