Pros and Cons of Administration Agreements

by Jeffrey and Todd Brabec

Since the music and entertainment businesses are extremely complex, it is in many cases extremely wise for a writer to find a full-service major music publisher to handle the everyday administrative duties involved in protecting and promoting his or her songs as well as licensing, collecting, auditing, and processing the income those songs generate.

One of the main differences between the co-publishing agreement and the administration agreement is that the songwriter (through a publishing company that he or she owns) retains full copyright ownership of all songs. In addition, since the fees charged by the major publisher doing the administrative work are usually not large, the writer will normally be entitled to retain between 80% to 90% of all monies earned. This arrangement is many times reserved for established songwriters who have formed their own publishing companies and are not currently under a co-publishing agreement with another publisher.

Depending on the bargaining power of the writer and the services being offered by the administrating publisher, the fees charged are between 10% and 25% of all income collected. However, if the writer is a successful recording artist who automatically generates substantial income or the administered catalogue is a motion picture or television company with guaranteed performance income, the fees charged for administration may be as low as 7% of the publisher's share of income, depending on the services being provided.Songwriters who own the publishing rights to their songs can gain some real benefits by allowing a full-service publisher to handle all the business and promotion aspects of their catalogues. But considering the demands on both time and personnel (registering copyrights; registering with ASCAP, BMI, or the Harry Fox Agency; negotiating and issuing licenses; drafting agreements; preparing royalty statements; filing infringement suits or negotiating settlements; promoting of songs for television, motion pictures, and commercials; paying for demo sessions; notifying foreign countries; organizing a catalogue), some publishers are not that interested in certain administration deals.

Obviously, if a substantial amount of work is going to be done and all songs will be lost in three to five years, many publishers feel that it is just not worth the trouble, especially since time and effort are being taken away from handling the songs that they own for the life of copyright. Additionally, the profit margins on many of these agreements are so small that they are not worth entering into.

On the other hand, if an administered catalogue is earning substantial monies (e.g., a hit recording artist's songs or a motion picture or television catalogue), the administration fee as well as the interest earned on the monies generated might be well worth the efforts expended regardless of the limited duration of representation.

In addition, if an administering publisher is weak in one area of music (e.g., Rock, Soul, Pop, Hip-Hop, or Country), it may enter into such an agreement just to get a foothold in that area.

There are also some catalogues that are so prestigious by their very nature that many publishers will accept a short-term administration relationship because being associated with such a catalogue will enhance their reputation and, more than likely, generate additional business from other sources.

And if a music publisher knows that the catalogue has been under exploited in the past and feels that its promotion department can secure new cover recordings or film, television, video game, cell phone and soundtrack uses, an administration arrangement may be attractive especially if the fee is increased on new uses secured by the publisher's activities.

In addition, if the past business practices of the people who ran the catalogue were not good, a major publisher may enter into an agreement because it knows that it will be able to track down and collect a substantial amount of missing or unpaid royalties via audits, litigation and business acumen; a factor that can make an administration agreement very lucrative despite its short term nature and smaller profit margins.

In many cases, if the administrating publisher increases the income of the catalogue, the contract may be renewed for continuing periods which can turn a short term relationship into one that lasts for many years of profitability for all parties.

Choosing the Right Administrator

Since an administration agreement, by its very nature, is usually not a commitment for an extended period of time, many writers do not undertake the necessary research to find out which publisher is best suited for their needs. After all, many feel that if they make a mistake, it can always be rectified by going to an experienced publisher when the current agreement ends. But a great deal of damage can be done in a very short period of time and a substantial amount of money lost by being with the wrong administrator—whether it be a publisher, lawyer, manager, or other representative.

A writer must be aware that two or three years can, in the wrong hands, create a lifetime of problems and that any decision should be made only after extensive research on the reputation, personnel, and capabilities of the company being chosen to act as administrator, regardless of the amount of up-front advance money that may be offered to secure the deal.

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