If a publisher has established their business in the United States, their copyright protection and licensing power will be limited to musical products released in the USA [and maybe Canada]. If they want to be paid royalties for a product being sold in another country, they might or might not need a “sub-publisher.” A sub-publisher is basically a foreign business partner that takes a small percentage of the royalties gained in that territory in return for monitoring copyrights, exploiting usage for licensing, and collecting royalties for the domestic publisher. Although the sub-publisher doe’s not own any of the copyrights; the privileges of the original publisher are passed to the foreign co-publisher for administration and exploitation in that territory.
This could be extremely important for a few reasons: (1) Copyright Laws are different in other countries, (2) If a domestic publisher’s writer is extremely popular in another country, it might be worth it to have a satellite partner to encourage the songs use (3) If the country is far away, it may cost more to enforce your rights in a foreign court than to just forget about it. A good publisher can’t forget about it, and must be able to make money while foreign territories are still listening. Before negotiating in different languages, a publisher needs to know a little about international copyrights:
“There is no such thing as an “international copyright” that will automatically protect an author’s writings throughout the world. Protection against unauthorized use in a particular country depends on the national laws of that country. However, most countries offer protection to foreign works under certain conditions that have been greatly simplified by international
copyright treaties and conventions. There are two principal international copyright conventions, the Berne Convention for the Protection of Literary and Artistic Works (Berne Convention) and the Universal Copyright Convention (UCC).”[1]
This means that, a writer that publishes a song in country that is a member of Berne or UCC (the only two conventions mentioned on the U.S. Copyright Office website), their work will be recognized and protected (to an extent) in other member countries as well. The U.S. was the founding member of the UCC and joined the Berne convention in 1989, so any American writer is protected within the boundaries of the conventions memberships. If the publisher wishes to gain copyright protection in a territory that has no convention membership or copyright protection in general, the publisher may have to consult an attorney specializing in international law.
When it comes to collecting money, a U.S. publisher would normally go to a performing rights organization like ASCAP or BMI to monitor national usage. Most foreign territories have their own PRO’s and unlike the USA, they are usually run by their government. Examples of these foreign PRO’s are SGAE (Spain), SAIE (Italy), SADAIC (Agentina), SACEM (France), ACUM (Israel), AEPI (Greece), MCPS (UK and associated), GEMA (Bulgaria, Germany, Poland, Romania, Turkey) and many more. The good news for a U.S. publisher that has signed with ASCAP or BMI is that U.S. PRO’s usually have deals made with these foreign societies already, and certain foreign PRO’s will have registered with ASCAP or BMI for collection purposes. This means that a U.S. publisher can use ASCAP or BMI’s resources to receive foreign royalties!
The Harry Fox Agency is also international. It can collect from foreign societies for mechanical licenses: “HFA only issues mechanical licenses to record companies in the United States. However, HFA does maintain reciprocal representation agreements with affiliated foreign collecting societies and the territories they represent. This provides collection and monitoring services to HFA-represented publishers in these territories.”[2] Therefore, a domestic publisher can use Harry Fox to issue mechanical licenses to foreign territories (there are many) as well- if they want to pay the fees.
So if a publisher is within the United States: its copyright is protected by the Berne and UCC convention, can gain global performance royalties from ASCAP and BMI, and can issue international licenses via the Harry Fox Agency – WITHOUT A SUB-PUBLISHER.Then what’s the point of a sub-publisher? The truth is that a small publisher without any hit song might not, but a big publishers with giant hits and catalogs almost always need that presence in faraway lands. What HFA and ASCAP and BMI cannot do is exploit the copyrights. A domestic publisher can hire those companies all day to issue licenses or monitor foreign broadcasters, but if nobody in those territories are using the music or playing the music to be broadcasted, there are no foreign royalties.
A typical sub-publishing deal is more than just collecting the money and administration; it is a partner overseas that a domestic publisher can trust to bring attention and business to the catalog.
According to Making music make money by Eric Beall: “A good sub-publishing deal should lead to:
- Covers of your songs in the local market
- Placements of your songs in local television and radio programs
- Promotion of your releases in the international territories
- Tips on local projects seeking material
- Publicity and marketing for your company and catalog”[3]
Many sub-publishers even find local writers in their territory to co-write songs with the U.S. to create more business; good sub-publishers can be the reason for a No.1 hit song in some country!
The other reason a U.S. publisher might need a sub-publisher is timing. Like ASCAP and BMI, foreign performing rights societies pay the writer and the publisher separately. Once the performance royalties are collected by a foriegn PRO, and then through ASCAP or BMI, it will probably take much longer for the publisher to receive the money than the writer. So on the publisher side, it’s definitely worth the small percent for the Sub-publisher to get the big check a little earlier. Like ASCAP and BMI, foreign PRO’s must have the songs registered before they can pay anyone what they have collected. When a U.S. publisher has not registered their songs with these foreign PRO’s they will still collect for those songs even if they are unclaimed. This unclaimed money is called the “Black Box” by the music industry and usually can only be collected from by the big time auditors. Forein PRO’s will do everything they can to keep the money (they can collect interest of the unclaimed shares) so a good sub-publisher might help collect that money before it is gone forever.
What does a sub-publisher charge? In All You Need To Know About The Music Business, Donald Passman explains: “The range of deals for subpublishing allows the subpublisher to retain anywhere from 10% to 50% of the monies earned, with the vast majority of deals being from 15% to 25%. The contracts are actually written the opposite way, stating that the subpublisher collects all monies and remits 75% to 85% of it to the U.S. publisher.”[4]The industry way of telling the split is “75/25” that refers to the domestic publisher giving up 25% to the sub-publisher.
This also depends on the type of use. “For printed music, if the subpublisher actually manufactures and sells the stuff, it pays the U.S. publisher from 10% to 15% of the marked retail selling price, the norm being 10% to 121/2%”[5]
For cover records recorded in the foreign territory, or any deal where the sub-publisher was a star player in getting that deal (maybe their local writer contributed or translated the lyrics) the sub-publisher can try to charge more for such releases (as they should). Also, the sub-publisher usually charges more for performance uses (usually 50/50 with the domestic publisher) as they would get less on those uses from Performing Rights Societies collections filtered through ASCAP and BMI. This type of deal can only happen when the sub-publisher has a good deal of bargaining power and might never get it when negotiating with large U.S. publishers like Warner Bros. Music Corp. or Universal Music Publishing Group.
Many American publishing firms make deals with one sub-publisher who can collect from many other territories as well; it causes notice to be brought to another contractual point that a good publisher must use is called an “At Source” deal. This deal requires that all royalties should be computed wherever the foreign money is collected; as opposed to in another territory in which another middle-man might receive money that’s owed to the U.S. publisher(“Receipts-Basis” deal.) “In a receipts deal, the writer would only get royalties based on monies received by the original publisher.”[6] The problem is that if a U.S. publisher collects 75/25 from say, a European sub-publisher to collect from all Europe. So the European collector collects from its sub-publishers who take their share, then the European publisher takes their share and then the money comes to the U.S.! That would be 75% of 75% =37.5% !! So a good publisher would include an “At Source” clause to its contract to actually get the 75%.
Another trick for a U.S. publisher with a few big hits is to ask for an advance from a sub-publisher: “If you have one or two songs in your catalog that have generated some heat in the U.S., it is perfectly reasonable to expect an advance from a sub-publisher. The amount will depend on just how big your hits were, the viability of your genre in the foreign territory, and the size of split the sub-publisher will receive.”[7] The advances can help out a great deal during tough times, and a U.S. publisher with a good history should not sign any contracts without something upfront. If there are no advances, the deal is known as a “collection deal” and can sometimes lower the sub-publishers percentage of income to around 10% to 15%.
International relations are becoming more and more common with the globalization of internet sales and giant conglomerate record labels, so every publisher should be aware of the dynamics of international collections and sub-publishing to achieve success. A good international copyright attorney can find the best sub-publisher or save millions in an overseas dispute, but the more a publisher knows off the bat, the more money is left for the music.
[3] Beall, Eric. Making music make money : An Insider's Guide to Becoming Your Own Music Publisher Berklee Press 2003
[4] Passman, Donald. All You Need to Know about the Music Business. Simon and Schuster, 2006
[5] Passman, Donald. All You Need to Know about the Music Business. Simon and Schuster, 2006
[6] Baskerville, David The Music Business Handbook and Career Guide. Thousand Oaks: 2006
[7] Beall, Eric. Making music make money : An Insider's Guide to Becoming Your Own Music Publisher Berklee Press 2003
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