Contract Definitions

It can be a costly mistake to assume that the words you are reading in your songwriting contract have their normal and customary meanings. Almost any term can be defined in some special way that gives it a meaning you might not normally expect. By agreeing to the contract, you are binding yourself to the special definitions contained within it.   Some contracts will have a separate section listing all the special definitions that will apply.  Others will define special words throughout the contract, as those words come up.  Specially defined words are sometimes (though not always) capitalized, which gives you a clue to look for how that word is being specially defined in the contract.

You would think that the word “composer” in your songwriting contract means you, the songwriter.  Not necessarily.  “Composer” is often defined to include all your co-writers, even though they may not be a party to the contract.  If you have collaborated with another writer on a song and deliver that song to your publisher, the publisher may argue that your co-writer should be satisfied with whatever special royalty calculations you agreed to in your contract.  If that’s not the case, you may find yourself making up the difference between what you thought was a reasonable royalty for you and what your co-writer now insists on.

“Delivery” doesn’t just mean handing over a song to the publisher.  It is often defined as the publisher’s acceptance of your song(s).  It may also be defined to include your delivery of everything from lyric sheets to licenses and releases from co-writers and the studio musicians appearing on your demo.  You may think you are delivering songs as required only to find out that you are responsible for all sorts of supporting paperwork as well.

Speaking of co-writers, be sure that fractional compositions, (songs you only wrote part of) count towards your delivery requirements.  If you can only deliver half the copyright on a song because you only wrote half of it, you should still get credit for having delivered half a song.  Otherwise you may wind up getting no credit at all for songs you co-write with others.

The definitions for “gross receipts” and “net income” are critical in computing the money to be paid to you, and are often the most hotly negotiated. “Gross receipts” normally refers to the total money actually received by the publisher on your songs, as opposed to the total earnings or credits the publisher may be entitled to on paper.  “Net income” describes what deductions will be taken from gross receipts before your royalty percentage is applied.  The more deductions from gross, the less money you will receive out of the remaining net.

Representing the publisher, I want to define net income as gross receipts minus as many deductions as I can think of:  administration fees, demo costs, writer royalties, copyright office registration fees, collection costs, legal expenses, advertising, promotion, and all other expenses.  Representing the writer, I want to limit these deductions from gross, so there is still something left over for the writer to have a piece of.  Otherwise, your song may have to be covered by Garth Brooks before you see any money.  In a perfect world, a lot of the “deductions” shouldn’t be deducted at all.  They should be considered the publisher’s cost of doing business, not yours.  Your contribution is the song.  Even in our not so perfect world, you may be able to limit certain deductions, (such as your publisher’s legal fees in negotiating foreign deals),  to a set monetary amount.  Other deductions, such as the publisher’s office overhead, should be eliminated entirely.

Always pay close attention to how your contract defines its terms.   By agreeing to the contract, you’ve agreed to its definitions, which are often at odds with plain English.