PledgeMusic Blog

All Posts

6 Things You Need to Know Before Signing a Music Publishing Deal

Tab width

If you’ve ever watched the television show “Nashville,” chances are you’ve been completely misinformed about what it means to be a professional songwriter. Remember that episode when Gunnar opens his mailbox to find a first quarter royalty check for $400,000? Yeah, please don’t stake your future career on this scene.

That’s not to say a publishing deal doesn’t have its perks. It absolutely does. If you’ve ever toyed with the idea of courting publishing companies, here are some of the facts you’ll want to consider as well as a few of the pros and cons of being an “employed” songwriter.

1. The Royalty Rate

Under US Copyright law, the current mechanical royalty rate for any physical recordings or permanent digital downloads is 9.1 cents for songs of 5 minutes or less and 1.75 cents per minute or fraction of a minute over 5.

Essentially, this means that if you are the only writer on the song, you don’t have a publishing deal and you are not the artist performing it, you will receive this rate. If you are also the performer, you can add your performance royalty to this number. Performance royalties aren’t as cut and dried as mechanical royalties, though, so this amount will vary. If you co-write the song, as is very common, with one or more people, you divide your total income by that number. Then, if you have a publishing deal, the pie gets a little smaller as you give your publisher your agreed upon share.

2. Types of Publishing Deals

Many types of songwriting deals exist, and before you sign one, you want to be very clear on its implications. The importance of legal counsel in this process cannot be overstated. While you can learn more about single song contracts, sub-publishing, collection agreements or having someone purchase your entire catalogue, for the sake of this article, we’re going to focus on Exclusive Songwriter Agreements, Co-Publishing Agreements and Administration Agreements.

When you sign an Exclusive Songwriter Agreement, you’re usually coming on with a publishing company as a staff writer. What this means is that you retain the writer’s share of the copyright (usually 50%) while you give your publisher the entire publisher’s share (the other 50%). In return for giving up your publishing, you will generally receive an advance, which feels much like a salary except for the fact that it’s recoupable (more on this in a bit).

Once you’ve had some success and gain a little more negotiating power, you might be able to land a Co-Pub deal, which means you and the publisher actually split the publisher’s share, usually giving you 75% of the copyright of each song and giving your publisher the remaining 25%.

In the case of an Admin Agreement, you as the writer retain 100% of your publishing rights and then hire a third party to handle the administrative tasks you might not have the time or energy to manage. These tasks include things like registering your songs with a PRO (like ASCAP, BMI or SESAC), registering them with the US Copyright Office, etc. These tasks can quickly get complicated for an individual, so many will engage other companies to handle them in exchange for a percent of their income (usually about 15 – 20% for domestic income) from the songs created within a specified period of time.

3. The Term

When you sign with a traditional publishing company, you usually sign a one-year contract with a number of options for renewal. For example, if you sign a one-year contract with two options, then after your first year, with each option your publisher can evaluate how things are going and either exercise the option to renew your contract for another year or choose to drop you.

4. The Math

Yes, you absolutely can make good money as a songwriter, and a handful of people still do. But don’t let that $400,000 “Nashville” check fool you into thinking it’s a simple feat. Since country music is a genre that still employs songwriters, let’s say you wrote a No. 1 country single in 2013. You co-wrote said song with one other writer and then it was downloaded a million times. The combined writer’s and publisher’s share of income from that track would be $91,000 (woo hoo!). Remember, though, you wrote it with someone else, which is extremely common, so your share suddenly becomes $45,500. If you have a publishing deal, you give your publisher half of that number, and you are left with $22,750.

While you might at first think, “I can make almost $23,000 from spending a few hours writing a song? That’s incredible!” you also have to consider the countless hours you’ve spent writing songs that never see the light of day. Plus, remember that, if your publisher has given you an advance, all of that money is recoupable (yes, we really will get to that).

Even so, certain songwriters have been able to make a living for years getting enough cuts to sustain themselves. With the advent of streaming, the equation has become a bit more convoluted, however. While you may make $22,750 from a million downloads, the same number of streams on a popular streaming service will result in a royalty check for $521.

5. The Recoupable Advance

One of the greatest parts about signing a publishing deal is that you gain the support of an individual or a company that believes in what you’re doing and gives you the validation of fronting you a salary to free you up to create. It’s almost like the patrons you think of in Da Vinci’s day. It truly is a huge perk of having a publishing deal, but it’s important that you understand the mechanics of an advance. It is just what it sounds like – someone believing in you enough to front you money, to invest in you with the hopes of getting a return on that investment.

Songwriting is a business just like any other, so it’s not that publishers are greedy or selfish; they’re sticking their necks out there and potentially losing a great deal of money on you if the deal doesn’t pan out. Let’s say you receive a $25,000 advance each year of your publishing deal and you’ve had the deal for two years by the time you write the country hit in the example above. Technically you will owe your publisher $50,000, so your $22,750 will go against that advance and now you will only be $27,250 in debt to your publisher.

Now, if for some reason you aren’t renewed as a writer, you don’t have to go back and pay your publisher that money. It’s generally just a part of the agreement while you are under contract. That publisher will, however, usually own the agreed upon share of the songs you wrote during your time with a publishing deal even after the deal is finished. These are the kinds of things you want to be very clear on and aware of when creating your initial contract.

6. The Pros

When you sign a publishing deal, you gain an extreme amount of freedom to create. Many publishers allow their writers to have lots of autonomy and flexibility with their schedules, which gives you the space to do what you want to do – write songs. With the benefit of an advance, you’re often able to skirt the day job (or at least work much less) and you also have a third party handling the administrative tasks that would otherwise bog you down and hinder your writing.

Another more subtle pro of having a publishing deal is the validation it gives to your work. Someone has put their money behind you, and that can speak well for you in the industry. With a publishing deal, you also have the benefit of a song plugger taking your songs to pitch meetings and working as your advocate to get your songs cut. Publishers will commonly give budgets for demo recordings as well as other expenses that might come up (which is – you guessed it – recoupable).

To Sign or Not to Sign?

In the end, signing a publishing deal can be a great move for a talented songwriter looking to make it in the industry. The amount of creative space it opens up is a true rarity, and it might be the best next step to allow you to get into the right frame of mind on a regular basis. But before you sign anything, just make sure you fully understand the implications and the details of what a publishing deal looks like in the real world in 2014. We would all love to make $400,000 in the first quarter after writing a hit, but in reality that’s so far from accurate it’s laughable.

Get a publishing deal if it seems like the best next step, but don’t fall prey to ideas of getting rich quickly (or possibly ever) and don’t allow yourself to be delusional when the stars hit your eyes. Write because you love it, and if the rest follows, it will simply be an added bonus.

Join the discussion

Want to add a comment? Sign Up or Sign In.

Discussion

Anonymous

Anonymous commented

Well said