A – These two contracts represent two very different sources of income for an artist and there is no guarantee that because you have been offered one that you will be offered the other.
A recording contract enables you to have your music professionally recorded, released and distributed. In reality, you sign away a percentage of your potential earnings from the sale of your CDs etc. to the record company. In return you get an advance up front to live on and the record company will pick up the tab for all the other expenses such as recording costs, video costs etc. So from a strictly commercial point of view it makes sense to have the recording contract as a priority as all the recording costs are paid for by the record company before you even sell a single album. The record company will recoup these costs from any royalties you earn. So in essence they are loaning you the money to make the album and this loan must be repaid from whatever the album earns. But most important of all, the record company will get your album into the shops, market it and try to get it aired on radio, which is beyond the means of most artists. Without this kind of backup, it will be only word of mouth that gets people to your gigs. This is no bad thing in itself but it definitely makes life more difficult.
With a publishing contract you are once again giving away a percentage of your earnings from the songs for an advance up front. In addition to the advance the publisher should also find people to use your songs (other artists, TV, film etc.) for a fee, give them licenses and collect the fees. They can also put you together with other writers for you to collaborate with. The advance given by a publisher is normally much smaller than that given by your record company. The only exception to this is if you already have a global audience for your music and therefore an existing market for the publisher to exploit. But probably the most important thing for an Irish resident artist to remember is that your publishing income is exempt from income tax once it qualifies for the Artists Exemption. This is a sizeable saving when you consider that the top rate of tax is now 42% and you will hit it once your annual income exceeds €34,000, assuming you’re a single person. So a publishing advance of €40,000 suddenly looks a lot better when you know that you are not handing over 42% to the taxman. As a result of the changes in the 2006 Budget, the amount of artists’ income which is exempt from Irish income tax, has been capped at €250,000.
So, if you can get an album out and have some success with it then it will always be easier to attract a publisher. Just like in the “real world”, it is always easier to get a new job once you already have one. But you can always set up your own publishing company to look after the publishing aspects of your music. A lot of songwriters now retain their own publishing. This way, they are their own publisher and retain the ownership of the copyright in their work. As you achieve more success it may mean hiring someone to administer all of this on your behalf but that’s a small price to pay for success.
This service is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from taking any action as a result of the contents of this column.