Foreign and Sub-publishing Agreements

By Jeffrey and Todd Brabec

The agreement in which a writer, writer/performer, or U.S. music publisher grants the right to represent musical compositions in countries outside the United States is known as a "sub-publishing agreement".

The agreement in which a writer, writer/performer, or U.S. music publisher grants the right to represent musical compositions in countries outside the United States is known as a "sub-publishing agreement".

Because of the ever-increasing importance of foreign countries to the earning power of U.S.-originated compositions and the many positive and negative consequences that can occur owing to how one deals with the relationship created by this type of contract, it is a document that should not be taken lightly. With this in mind, the most important provisions of foreign sub-publishing agreements are reviewed here.

Term Decades ago, it was not uncommon to commit an entire catalog to a foreign representative for the life of copyright of each composition controlled by the sub-publishing agreement. Thus many standards are still currently controlled overseas by companies for the full term of copyright protection through agreements that were signed 60 or 70 years ago.

The standard duration of sub-publishing agreements in today's market, however, is normally from 3 to 5 years, with 3 years being the minimum accepted by many foreign royalty collection societies.

The term of an agreement is one of the many negotiable items contained in any sub-publishing agreement; variations of the term are based on the amount of advances given, retention rights for local cover recordings, the right to collect "pipeline" royalties (monies earned prior to the expiration of the term of the sub-publishing agreement but not yet paid by the music user until after the end of the term), released-album guarantees, extensions if advances have not been recouped, rules of local performing rights societies, suspensions due to breaches, and extensions based on the non achievement of guaranteed earnings plateaus.

Royalty Percentages The compensation received by the foreign representative is based on a percentage of the monies generated by the songs controlled by the agreement. For example, if a U.S. publisher enters into a sub-publishing agreement with a foreign publisher for the territory of Germany, the German sub-publisher would receive a percentage of the royalties earned by the compositions from CD and tape sales, television and radio broadcasts, advertising commercials, motion picture uses, and other exploitation that actually occurs in Germany.

If a certain catalog is successful enough to generate uses and income by its very nature, the fees chargeable by sub-publishers may be in the 10% to 15% range, since these catalogs virtually guarantee substantial television, theatrical, and soundtrack album income. If a catalog does not have such guaranteed income-producing music, however, the fees charged by a local sub-publisher will usually be in the 15% to 25% range.

Local Cover Recordings If promotion of the U.S. catalog is one of the reasons for selecting a certain sub-publisher, most agreements will provide that the sub-publisher may retain a larger percentage of the income that is generated from a local recording or other use secured in the particular foreign country (a "cover record").

For example, if the fee on a CD that originated in the United States is 20%, that fee may be raised to between 30% and 40% for a single or album recorded and released by a foreign recording artist.

Some agreements provide that if a local recording is secured, the sub-publisher's percentage on all versions of the song contained on that cover record will be increased. Since this type of provision can be somewhat unfair if the original U.S. version is a major hit, this is something that one must guard against; unless, the local version becomes a major hit in a foreign territory where the U.S. version is not generating substantial income already.

If one signs with a worldwide company, it is often specified that if there are to be increased percentages for local cover records, such increases shall only apply to the territory in which the cover record is released (or becomes a hit, if applicable) and not to all countries controlled by the agreement.

This article is based on information contained in the new, revised paperback edition of the book "Music, Money, And Success: The Insider's Guide To Making Money In The Music Industry" written by Jeffrey Brabec and Todd Brabec (Published by Schirmer Trade Books/Music Sales). www.musicandmoney.com