One of the ways for an artist-writer, producer-writer, successful songwriter, or smaller record company to grow their publishing assets, through financing or co-financing from a third party, is to align with a major music publisher under what is known as a co-venture or joint venture publishing arrangement.
The value to the major publisher of such an agreement is that it gets the benefit of the creative expertise of the artist-writer, producer-writer, songwriter or record company in that it will be able to be involved with the songwriters and songwriter performers discovered by its partner. In effect, the major publisher is hiring an additional A&R source which will complement its own creative staff and, hopefully, be introduced to opportunities that it would ordinarily not have. The value to the artist-writer, producer-writer, songwriter or record company of the arrangement is that they will have a source offinancing and administrative support to take their creative dream and business plan to a level that they may not necessarily be able to do by themselves.
Under this type of agreement, the major publisher usually guarantees that it will provide a certain level of financing on an annual basis which will be used by the writer-artist or writer-producer to sign other songwriters. The copyrights to the compositions will be co-owned by the co-venture parties but the major music publisher will usually administer the compositions throughout the world. The major publisher will also many times be responsible for the payment of the advances required to sign the songwriters selected by the writer-artist or writer-producer.
Term- The term of the agreement can be for a set number of years (for example, a term 3 year or 5 year term) or a 1 year period with a number of option years (for example, 1 year plus two 1-year options to extend the agreement exercisable on the part of the major publisher).
Co-Publishing- The major publisher and the writer-artist or writer-producer will co-own all compositions written by writers signed with the copyright ownership and income split usually being in equal shares. For example, if a songwriter is signed to an exclusive songwriter agreement, those compositions would be co-owned 50/50 by the major publisher and the writer-artist/writer-producer/co-venture party.
Administration- During the term of the co-venture agreement, the major music publisher will be the party who performs all the administrative functions related to the songwriters signed to the co-venture. For example, the major publisher will collect all royalties earned by the compositions, issue all the licenses, audit users, litigate infringements and prepare all accounting statements being sent to the songwriters.
There are a number of variations which can occur once the term of the co-venture agreement has expired. One variation is for both co-venture parties to begin to administer their respective share of each composition so that both parties will begin to issue licenses and collect monies for the share that it owns. This co-administration variation many times occurs only when all advances given to the songwriters signed to the co-venture have been recouped.
Advances- Under many of these agreements, the major publisher is the party which pays all the advances due to the writers who are signed. For example, if a songwriter agreement signed by the co-venture provides for $75,000 in advances for the initial period, the major publisher would fund the entire advance. Under some agreements, the major publisher and the co-venture partner will co-finance the advances required by the deals that are signed. For example, if the writer agreement provides for $100,000 in advances to be paid to the songwriter during the initial contract period, the major publisher and the co-venture partner may each contribute 50% each.
Sharing of Income- In many cases, the net income of
the co-venture is split equally between the major publisher
and the co-venture party regardless of which party funded
the deal. At other times, the net income is shared proportionate
to the amount of money each party has contributed to the advances
paid to the songwriters signed by the co-venture. For example,
if the major publisher paid 75% of all advances to songwriters
and the co-venture partner paid 25%, the net income of the
co-venture might be split 75% to the major publisher and 25%
to the co-venture partner. In these cases, the rewards follow