Music Publishing & Songwriting

Songwriters received some good news and sleeping publishers got an abrupt wake-up call, recently, when an English High Court judge issued a ruling on a case that’s been bouncing around for almost a decade. If you remember the hit song “Believe”, which was a career-rejuvenating song for Cher in 1998, then you’ll be back at the beginning of the Crosstown Music vs. Mark Taylor case, which has significant ramifications for songwriters and publishers around the world.

The dispute centers around an initial publishing deal made between the very successful songwriters, Paul Barry and Mark Taylor, and Rive Droite Music at the end of the 1990’s. Barry and Taylor had created a massive hit with “Believe”, which won a Grammy Award, and then followed it with several more chart-toppers, including “Hero” and “Love to See You Cry”. In the midst of their success, they assigned the rights to these hits, as well as the rest of their catalog to Rive Droite Music. Undoubtedly, their motivation in doing a publishing deal was no different than every other writer– the incentive of a significant advance against earnings, some help in collecting the income, and another group of people who could be out promoting the songs.

Unfortunately, like many writers, they found that the publisher was not willing or able to live up to the writers’ expectations or even the requirements of the contract. Eventually, disputes over under-accounting (there’s a new one) and non-payment of royalties (another oldie, but goodie) led the songwriters to believe that Rive Droite was fundamentally in breach of the contract. In fact, Mark Taylor’s lawyer Andrew Forbes, estimated that 3 million GBP was owed to Taylor alone.

Happily, the writers’ publishing contract provided for a “reversion”– a clause which provides for the return of the song catalog to the writers in the case that a publisher breaches the contract. This is a fairly standard provision, though not an ever-present one– the ability of Taylor and Barry to obtain it was probably at least partly due to their already established stature as top UK songwriters. Not all publishing deals provide for “reversions” (the return of the catalog to the writers) at all– others provide for “reversions” after a certain number of years– upon recouping of advances, or upon the failure of a publisher to live up to the contract terms. If you’re a songwriter looking at a publishing contract, it’s always important to know if or when the songs might revert to you, or what remedies are available to you should a publisher fall short of what’s legally required.

But of course, this being the music business in the 21st century, it’s not that easy. When Rive Droite failed to meet their contractual obligations, Barry and Taylor saw it as a chance to reclaim their copyrights. Other companies however, saw it as an acquisition opportunity. In 2006, Crosstown Music, a new publishing entity fueled (as many were and are) by investment fund backing, bought up the Rive Droite song catalog (85% of which was songs by Taylor and Barry) for 11 million GBP. Rive Droite (the company itself), having lost its primary source of income (the songs), went out of business in 2007.

Obviously, this complicated things for Barry and Taylor. In an effort to keep any monies owed from disappearing into the accounting ether, the songwriters served a “cure” notice to Rive Droite and copied Crosstown, requiring Crosstown to remedy the problems with Rive Droite (i.e. pay up NOW). Needless to say, Crosstown was less than enthusiastic about paying old royalties owed by Rive Droite– nor was it willing to concede that the breaches had occurred. This is the case that eventually found its way to Justice Mann in the High Court at the end of 2008.

Having reviewed the records, the judge found “a whole range” of breaches in the contract, and ruled that as the new owner, Crosstown was responsible to remedy them. By failing to do that, Crosstown had allowed the copyrights to automatically “revert” back to Barry and Taylor, as outlined in the original contract. Good news certainly for the songwriters, and probably a just verdict overall, but certainly bad news for Crosstown, which now finds it has purchased a catalog with no songs, and assumed huge liabilities for past payments.

There are a couple of good lessons here, for both parties:

1. If you’re a songwriter, make sure that you understand the reversions that are in your contract and under what conditions they apply. If you can get your songs back, there’s always a limited amount of damage that a bad publishing deal can do. If you can’t get your songs back, even when the publisher is in violation of the contract, then you are in a very vulnerable position indeed.

2. If you’re a songwriter, know what constitutes a “material breach” of your contract, and act quickly should one occur. Almost any contract requires the songwriter to notify the publisher of a “breach”, and then provides a window of time for the publisher to remedy the situation. However, the window of time varies greatly– it could range from almost immediately to 90 days, to even longer. You need to make sure that you know when you are supposed to receive accounting statements, how long you have in order to register an objection to something in the statement, how long the publisher has to respond, and what happens if the publisher does not respond.

There are always provisions that provide for this “breach and cure” process, but there are often other provisions that set limits on how far back a dispute or an audit can extend, and when failure to register a complaint constitutes acceptance of a royalty statement. I have seen many instances when a writer senses a problem, but allows too much time to pass before registering a complaint or a notice of “breach”, and consequently, is unable to retrieve money that should have been paid.

3. If you’re a publisher, you need to have systems in place to make SURE, that you don’t unknowingly fail to live up to a requirement of the contract– by late accounting, failure to pick up an option by the deadline, a bounced payment or a failure to properly register a song. This is doubly important if the writer’s contract provides for an automatic reversion of rights upon a breach. This could put you in the position of having to disprove the breach, then having to take on the challenge of legally retrieving the copyrights.

Book-keeping or paperwork mistakes that seem small to a publisher may nevertheless open a window of opportunity for a savvy writer to take back his or her copyrights, and leave the publisher with a big, unrecouped advance, along with the prospect of a lengthy legal battle. Presumably, you, the publisher, wrote the contract. You need to live up to every detail of the fine print.

A corollary here: don’t write contracts that are too complex for you to realistically carry out. Sometimes in the course of contract negotiations, it’s easy to agree to all kinds of complex requirements in the hopes of pleasing everyone and finishing the deal. But you have to think about whether or not your administration and accounting departments will be able to understand, and live up to the things you’re putting into print.

4. If you’re a publisher and you’re in the position of acquiring an already existing song catalog from another publisher, you’d better know what legal problems you may be inheriting. The reason that Crosstown bought the Rive Droit song catalog, and not the actual company Rive Droite (remember that the company went bankrupt after the sale) was in part to avoid assuming legal liabilities of the company (which could be anything from unpaid employee salaries to telephone bills). Nevertheless, because the Rive Droite contract provided for automatic reversion upon breach, Crosstown still wound up being caught in the cross-fire, so to speak. Obviously, it’s cheaper and smarter to buy something when it’s broken, so long as you think you can fix it. But you better be sure that you know exactly how broken it is, and what it will take to put things right.

Most importantly, this should be a reminder that words matter. Knowledge is power. What is put in that contractual agreement is not a vague understanding or a suggestion, but a requirement. Any requirement carries with it some kind of penalty if the requirement is not met. Publishers that dismiss mistakes as “paperwork” errors get no sympathy from me. Paperwork is all that publishing is. It’s like a bank excusing an accounting error. Here’s the Music Business Weasel’s Guide to Contract Review. Try this every time you look at a contract:

1. Look at how much is being paid, and who is paying it.
2. Look at when the payments are due, and what conditions must be met before payments are made.
3. Look at what happens if whoever is supposed to pay doesn’t do it.

Don’t believe in people. Don’t believe what you’re promised. Believe in what’s written down. Then get a reversion clause.