The Relationships Among Music Industry Players

III The Relationships Between Songwriters and ...

1. Publishers

In English Canada, the relationships between composer/songwriters and their publishers differ depending on whether the publisher is a “major” or an “independent” and whether the songwriter is a pure songwriter or a singer-songwriter.

Where a songwriter signs with a “major” publisher, the contract is usually a co-publishing agreement. This means that, from most income sources, the writer retains 50% in his capacity as writer and 25% in his capacity as co-publisher, for a total of 75%. However, he often receives less for cover versions and synchronization licence fees.

Where a songwriter signs with an “independent” publisher, that publisher already has or intends to have its own co-publishing agreement with a major publisher. Accordingly, in order to split the publishing share with the major while providing sufficient incentive to both co-publishers, the songwriter normally signs a full publishing agreement. Under that structure, the writer receives only his 50% in his capacity as a writer, the remainder being split between the two third party publishers.

In some instances, notably where the songwriter is also the artist on an independent label, the independent label's publishing arm becomes the publisher, under a full publishing agreement. Often, the independent record label publishing arm has no intention of co-publishing with a major publisher but compels the writer to assign his publishing as part of the recording package deal, for two main reasons: (1) to reduce the record labels' effective mechanical royalty disbursements; and (2) to allow the record label to earn back some of its outlay through SOCAN radio airplay royalties.

This kind of “tied” deal is being resisted more and more effectively by lawyers representing independent artists, but is by no means eradicated as a business practice.

Songwriter agreements with “independent” publishers tend to be “development deals.” The “majors” are doing fewer development deals than in the past. The object of a development deal is to cultivate promising talent into commercial songwriters who do not already have a record deal in place. It becomes the role of the publisher to “shop” demos of the songs to potential recording artists and to record labels, the latter if the songwriter is also a recording artist.

Songwriter agreements with the “majors” tend to be tied to existing record deals. Often a band that writes its own material signs a recording contract first and then looks for a (co)-publishing deal, either with the record label's sister publishing company or a rival. The role of a publisher in this scenario is more one of a banker, lending non-returnable advances to the songwriting band members. The band benefits from sorely needed cash flow and presumably more licensing opportunities in the form of audio-visual synchronization licences (commercials, TV and movies) and sometimes in the form of “cover” records (e.g., Gordon Lightfoot's songs have been covered by numerous artists).

2. Collectives

As noted in the sections on the collectives, the relationship between composers/songwriters and their collectives depends on the collective.

For mechanical rights, CMRRA has no direct relationship with songwriters as it represents only publishers. Songwriters are paid out of the net receipts of the publishers who are paid by CMRRA. On the other hand, SODRAC has a direct relationship with its songwriters as it pays them directly and they sit on the SODRAC Board.

For performing rights, SOCAN has a direct relationship with its songwriters as it pays them directly and they sit on the SOCAN Board.

For private copying rights, CPCC has no direct relationship with individuals, representing only other collectives. Those collectives who represent songwriters - CMRRA, SODRAC and SOCAN - appoint directors to the CPCC Board.

NRCC represents only sound recording performance and performers' performance rights, not songwriters' rights.

3. Record Companies

The relationship between songwriter and record company varies depending on whether or not the songwriter is also a recording artist signed to the label.

If the songwriter is not an artist signed to the label, there is generally no direct relationship between the two. The record company must secure a mechanical licence from the songwriter or his publisher. However, apart from rare instances where the publisher issues such licences directly, it is CMRRA or SODRAC that issues them.

For compilation CDs with a high number of tracks, for special TV-advertised CDs and for some budget-priced CDs, record companies will often try to negotiate rates at less than the industry-negotiated rates. Record companies often want medleys to share the single-song rate. These variances require direct negotiations with the publisher, since the collectives are not authorized to reduce the rate without the publishers' approval.

If the songwriter is signed to the label, in English Canada, there is generally a “controlled composition” clause in the recording agreement. Controlled compositions are songs that the artist has written in whole or in part or controls. Recording agreements often impose limits on the mechanical royalties that the company will pay, as to both the rate and the number of compositions on an album for which it will be responsible.

The typical controlled composition clause will limit the payment to 3/4 of the industry-negotiated rate for a 5-minute song on not more than 10 songs (the “cap”). The record company thereby limits its mechanical outlay to (3/4 x 7.7¢ x 10 =) 58¢ per album which represents a considerable savings on a 15-track album, otherwise totaling (7.7 ¢ x 15 =) $1.12. However, paragraph 7(c.3)(iii) of the current CMRRA-CRIA Mechanical Licensing Agreement (MLA) (effective January 1, 2004) provides for a minimum aggregate mechanical royalty of 3/4 x 7.7¢ x 12 = 69¢, notwithstanding any less favourable contractual provision.

The effect of the controlled composition clause is to reduce the singer-songwriter's mechanical royalties whenever he records non-controlled compositions. For example, if he records six non-controlled songs and six controlled songs, the non-controlled songs must be paid (7.7¢ x 6 =) 46¢. From an initial mechanical royalty budget for the CD of 69¢, this leaves only 23¢ for the artist's own compositions or 3.8¢ per song. If the artist writes fewer than half the songs, his share of the mechanical budget will be further reduced. Additional benefits of the MLA are:

  • an override that prohibits the record company from paying less than 50% of the full rate for any one song;
  • for multi-year deals, an override that moves the mechanical rate upward as the industry negotiated standard license fee is increased,even if the artist's contract purports to lock in the rate prevailing at the time of release.

It should be borne in mind, however, not all Canadian independent record companies are signatories to the MLA and that no similar provision has been adopted in the US where a statutory regime is in place.

“Controlled composition” clauses are rare in Quebec recording agreements, as industry practices there are not so heavily influenced by US practices.

4. Audio-Visual Producers

The relationship between composers of TV and motion picture scores and the producers of those A-V works is quite different from that between recording artists and their record labels.

An A-V producer wants to own the copyrights in music composed for its soundtracks for two main reasons:

  • to participate in performing rights royalties generated both when the music is performed with the program or movie and when the music is performed on its own; and
  • to allow the producers to distribute their products throughout the world without concern about subsequent payments for music use.

The composer is paid a one-time fee for composing and synchronization, retaining his right to collect directly the composer share of performing rights royalties from his local performing rights society. He also generally participates in half the royalties earned from subsequent exploitation of the music in other media.

Film and TV composers with considerable clout (of which there is a handful in Canada) are sometimes able to negotiate a co-publishing agreement with their producers.

Since 1999, SOCAN's commercial television tariff has allowed a broadcaster-producer to obtain a complete “buy-out” of performing rights; i.e., the composer may license the music directly to the broadcaster, rather than through SOCAN. In theory, higher composing and synchronization fees would compensate the composer for forgone performing rights royalties, but, in practice, most composers are not in a strong bargaining position.

SOCAN was initially concerned that this option would erode the blanket licence system. However, the extent to which broadcaster-producers have availed themselves of this option has not seriously undermined the value of the commercial television tariff.