Music Publishing 101
The Business of Music
With music, every song has two sides to it: the master and composition (publishing).
Typically, Record Labels own the master while the songwriter(s) and/or their Music Publishing Company owns the publishing.
The Master and Publishing each generate their own royalties.
A song can also generate an upfront licensing fee.
This usually requires the approval of the owner of the master recording as well as the publisher of the song. This post deals with just the publishing.
Music Publishing is further divided into two halves.
The picture represents the total music publishing pie in a song.
One half: Publisher’s Share, another half: Writer’s Share.
The Writer’s Share always belongs to the songwriter(s) and never be assigned/sold.
If a songwriter does not have a contract with a Music Publishing Company, the songwriter(s) retains 100% of the Publisher’s Share.
The Publisher’s Share can be assigned/sold The Publisher’s Share CONTROLS the copyright to the composition (lyrics + music) of the song.
Music Publishing Deals
Songwriters assign a Music Publishing company to collect the Publisher’s Share on their behalf in return for a percentage of the royalties and/or corresponding ownership of the copyright.
3 Common Publishing deals are Administration, Co-publishing, and Full Publishing/Buy-Out.
Administration Deal
In an Administration Deal, songwriters(s) retain 100% copyright of their songs but authorize the Music Publishing Company to act on its behalf in collecting the Publisher's Share in return for 15 to 20% of the royalties.
Co-Publishing Deal
In a Co-publishing deal, the songwriter and the Music Publishing company co-own the copyrights (Publisher’s Share) of the song 50-50%.
Songwriters pick these deals due to the cash advances provided and song-pitching services rendered by the Music Publishing company.
Full Publishing/Buy-Out deal
In a Full Publishing/Buy-Out deal, the Music Publishing company retains 100% of the copyright (Publisher’s Share) in the song with sole administration rights.
Songwriters sign these deals because of the very large up-front payments or if they have been tricked.
Song Publishing Revenue Breakdown
The two revenue streams for music publishing are Performance Royalties (concerts, bars/restaurants, radio, tv, film) and Mechanical Royalties (tiny % on-demand streams, music sales).
The Writer’s share and the Publisher’s share are paid according to the picture.
Michael Jackson and The Beatles Beef
Now that you understand how music publishing works, let’s take a look at what went right for Michael Jackson and what went wrong for The Beatles.
Northern Songs
In 1963, John Lennon and Paul McCartney started their own Music Publishing company called Northern Songs at the urging of their manager Brian Epstein and music publisher Dick James.
Northern Songs would act as the sole owner of the Beatles catalog (Publisher's Share).
Bad Initial Publishing Deal
Lennon-McCartney did not understand how Much Publishing worked.
Here’s what Paul McCartney said of the deal, “We had complete faith in Brian Epstein when he was running us. To us, he was the expert”.
McCartney was only 21 and Lennon was 23 at this time.
Northern Songs Pre-IPO Equity
The equity of Northern Songs (Publisher’s Share of Music Publishing) was broken down as follows.
Northern Songs Post-IPO Equity
In 1965, in an effort to reduce their tax burden, Northern Songs was floated on the London Stock Exchange.
The equity was broken down as indicated in the picture.
This time, Ringo Starr and George Harrison were each given 0.8% each of the newly public company.
George Harrison & Ringo Starr Were Cheated
As you might have suspected, George Harrison wasn’t a fan of this deal and felt he had been cheated of the copyright of his songs.
As you might have suspected, George Harrison wasn’t a fan of this deal. Here’s what he said, “It was at the point that I realized Dick James had conned me out of the copyrights for my own songs by offering to become my publisher.
As an 18- or 19-year-old kid, I thought, ‘Great, somebody’s gonna publish my songs!’ But he never said, ‘And incidentally, when you sign this document here, you’re assigning me the ownership of the songs,’ which is what it is. It was just blatant theft. By the time I realized what had happened, when they were going public and making all this money out of this catalog, I wrote ‘Only A Northern Song’ as what we call a ‘piss-take,’ just to have a joke about it.”
Brian Epstein Passes Away
In 1967, Beatles manager Brian Epstein died of an accidental drug overdose.
Lennon-McCartney hoped to renegotiate a fairer deal but this caused tension between them and Northern Songs majority equity owner Dick James.
Associated Television (ATV)
In 1969, Dick James and his partners secretly sold their entire stake in Northern Songs to Lew Grade’s Associated Television (ATV) without informing Lennon-McCartney, owned by Associated Communications Corporation (ACC).
ATV also owned the copyright to 4,000 other songs.
Northern Songs Equity - April 1969
Upon hearing of the sale, Lennon-McCartney set out to regain control of the Northern Songs.
They also needed to convince a consortium of investors to sell them their shares and buy back NEMS Enterprises, their ex-manager's company which contained shares in Northern Songs.
Investors Siding with ATV
During one of the board meetings with the consortium of investors, Lennon remarked, “I'm sick to death of being fucked about by men in suits sitting on their fat arses in the City!” It’s safe to say this did not please the investors.
Northern Songs Equity - September 1969
Lew Grade from ATV approached Peter Donald, a major shareholder in the consortium with an offer of 40 shillings (£2) per share for the consortium’s 15% holding, which was accepted.
This resulted in Lew Grade’s ATV effectively owning 54% of Northern Songs.
Northern Songs Equity - December 1969
To regain control over Northern Songs and go up against Lew Grade no longer made sense. Lennon-McCartney sold their remaining stock in 1969 to ATV effectively relinquishing any ownership in Northern Songs (their Publisher’s Share).
The Beatles Catalog - 1970
In 1970, the ownership structure of the Beatles Catalog looked like this:
ATV to be sold
ACC, the parent company of ATV started suffering losses in the late 1970s and with a dropping share price, was looking to offload a few assets.
In 1981, Paul McCartney inquired about purchasing Northern Songs but Lew Grade was more interested in selling the ATV as a whole
Robert Holmes à Court buys out ATV
Around the same time, Australian businessman Robert Holmes à Court was acquiring shares in ACC and in 1982 successfully acquired the entire company.
With that sale, Northern Songs switched owners once again.
ATV Catalog up for Sale Again
In 1984, Robert Holmes à Court decided to put the entire ATV catalog up for sale. Contrary to popular belief, Paul McCartney was given the right of first refusal.
He thought the idea of him owning it himself was odd and tried to convince Yoko to join him. Here’s what he said
McCartney Couldn't Justify Paying a High Price
Michael Jackson’s lawyer at the time, John Branca reached out to McCartney and Ono with each stating that they wouldn't be bidding. Here’s why Paul McCartney couldn't justify paying anymore.
How did Michael Jackson get into Music Publishing?
So who gave Michael Jackson the idea of purchasing music publishing? It was Paul McCartney himself during the songwriting sessions together.
They had the Number 1 hit “Say, Say, Say” together
Michael Jackson Buys ATV
On August 10, 1985, after a very tough set of negotiations, Michael Jackson’s offer of $47.5 million to acquire the entire ATV catalog containing 4000 songs including the entire Beatles Catalog was accepted.
What Yoko Had to Say
Yoko Ono had this to say about the acquisition, “Businessmen who aren't artists themselves wouldn't have the consideration Michael has. He loves the songs. He's very caring”The Beatles Songs in Commercials
The Beatles songs were now being used in commercials, something Lennon-McCartney avoided at all costs. McCartney felt this destroyed the magic of his songs and devalued it in the long run. To Michael, it was just business.
McCartney Asking Michael Jackson for a Raise
McCartney tried writing letters to Michael Jackson asking for a raise. Michael Jackson always turned it down.
Privately, he said, “If he didn't want to invest $47.5 million in his own songs, then he shouldn't come crying to me now.”
The Beatles Catalog - 1995
10 years after the acquisition, in 1995, owing to large debts, Michael Jackson merged the ATV catalog with Sony’s music publishing, establishing the Sony/ATV joint venture in which Michael Jackson owned a 50% stake and received $110 million.
Michael Jackson’s Second Deal with Song Publishing
In 2006, amounting to his legal and financial troubles, Sony negotiated a deal on Jackson’s behalf to reduce loan payments on his debts, allowing him to borrow around $200 million and as part of the negotiations, retained an option to purchase 50% of Jackson’s stake.
The Beatles Catalog - 2016
In 2016, Sony officially agreed to buy out Michael Jackson Estate’s 50% stake in the Sony/ATV Joint Venture for $750 million making Sony Music Publishing the sole copyright owner of 4 million songs including the Beatles Catalog.
US Copyright Act of 1976
Under the US Copyright Act of 1976, which allowed songwriters to retain the publishers’ share of their copyrighted works released before 1978, McCartney and Sony agreed to a confidential settlement in June 2017
If the songwriter were to die within the first 28-year period, the writer’s heirs would be eligible to recapture that publishing share at the end of that first period, which in John Lennon’s case would have been 1990. A deal was also worked out with the estate of John Lennon.
Independent Artists & Producers
Independent artists should sign up with a PRO (ASCAP, BMI, SOCAN) to collect their writer’s share, Songtrust to collect their publisher's share in an admin deal, SoundExchange for their Digital Performance Royalties, and a distributor like Distrokid, TuneCore, CD Baby, etc. for master royalties!