Never Can Say Goodbye

Mar 09 2011

A night in the life of a Music Business Weasel:

After many broken promises and lame excuses, I finally make it to the showcase performance of a friend of mine. Miraculously, I arrive early, and the band is just starting to set up. Not wanting to do the usual “stand by the bar with arms folded” A&R routine, I try to be supportive by taking a seat up front– at the far end of the stage, right in the front row. I’m a little surprised by the fact that I don’t see any familiar faces in the audience. After all, the artist and I have been friends for a decade or more. We usually have quite a few acquaintances in common. But it seems she’s attracting a new audience these days. Also seems that she has an entirely new band, with all new instrumentation. No wonder she was so eager for me to catch the show.

A few minutes before the show, the club has filled up– still no sign of anyone I recognize. It’s only when the band finally takes the stage that I realize:

This is not my friend.

I check my blackberry… and realize I’ve shown up in the right place, but on the wrong night. My friend is not playing tonight. She’s playing next week. This is problem #1.

But it’s really problem #2 that is the most serious and urgent matter. I’m stuck. By sitting in front of the stage, on the side furthest from the door, I have absolutely no way out of this club. My only choice is to stand up in the middle of the set, in front of the whole audience, and walk out, tripping over people all the way across the room. This is an option I do indeed contemplate, as the band is bad. Very bad.

Nevertheless, I persevere Only an hour later am I freed from this hell to make my escape. Having wasted an evening, I return home and spend the next few hours contemplating immediate retirement.

Here’s the point: in the music business, you always need an escape route. Finding your way into situations is a great thing– but sometimes it’s just as essential to find a way out of them.

When negotiating publishing deals, it always surprises me how much time songwriters and attorneys will put into bartering over things like bonus payments (which almost inevitably never actually come into play) and how little attention they pay to what happens at the end of the deal, when the company either runs out of option periods, or elects not to pick up the contract for another year. This is a crucial period, and a smooth exit strategy is essential in order for a songwriter to be able to retake control of his or her catalog, or to move on to a new deal with another company. If you’ve reached the end of the line with your current publisher, or if you’re in the midst of entering into a new relationship, here are four things to ask:

1. How long can we go on like this?

In the world of publishing contracts, one “contract period” does not necessarily equal a year. A publishing deal with two option periods does not necessarily end at the end of the second option period. In this land of legalese, things are not always what they seem.

Some contracts are actually built on periods that will last a calendar year. But most agreements today are built on a “contract period” that will last a minimum of one year, but could stretch into multiple years depending on whether or not a certain number of songs have been delivered, a certain number of exploitations have been obtained, or a certain level of recoupment has been reached (that is, the earning back of whatever was paid as an advance to the writer).

I have seen instances where songwriters have spent five or six years in the first “contract period” of their deal, trying to hit a Minimum Delivery Requirement or Minimum Release Requirement that was completely beyond their reach. This can literally be a career-ending situation, as writers are forced to live year after year off that first period advance, with no hope of receiving another payment until they obtain a certain amount of placements.

2. Whaddya want from me?

So let’s talk about that Minimum Delivery and Minimum Release requirement. These two clauses are at the heart of most “break-up” problems between writer & publisher. A Minimum Delivery Requirement is usually not a big threat– it’s a fairly standard clause that requires a songwriter to hand in certain amount of new songs (usually 8-12) per “contract period”. But be sure to do the math! If you co-write a song with one other songwriter, and split the ownership down the middle, then you control only 50% of a song, and only that number is credited toward your Minimum Commitment. So if you always write with two other writers, and split things evenly, you will have to write 30 songs in order to hit a 10 song delivery requirement. It gets worse…

The Minimum Release Requirement is by far the more dangerous of these two clauses. While the Delivery Requirement only applies to turning in “acceptable” songs to the publisher, the Release Requirement is based on having a certain number of songs (anywhere from 3 to 7, or even 10) on “commercially released albums”. This is often made even more onerous by restrictions that stipulate that a “commercial release” must be on a major label, must be released in the US, and can not include soundtrack albums or compilations. I’ve even seen requirements that say that no more than two songs on any one album can count toward the Minimum Release Requirement.

The problem here is that songwriters generally have almost no control over release schedules or circumstances. Songs get dropped off of albums at the last minute; album releases are delayed; albums are released in Europe months before they’re released in America; songs are held off of one album and saved for a subsequent release. Personally, I hate the Minimum Release Requirement. It’s simply too dangerous for writers, precisely because it leaves them with almost no escape hatch. Nevertheless, such clauses are very common, especially on deals with relatively large up-front advances. Despite what an attorney (who is often basing his or her fee on the size of the advance) might tell you, if you can take less money upfront in exchange for no Minimum Release Requirement– do it.

3. When do I get my life back?

Reversions differ widely from contract to contract, with a “life of copyright” deal (once the standard in music publishing, but far less common now) being at the far end of one side of the spectrum, and the Kobalt-style “administration” model, with all of the writer’s catalog reverting at the writer’s request within a matter of months being at the other side. A more standard agreement might provide for the publisher to retain for 15-20 years any songs “exploited” during the term of the contract, while “unexploited” songs will revert back immediately upon termination, or within three years, provided all advances have been recouped.

It’s very important that writers are aware of the reversion terms in their contracts, as there is often a window of time in which the writer must reclaim the song, or else allow the publisher to keep it for life of copyright, or at least the 15-20 year period. To miss such an opportunity to reclaim a song, especially one earning money, can be a very expensive mistake.

When a publishing contract has run it’s course, it’s imperative for songwriters or their attorney to furnish to the publisher a Schedule clarifying all of the songs submitted in order to meet the terms of the agreement, listing any exploitations of the songs, and identifying the dates upon which the various songs will be reverting back to the writers. Which leads me to the final point…

4. Take a letter, Maria….

Reversions are only helpful to the extent that you can get written notice from the publisher that the songs have reverted back to you, and that the publisher will relinquish their rights in registrations at ASCAP, HFA, or BMI. This is the key concern that actually triggered this blog.

Particularly in these days, when small publishers are disappearing faster than Arab dictators, when mid-level and even large companies are being swallowed whole by new hedge-fund back acquisition firms, and many of the biggest players appear to be in the game only long enough to acquire some assets and immediately sell them to someone else, songwriters need some protection.

I recommend a clause in the contract requiring that upon the completion of the final contract period, the Publisher will provide Writer with a letter and a schedule of all songs handed in during the term of the agreement. The letter should state the date upon which the agreement ended, acknowledge the dates upon which the various songs on the schedule will revert back to the writer, and relinquish any claim to the songs that revert immediately. Publisher should also be required, within a designated window of time, to provide all necessary Quit Claims or other documents in order to facilitate changes in registrations, and to cause the Publisher’s foreign affiliates to do the same.

Imagine you are a songwriter signed to a publisher which is swallowed up in a giant corporate merger, or goes out of business entirely. Two months later, your contract period is up, and no one calls to exercise the option for the next period. Technically-speaking, you are out of your deal. You can pursue new opportunities and perhaps reclaim at least some of the songs from your catalog.

But how can you do that if no one at your former publisher will pick up the phone at the office? Or if there is no one at the office who knows anything about you or your deal? No one at ASCAP or BMI can change a registration without a letter from the company currently claiming control of the rights. You can’t make a new publishing deal, because most publishers will also want notification from a former publisher that your previous contract truly is over, and that there will not be any claims that one of the new songs was written during the previous term. You need to be sure that the failure by Publisher to provide a letter or notice of the completion of the deal is considered a “breach” of contract.

No one likes to talk about endings at the beginning. But in days where many people who are with you at the start of the game will have been ousted, purchased, fired or arrested before you reach the finale, you have to know what happens when the music stops. Relationships ain’t what they used to be– even in music publishing.

When I worked at Sony ATV several years ago, the Sr. Vice-President of the Nashville office, Woody Bomar, was legendary for his ability to skip out of cocktail parties undetected. He would show up, make his rounds, greet everyone warmly and make sure that everyone who needed to see him was aware that he was in the house. Then like a flash, he would duck into a back room, a stairwell, a kitchen or a hallway and suddenly he was gone. When latecomers inquired about him, everyone would say “Oh yea– Woody’s definitely here. I just saw him. I think he’s over in the corner there…” By that time, Woody was already on to the next event. He knew every back door or fire exit in Nashville. That’s a pro for you.

Don’t go in, until you know how you’re getting out. Every deal deserves a happy ending.

    Thanks so much for the positive feedback! These “parting” issues are a real problem right now– I’m seeing it more and more. People are finding that their publisher is just gone, and there’s no way to cleanly dissolve the relationship or reclaim the songs. Very frustrating.

    Hope all is good with you. Thanks for your continued support of the blog!

    Damon:

    Thanks for reaching out. So glad the blog was helpful. It’s amazing what the record labels have been sneaking into contracts for years. Was quite interesting to see the recent Eminem lawsuit that could, quite literally, be disastrous for the record labels. It seems karma has finally come around and the label’s legal eagles let a very big one slip through the cracks. Not good news for the “industry”, but definitely good for artists. It’s about time…

    Best,
    Eric

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