The Oracle: Sub-publishing with a sting in the tail

A - When you sign a publishing deal you effectively assign all ownership rights in your songs to your publisher for them to exploit in return for an advance and a significant cut on all monies they make. A fairly standard arrangement is where the publisher pays 50% of all revenues collected to the writer but you can push for more.
A lot of publishers don’t have offices in every territory, so they make deals with local publishers to collect royalties on their behalf. The local publisher is called the sub-publisher. The sub-publisher will administer the rights to your material in the same way as your original publisher. Because you have assigned the copyright, you are unlikely to have any say in who is used as a sub-publisher or the terms agreed. You can try to include in any publishing deal that you have the final say on sub-publishing but it’s unlikely that your publisher will agree.
Sub-publishing arrangements can be on a collection-deal basis, or a sub-publishing basis. In a collection deal, the local publisher merely collects income, usually on the artist’s own records. Usually no more than 15% is paid – or, for major artists, 10% or less. Where a writer wants other artists to record the songs, a sub-publishing deal is more likely: the sub-publisher is then expected to get local artists to record the work. These are known as Territory Originated Recordings. Under this kind of deal the sub-publisher will get a bigger cut, usually 20%-25%.
Income from sub-publishing deals can be calculated on a “receipts” basis or on an “at source” basis. At source means that your royalty is calculated at your agreed percentage on all income generated in the sub-publishers territory. On the receipts basis, the sub-publisher will deduct commission and then pass what’s left to your publisher. Your publisher then calculates your percentage on this amount. Say a song by a writer on a 70% deal goes massive in Japan, where his publisher has an arrangement with a sub-publisher giving them 20% commission. Under an at source deal you would earn €70 for every €100 generated in Japan. Under a receipts deal, you get 70% of the €80 returned to your Irish publisher ie. €56. To avoid this loss, it’s crucial that your original deal should specify that sub-publishing must be paid on an at source basis.