Money Matters in the Music Business - PART 2

Performing Rights are the New Future of Record and Music Revenue
Contribution by Jonathan G Shaw
Now, speaking of things that have changed, you may have got your record on radio but this no longer means generating a significant amount of sales. In fact, this was foreseen the big record companies in South Africa around 14 years ago. Year on year since 2008 the South African recorded music sector has seen a steep drop in the amount of records song. Digital sales revenue has only recently started picking up, but is still far from replacing lost profits. In 2002, lobbying on the part of record companies by the Recording Industry of South Africa (RISA) led to the introduction of performing rights for the recording of the music.


Read part one HERE and part two HERE...

by Nick Matzukis
Advocate of the High Court
Lecturer in Music Law and Business
Academy of Sound Engineering

The publisher’s duty is to administer and exploit the copyrights on behalf of the writer to create as much royalty income as possible. In order to do this, he will require assignment of the Writer’s copyrights, to him.



Nick Mby Nick Matzukis
Advocate of the High Court
Lecturer in Music Law and Business
Academy of Sound Engineering

Relatively speaking, it does not take much capital investment to open a publishing house (since, unlike record labels, publishers do not need to consider the need for distribution networks, warehouses, etc.) Therefore, there are hundreds of small players in publishing, and although there are huge, mammoth publishing companies as well, they do not dominate the industry quite as much as the major record labels do in the record industry.

After some recent restructuring, there are now three ‘major’ music publishers in South Africa. They are Sony/ATV Music Publishing (which now includes EMI Publishing), Gallo Music Publishers (which for many years represented Warner/Chappell in South Africa) and Universal Music Publishing (which now includes BMG’s publishing arm.) But several independent music publishers such as Sheer Music Publishing, Synchro Music and others, have also had great success in South Africa, and are in many cases quite large and influential.

Essentially, the better publishers will exercise three core functions for the composer: marketing the music for exploitation, ie opening doors for use of the compositions that the composer himself cannot open; administration (ie handling the tracking of royalties, both with the major royalty collection societies and others, and ensuring that the correct royalties are timeously paid; and creative input, ie guiding the composer, assisting him/her in creating exploitable works, creating songwriter partnerships where necessary and so on. Some publishers do not involve themselves in the third function, but it is my feeling that they should, depending on what their share of the royalty stream is. In most full publishing agreements, the split is 70/30, but 60/40 (in either party’s favour) is also quite common.

As a general rule, but not exclusively, the aim of most large publishing companies is to own copyrights outright, and to exploit those copyrights for as long as they can. Other smaller publishers might have different business models, namely to have a share in a particular writer’s copyrights for a particular time only, and perhaps thereafter to build a business partnership together with that writer. Publishers appear, today, to have more power in the industry than they have had since the sixties, because of the music world’s attempts to legitimize the internet download business. Publishers enjoy a new power, as the recording industry seeks to shift gears from selling songs on discs meant solely for traditional stereo systems to formats optimised for use on computers and computer peripherals - a change with profound implications for artists, consumers and everyone in between. Music publishers see this shift as an opportunity to recast contracts with record labels and providers.

Quite recently, an out-ofcourt settlement was reached to ensure that 8% of the sale price of every digital download by a major online retailer would be paid to the publisher handling that copyright, and the goal percentage has now been raised to 9%. This South African agreement was reached due to publisher pressure. Therefore, the fact that every internet download sold is a copy, and therefore requires a mechanical license, is giving the publishers a whole new opportunity to entrench themselves as the power-brokers of the industry. Furthermore, the recent boom in “synchronization royalties” (royalties paid for use of a musical composition on film or video) has made publishers more powerful, due to the recent film boom in South Africa, including the movies “Chappie”, “Spud”, “District 9”, “Tsotsi” and others. Television advertising is not to be forgotten in this scenario. This income stream is becoming increasingly important o composers, and should be well understood.)

In its most basic form, a publishing agreement is a copyright transfer contract. In the agreement, the publisher is assigned, for a particular area, certain designated copyrights, or categories of copyrights (perhaps everything written by the writer) for a particular period or in perpetuity (the life of the copyright.) These contracts can vary hugely – either the publisher “owns” the copyrights assigned to him in perpetuity, or he acquires, perhaps “rents” them, for a particular period only, as a licensing deal (the latter is, of course, preferable from the composer’s perspective since it keeps his/her future options open, but this is often not what publishers want.) The copyrights that are subject to the agreement also vary hugely. They can vary from a “single song assignment” to total transfer of everything the Writer will write (and perhaps has written.) Generally speaking, in the full publishing agreement, the Publisher will want exclusive control over all the Writer’s output.

Click HERE for part 3...



Nick M


by Nick Matzukis
Advocate of the High Court
Lecturer in Music Law and Business
Academy of Sound Engineering

PART 1 of 3
Music Publishers are executives or organizations that acquire assignment of the copyright in your compositions (as opposed to the copyright in your recordings – a different copyright) and exploit them on your behalf. In other words, they represent composers and ‘exploit’ (license, sell, etc) their compositions. They do so for a percentage of the proceeds that can vary from 25% up to 60% (in some cases), and should therefore be very well-connected in the industry in order to be successful and useful to the composer.

Composers sometimes sign full publishing agreements, or sometimes variants thereof, like “Administration Agreements”, which deal with the administration/royalty collection side of the business only, and leave out other responsibilities. Let us deal with the full publishing agreement in this article. This agreement is sometimes also called the “Exclusive Songwriter Agreement”.

The most immediate income in the music industry does not in fact come from recording - it comes from publishing.

Put another way, the mechanical and performance royalties that attach to the copyright in the composition, if you are the songwriter, are far more likely to earn you money early on than the artist royalties that you will receive from the record company (as well as the needletime) if you are a recording artist as well. (For example, the composer will be paid mechanical royalties from the time that CD’s containing his/her compositions are manufactured, while the recording artist will only receive sales royalties once sales take place [if at all, because of possible record label recoupments.])

It is not possible to understand music publishing agreements without understanding how copyright works. This is a long and detailed topic which cannot be covered here, and I suggest you do a course that analyses and explains the different copyrights. However, I will attempt to give you a broad introduction to the implications of publishing agreements in this article.

The first and most important point to understand is that, when a piece of music is written and recorded, not one, but two  copyrights come into existence. The first is the Copyright in the Composition (ie the origination and creation of the music) and the second is the Copyright in the Recording, an entirely separate and distinct copyright. These two copyrights can, and often are, owned by different parties. However, if they have not been contractually assigned to someone else (usually a publisher for the Composition and a record label for the recording), it may well be the artist who owns both. There are companies that seek to acquire assignment of both copyrights from you (especially the major record labels, all of whom have recording and publishing companies), and there are independent firms that are also now seeking to acquire 360 deals (the topic of another article), which would include both these copyrights (as well as touring and merchandising). But nevertheless, the fact remains that these are two separate copyrights that must be considered separately. They therefore give rise to separate earning streams (mechanical and performance royalties and synchronization of the composition in the case of the first, and sales royalties, needle-time and synchronization of the recording in the case of the second.) In the purest sense, the publisher is only interested in, and involved in, the first. Let us presume, for the purposes of this article, that we are dealing with a ‘pure’ publisher, and therefore that it is only the Copyright in the Composition that is being discussed here.

More in PART 2 of this article.

What is a music publisher?

publisherby Russel Hlongwane & Marlyn Ntsele

Somewhere within the music industry value chain is the role of a publisher. The publisher is probably one of the most integral of all the links that form this chain. You can refer to the publisher as the “Silent Engine” of the industry. The publishing company usually plays a HUGE role in creating a hit song. There is a lot of confusion around publishing, this article seeks to bring clarity to this confusion.



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