Exclusive library contract: am I misreading?? (help!)

[audiorayne]

Hello from Singapore! Been a long few weeks getting settled, but things look pretty nice over here.

I have a question about an exclusive publishing contract (2 songs) with a library in the UK that my co-writers and I are very close to signing. However I have a point of confusion on what seems to be a major part of the agreement, and wondering if anyone out there can tell me if it's normal. I'm holding up the process right now and am afraid my co-writers aren't too happy that I'm bringing up these issues, so I truly hope that I'm misreading. If not, well, we'll see.

The 14-page contract is a 3-year deal (supposedly), and the standard library bits seem pretty typical - they take 100% of publishing, 50% of licensing, etc. Basically for the 3-year term they get the rights to the compositions & recordings, as you'd expect. However, the contract introduces the terms "Qualifying Composition" and "Qualifying Master" which they define as any composition/master for which we (the songwriters) "receive (or are deemed to have received) an amount during the term equal to or greater than $500 from licenses secured during the term."

The agreement states that the rights to any composition or master that is not a "Qualifying Composition or Master" will automatically revert to us after the three-year term. However, it also states that the library "shall retain all worldwide rights to each Qualifying Composition and Qualifying Master for the term of the copyright." They separately define "term of the copyright" to mean "the term of the copyright throughout the world and any extensions or renewals of those copyrights whether now in existence or as hereafter enacted."

This sounds to me like once a track makes $500, they get to keep the rights to the song basically in perpetuity. Anybody have any thoughts on whether (a) I'm misinterpreting the "term of the copyright" thing, and/or (b) this is standard exclusive contract fare? Does the $500 limit seem a little low for three years?

Thanks,
Logan

[matto]

Yes this is standard. The reversion only applies if they fail to make you money. If they do make you money, they get to keep the songs so they can make you more money.

Many companies don't specify a minimum amount that will render a composition "qualifying" (to use the language of this contract), so the fact that they specify that it has to be at least $500 is actually a bonus. It means that they have to get you at least one major placement during the 3 year term. It can't just be one little $10 blanket share or something like that.

You shouldn't think of the reversion clause as a "minimum payment guarantee". You should think of it as an insurance policy against non-placement.

HTH,

matto

[mazz]

Yeah, I would think that the last thing a library wants to do is give a song back if the song has potential, so this puts the ball in their court too. If they just sit on it and don't promote it, then you should have another shot at putting it somewhere else, so that minimum "qualifying" amount is an incentive to them to promote your music, it seems to me.

Thanks for posting the question Logan and thanks for the answer, matto!

[Casey H]

A minimum dollar amount qualifier on reversion is a very good thing.

Early on when I got publishing contract offers I would always make sure they had a reversion clause. After all, I always read you shouldn't sign a publishing contract with no reversion. Many reversion clauses simply say that if they don't land a commercial recording with in N years you get the song back. However, what is a placement? Someone with a basement record label cranking out a few CDs? (Being extreme here).

My first review with an entertainment attorney taught me a lot. One of the key change requests the attorney would always ask for is some qualifiers on the reversion clause. That can range from minimum earnings to words like "major label", "film/TV with national distribution", etc, etc (All paraphrase example ideas, not comphrensive or legal langauge).

So, it's good that this contract specifies the minimum earnings. Most exclusive contracts do involve the assignment of copyright for life should there be a qualified placement so what you have here is not out of the ordinary.

The key thing now is the track record of the company and your comfort level signing a song with them.

Best of luck and congrats!!
Casey

[audiorayne]

Wow, thanks Matto, Mazz, Casey. Talk about some high powered help! You guys really put my concerns to rest and it is much appreciated. I'm glad I asked, cause I definitely learned something here.

best,
Logan

[jdhogg]

Just wondering. In this situation and this may be a dumb question.

Does "qualifying" mean that you only get paid after the song makes $500? ie to save the admin of sending out cheques for $10?

[matto]

Does "qualifying" mean that you only get paid after the song makes $500? ie to save the admin of sending out cheques for $10?

Not unless this was specified elsewhere, nothing in the present excerpt seems to indicate it. $500 would be too much money for a company to sit on IMHO.

[Casey H]

If I understand it correctly, "qualifying" only is with respect to the reversion clause and has nothing to do with payments to the composer(s). It's just there to say they won't take lifetime ownership of the song unless they landed something significant.