Music publishing income is not like typical products or services. For example, it’s not like we’re selling shoes here. With tangible products, the income math is pretty simple. If we manufacture a pair of shoes for $10 and then sell the shoes at retail for $50, it’s simply a $40 profit over and over for one product.
With musical compositions, there are various income streams available and all come with their own specific licenses, rates and regulations (or lack of regulations). One song can generate income from various sources such as radio and internet streaming airplay, live concerts, TV/Film uses, advertising and product placements, sheet music, lyric re-prints, musical theater and even karaoke products. That’s way more revenue streams available than a tangible product like shoes.
All music publishing income is split 50/50 between the songwriter and the publisher. This is typically referred to as the “writer share” and “publisher share” of income. No matter how many writers and publishers, the publishing royalties are split in this way. If there are five writers and one publisher, the writer share would usually be split five ways (10% each) and the publisher would receive the full publisher share (50%). Additionally, if the songwriters received an advance under the deal, this advance is recoupable from the writer share of income. That’s because the advance is against future royalties on the writer share; therefore it is recouped from the writer share, not the publisher share.
The music publisher is responsible for licensing and collecting all income on behalf of the songwriter, EXCEPT for the writer share of public performance income (ASCAP, BMI, SESAC). The writer share of public performance income is paid directly to the songwriter from ASCAP, BMI and SESAC. This income is supposed to bypass the music publisher entirely and act as a protection measure to ensure the songwriter receives their share of performance income. If a songwriter has an un-recouped advance with the publisher, this allows the writer to at least receive some income from their songs.
Most publishing agreements will state that if for any reason the music publisher receives the writer share of performance income from ASCAP, BMI or SESAC, the publisher will promptly remit this income to the songwriter. However, the publishing culture is beginning to change on this.
Some publishers are beginning to insist in their agreements that the publisher will also collect the writer share of performances, in order to recoup the advances. This can be a bitter pill for a writer to swallow. But in the new music industry economy, the publisher is looking to reduce risk as much as possible.
If the agreement is a “Co-publishing” deal, this means that the songwriter also receives half of the publisher share of income and owns 50% of the copyright. Under the co-pub deal, all income is split 75% to the songwriter (50% writer share + 25% publisher share) and 25% to the music publisher (half the publisher share). The music publisher will represent the writer’s half of the copyright and license/collect for their co-pub share as well.
Under this arrangement, the songwriter is also responsible to act as a publisher, in addition to their songwriting obligations. For example, the songwriter must share in some of the publishing costs such as demo recording, travel and copyright registration costs. The songwriter is also encouraged to assist in some of the heavy lifting of marketing and solicitation of songs.
All publishing agreements must specifically define the income splits as mentioned above, as well as the accounting schedule for those payments. I recently reviewed a publishing agreement where the agreement actually didn’t have any accounting language. Like I said, sometimes you don’t know a good agreement until you see a bad one.
It’s one of the most important questions a songwriter must ask when reviewing a potential deal – “When will I get paid?” If the agreement doesn’t specify an accounting schedule, the publisher could just pay whenever they feel like it – or not at all.
All of the major publishers (Sony/ATV, Universal, Warner) will pay semi-annually, usually 90 days after the accounting period ends. This means the songwriter is paid twice a year, every 9 months. Those paydays are typically around October 1 and April 1 each year, depending on the company and their specific policies. Other publishers may account 30 or 60 days after the semi-annual period, but 90 days is most common for semi-annual accountings.
More ideal for the songwriter, is if the publisher works on a quarterly accounting schedule. This means the writer gets paid four times a year. These quarterly accountings are usually 45 or 60 days after the quarter ends.
At my former company, we paid 45 days after the quarter. I always told our clients to mark their calendars on February 15, May 15, August 15 and November 15 as their publishing royalty paydays.
If the songwriter has un-recouped advances, the publisher won’t owe any payments, but the publisher is still obligated to send the writer a royalty statement. The royalty statement will show all income activity for the accounting period and where the writer’s un-recouped balance stands as of that date.
Read the rest of the series here:
- Part I: Full-Service Publishing Agreements
- Part II: Sale of Compositions and Advances
- Part III: “Minimum Commitment” & “Minimum Delivery Release Commitment”
Benom Plumb is an Assistant Professor of Music Industry Studies at the University of Colorado Denver. He is a veteran music industry professional with over 12 years of experience in music licensing and publishing, including VP of Licensing at Nashville publisher Bluewater Music. He is not an attorney. For more info about Benom, visit his website at www.professorplumbmusic.com.