Publishing deal explained: rights, revenue and pitfalls

A publishing deal, formally a music publishing agreement, is a contract between music authors (composers and lyricists, or those who have acquired their rights) and publishers. In it the author assigns the copyright in compositions and/or lyrics to the publisher, who then promotes, exploits and administers the works. In return the publisher receives a share of the revenue.

This article sets out how such an agreement is structured, which rights and obligations it involves, how advances work and where the risks lie, with examples from practice including Golden Earring and Martin Garrix.

The subject matter of agreements of this kind is principally the copyright in the compositions and/or lyrics of musical works (which we will refer to below, for convenience, as “the work”). It is therefore not about the rights in a recording of a performance of that work. Those rights are usually the subject of a record contract.

The difference between a publishing deal and a record contract

These two contracts are regularly confused, but they concern fundamentally different rights.

A publishing deal turns on the copyright in the composition and/or lyrics, the written musical work itself. A record contract concerns the neighbouring rights in a specific recording of that work. Put simply: the publishing deal is about the song as it stands on paper, the record contract about how it sounds once recorded.

That distinction matters. A composition can be recorded dozens of times over by different artists, and each recording falls under a separate regime. An author who has assigned their publishing rights has not thereby automatically arranged anything about the recording, and vice versa.

Sometimes these rights are combined in a 360 deal. One party then takes on both the publishing and the recording rights, and often more besides. Later in this article you can read about the advantages and disadvantages of that.

What do you agree in a publishing agreement?

In a standard publishing agreement a music author assigns their rights in a work to a publisher (to the extent that the rights have not already been assigned to Buma/Stemra). It is usually agreed alongside this that the publisher will promote, exploit and administer the works. That promotion and exploitation obligation covers, for instance, the publisher trying to offer the work to third parties so that it can be used, for a fee, in a television commercial.

The administration obligation means, among other things, that the publisher checks the statements provided by users of the works (Buma/Stemra, for instance) showing the revenue from the works, and makes sure that payments are made correctly and on time.

What must a publisher do for you?

It is of course important for an author to agree as precisely as possible what the publisher is going to do, that it will do so as well as it can, and then to hold the publisher to that. There is little point in assigning rights in a work to a publisher if that publisher then does nothing with them (other than earn from them).

For publishers, too, it can be important to make sufficient efforts. Where it fails to perform its obligations properly, a publisher runs the risk that the author terminates the agreement. Golden Earring did precisely that with the agreement with their publisher Nanada, because Nanada was doing too little with the works. That applies all the more now that the point has been regulated by statute since 2015 (in the Dutch Author Contract Law Act). A publisher may in such a case even be obliged to pay the author damages for revenue lost because the publisher exploited the works inadequately.

How is revenue divided under a publishing deal?

In return for its services a publisher receives a share of the revenue from exploitation of the works (often 50 per cent). A large part of that revenue often runs through Buma/Stemra, assuming of course that the author is a member. The publisher will be entitled to register as the “publisher” of that work with Buma/Stemra, after which Buma/Stemra (on a standard split) pays part of the revenue from those works to the publisher, after deduction of a kind of overhead charge, and the rest to the authors.

In many publishing deals it is also agreed that the publisher then passes part of its share of the Buma/Stemra revenue on to the author. In that case the author is entitled both to the revenue received as an author from Buma/Stemra and, through the publisher, to part of the revenue the publisher receives from Buma/Stemra.

Advances under a publishing deal: how do they work?

To make a publishing agreement more attractive to authors, publishers often offer to pay an advance on the exploitation revenue. The publisher may then set that advance off against exploitation revenue it receives later. The author has to instruct Buma/Stemra to pay revenue that would normally be received as an author directly to the publisher (by way of an assignment). The publisher may then set the advance it has paid against that.

It matters for the author to agree that the advance received does not have to be repaid if the publisher fails to earn it back out of the assigned revenue. In contracts this is referred to as a recoupable but non-returnable advance.

The great advantage of such an advance for the author is of course the certainty of earning money, where without the advance they might not. They receive it earlier in any event. For the publisher this naturally means running the risk of never earning back the advance it has paid. Publishers therefore often cite that risk as justification for their share of the revenue. Alongside, of course, the fact that it is remuneration for the promotion, exploitation and administration work the publisher is expected to carry out.

For many authors starting out, or less popular ones, no advance will ever be forthcoming, because the risk for publishers of not earning it back is too great. Practice shows that whether an advance is agreed, and for what amount, is therefore often a matter of the author’s negotiating position, which is determined in part by their popularity.

Term and territory: for how long and where are you giving your rights away?

Signing a publishing deal feels like a big step forward. But have you thought about how long that agreement runs and for which countries you are giving your rights away?

Those two elements are inextricably linked. A deal for three years, for the Benelux only, is something entirely different from a contract that runs for ten years and applies worldwide. In the latter case your publisher can exploit your songs on every continent, without your having any say in the meantime. That is not wrong by definition, but you do need to know what you are saying yes to.

In practice we regularly see contracts in which the term is automatically extended if the songwriter does not terminate in time. Or deals in which the territory is worded so broadly that the publisher holds rights in markets where it is not active at all. Your music then lies idle in countries where another party might have done something with it.

What should you watch out for? Look first at the duration of the assignment. Is it for the full term of copyright protection, meaning up to 70 years after your death, or for a shorter period? With a shorter term: what happens when the contract expires? Do your rights revert automatically, or do you have to take action for that?

With territory the rule is: the broader it is, the more you give away. A worldwide deal only makes sense if your publisher genuinely has an international network to exploit your work. Where it does not, you are giving rights away for nothing in return.

These are precisely the clauses songwriters come to regret if they are not checked properly. The difference between a fair deal and a gilded cage sometimes lies in a single paragraph.

Get in contact with one of our music law lawyers, Jaap Versteeg or Alexandra Iedema, if you have been presented with a publishing deal and want to know whether the term and territory are reasonable.

Audit rights and cost deductions: know what your publisher does with your money

You have signed a publishing deal, your music is used in a commercial and the streams keep coming on Spotify. But when your royalty statement arrives, the amount is disappointing. Where has the rest gone?

The answer often lies in the cost deductions. Publishers may deduct certain costs from the amounts they have to pay over to you. Think of registration costs at Buma/Stemra, administration costs or the costs of making demos. Reasonable enough in itself, but the difference lies in what may be deducted and how much.

Some contracts contain a broad formulation allowing the publisher to deduct virtually every conceivable cost. As a songwriter you are then left with little net, even where your music is used extensively. It is therefore important to know exactly which costs are deductible and to have that list recorded exhaustively in your contract. Not an open formulation such as “all reasonable costs”, but a concrete enumeration.

And then the audit right. As a songwriter you have the right to inspect your publisher’s records. You may check whether the amounts you receive match what actually comes in. That sounds self-evident, but in practice it is not always so.

Not every contract regulates this equally well. Sometimes an audit right is missing altogether, or is worded so narrowly that you can do little with it. A good audit right gives you the right to inspect the books on a regular basis, annually for instance, with the help of an accountant if need be.

Audit rights and cost deductions are both about the same thing: transparency. The difference between a fair publishing deal and a black box in which your royalties disappear often lies in these two provisions. Make sure they are properly arranged before you sign, since negotiating after the event is always harder.

What is a 360 or 180 deal in music?

Publishers frequently propose what is known as a 360 or 180 deal. That amounts to an agreement covering not only the copyright in the works but other subjects as well, such as rights in recordings (which would typically fall under a record deal), live performances, merchandising and the author’s management.

Agreements of this kind are also concluded with other parties, such as concert promoters. Authors sometimes look at such agreements with care, because the manager, record company and publisher with whom the agreement is concluded are often related to one another.

As the case of Martin Garrix against Spinnin’ Records (won by Garrix) showed, that is not always a good combination. It is in the author’s interest that those parties are critical in the negotiations conducted by their manager about the author’s works. Where the manager, the publisher and the record company are practically speaking the same party, the negotiations may of course not be conducted entirely in the author’s interest.

In such a case it is therefore important to agree that where arrangements are made between, say, a publisher and a record company belonging to the same group, those arrangements are made on the basis of what is customary in the music industry.

Entering into a 360 or 180 deal can of course also be favourable for an author or artist, where the manager, publisher and record company are major players in the market able to contribute a great deal to the artist’s career.

Well-known court cases about publishing deals

Publishing agreements regularly lead to legal disputes in practice. Two well-known Dutch examples show where things can go wrong.

Golden Earring v Nanada

Golden Earring terminated the agreement with their publisher Nanada because the publisher was doing too little with their catalogue. The band argued, successfully, that Nanada was not performing its exploitation obligations. This case illustrates the importance of concrete arrangements about what a publisher is actually going to do. Since the Dutch Author Contract Law Act came into force in 2015, authors are in a legally stronger position in situations of this kind: a publisher that exploits inadequately risks not only termination of the contract but possibly also damages for lost income.

Martin Garrix v Spinnin’ Records

DJ and producer Martin Garrix went to court to get out of his contracts with Spinnin’ Records. One of the core problems: Spinnin’ combined several roles (label, publisher, management) within the same organisation. The court ruled in Garrix’s favour. The case shows that 360 structures, in which a single group handles the publishing, the label and the management, pose a risk where there is no independent representation of the author’s interests. Where the party negotiating on your behalf is at the same time the party being negotiated with, there is a potential conflict of interest.

Both cases underline the same advice: always have a publishing deal assessed by an independent music law lawyer, particularly where several rights are combined in one agreement.