Author’s and publisher’s shares: how royalties are paid in Europe and North America

Trends in the development of the mechanism for collecting royalties for the use of objects of intellectual property rights are rapidly gaining momentum. Thus, in the Western world (European countries and North America) there have long been such concepts as the author’s share and publisher’s share. And we will analyze the difference between these concepts, the system of collecting and paying royalties in the Western world.

In the countries of Europe and North America, the structure of the rights to a song is perceived somewhat simpler than, for example, in Ukraine, namely, it is customary to divide such a song structure conditionally into 2 parts:

  1. Composition – that is, directly the music and / or lyrics of the song;
  2. The main recording is a recording on which the voice performance of such a song and a phonogram recording of such a performance are located.

In this article, we are interested in the composition and 2 types of royalty payments accrued for the use of the song, namely: performance royalties, when there is a so-called live performance of the voice and/or playing musical instruments of the composition and mechanical royalties when the composition is reproduced on a tangible medium and/or reproduced digitally.

At the same time, royalties for the performance of a song are also divided into 2 types: the share of the author (writer’s share) and the share of the publisher (publisher’s share). These shares are also proportional to the percentage of rights to the composition and are paid: 50% and 50% respectively. For example, if the royalty for the performance of a song is $100, then $50 of them will be paid to the owner of the author’s share (that is, the author of the text and/or music), and another $50 will be paid to the publisher as the owner of this share of rights to the song.

How to distinguish between the writer’s share and the publisher’s share?

The writer’s share is the percentage of rights to the composition created by the author, which will always belong to the author. Such a share of rights cannot be alienated (transferred), it remains with the author and is paid only to such an author. The share of the author arises from the moment the composition is created.

At the same time, it is important to remember that such a writer’s share does not arise when the composition is reproduced materially or reproduced digitally – this is not connected. That is, you cannot receive a reward for the writer’s share of “mechanical royalties” (the rights to mechanically reproduce the composition). The so-called “mechanical royalties” are not divided into writer’s share and publisher’s share – there are “mechanical royalties” only in the part of the publisher’s share.

The writer’s share is directly paid to such author by local collective management organizations.

The publisher’s share is the percentage of the collected remuneration for the rights regarding the created composition, which arises from the author and exists with the author until such author signs an agreement on transfer of rights with the publisher.

For example, if the author has recorded a song and does not have any contract with the publisher (conditional label), then the author will be considered the publisher of his composition until the author has established work with the publisher (i.e., a transfer agreement is signed). Collective management organizations such as GEMA in Germany or SACEM in France will collect the publisher’s share and pay the author directly until the author has entered into an appropriate transfer agreement with the publisher.

If the author signs a transfer of rights agreement with the publisher, the publisher will receive royalties in terms of the publisher’s share, as well as a percentage of their own commission for having worked to collect and pay such a share to the author.

Regarding the calculation of the amount of royalties in terms of the publisher’s share. So, for example, if, under an agreement with a publisher, a commission for the collection and distribution of funds to the author in terms of the publisher’s share is determined in the amount of, for example, 15%, and the royalty for using the song is conditionally $100, then the author will receive a reward of $50 (author’s share) and the other $50 (publisher’s share) will be paid minus the publisher’s commission (15% = $7.5) and amount to $42.5. The remuneration that the author will receive will be $ 92.5, and the publisher will receive $ 7.5 – which is the publisher’s commission.

Importantly, some of these collective management organizations (depending on your place of incorporation) may require a transfer of rights agreement between the author and the publisher, so that it is the publisher who collects the publisher’s share and receives a percentage of the royalties collected on the rights for the composition.

In Ukraine, there are no such concepts as the writer’s share and publisher’s share in the legislation, so publishers (labels, copyright holders, etc.) receive their percentage in full from the entire amount of royalties, and not just from half (publisher’s share), which, unfortunately, only increases the pocket of the publisher, and not the author of the composition.

/ / / /