23 Jun

Case Study: deciding to say no to a complete buyout

An Australian composer learned a useful lesson when offered a US contract

Buyouts, while much talked about of late, are nothing new. In 2009 Australian composer Ben was asked to score a 90 min feature documentary for a major cable TV network. It was his first encounter with a buyout agreement. However, before we get to his story here is some local context.

In Australia, as is the case in many territories, a client who commissions and pays for a composer to create a musical work will typically own the copyright in the recording of that work (called the Master recording). However, the use of the Music in this Master recording is almost always restricted to the production for which it was commissioned.

This occurs via the synchronisation license in the composer’s agreement which would stipulate the terms under which the music embodied in the master recording can be used. However, historically Australian composers working on Australian commissions have kept their publishing rights and have retained copyright in the Music itself – the compromise being that upfront fees are lower.

Ben was asked to score the film for 2/3rds of his usual fee but was also asked to sign a work-for-hire (work made for hire) agreement which meant he would relinquish copyright in not just the Master recording but would be assigning copyright in the Music to the network as well. This would permit the network to re-use or sublicense the Master to 3rd parties for any purpose, or re-record or adapt the Music, all without further payment to the composer.

This type of agreement is extremely uncommon in Australia and would normally be accompanied by significantly higher upfront fees. Furthermore, the network confirmed that the music agreement would entitle them to all public performance royalties; not just 100% of the so-called publisher’s share but also 100% of the writer’s share. In short, Ben would receive no further remuneration for the use of, or public performance of his works for the entire term of copyright worldwide. It was a complete buyout.

Initially Ben said he was confused by the term ‘work-for-hire’ because it is not defined in the Australian Copyright Act (unlike in the United States) nor is it a commonly used term in that country.

However, he did some digging…

“I realised that the concept of work-for-hire meant that work undertaken in the employ of a company was considered to be authored and owned entirely by the company. However, normally such companies pay regular wages, superannuation, sick leave, holiday pay and other loadings. However, we composers have none of these things and so royalties are an important way to compensate for this.”

“Our upfront fee has to cover our time and expertise of course, but also has to cover hard costs such as rent, software, sample libraries, computers and other gear as well as utilities such as gas & electricity, water & rates etc. It’s the royalties that actually serve as our superannuation and ensure our long-term financial survival because the up-front fee alone is not always enough to cover costs.”

Fortunately, Australian composers are afforded a degree of protection from buyouts. Like their counterparts in a number of European territories, members of the local performing rights organisation APRA (Australasian Performing Right Association) assign all performing rights in any current or future works to that organisation, enabling them to collect performance royalties on the composer’s behalf.

This also means that a composer member is not able to enter into an agreement under which they assign those rights to a third party. This meant that Ben could not grant the Writer’s share of performance royalties to the network without opting out of APRA across film and television entirely for all past and future works.

“When I pointed out that, as an APRA member, I could not relinquish my Writer’s share of my performance royalties they simply replied that I would be signing an American contract as a means to get around this. I was stunned to say the least, not to mention confused by the potential legal issues. Not only was I being offered a low fee but I was being asked to give up the entirety of my performance royalties, potentially a significant income stream, and was asked assign the entire copyright in the music allowing the network to re-use the music or sublicense the music without ever paying for that re-use.”

In an attempt to compromise, Ben suggested to the network that he could agree to the low fee by retaining his royalties and restricting re-use, emphasising that the network would still have an exclusive worldwide license in perpetuity to use the music in the master recording in the film, and that this would in no way restrict them from exploiting the film now or across any media in the future.

However, it quickly became apparent that the buyout was non-negotiable. He was however, asked to quote for the purchase of those additional rights required by the network.

“I quoted what I thought was an extremely conservative figure that was only two and a half times higher than their original offer (which was already very low) but this was outside their budget. In the meantime, I was asked to score a local documentary with a regular collaborator which attracted a higher upfront fee and enabled me to retain my copyright and royalties. It was a no brainer in the end.”

Ben says he has learned important lessons from the experience. Despite missing out on the cable network’s feature documentary and the potential international exposure that could result, he gained an invaluable education about work for hire and buyout agreements.

“The skills I learned during this experience have stood me in good stead throughout my career. Although unfortunately it doesn’t feel as if much has changed since 2009!  I think that advocating for yourself and your worth and conveying the value you bring to a production is just as challenging now as it was then, if not more so. However, I sincerely believe that composers are stronger when we are communicating and learning from each other, sharing stories such as these. If we all got together just a little more often, both established and emerging composers alike, and spoke honestly about the challenges we all face I think we could raise the bar slowly over time.”

And finally, what are Ben’s thoughts on these sorts of negotiations?

“I’ve noticed that clients that are unwilling to negotiate, or at the very least won’t meet you half way, are unlikely to become long term collaborators because they are less interested in the relationship or the particular skills you bring to their production than they are in getting the cheapest result. That said, often the issue isn’t with your immediate creative collaborators but more with the lawyers and upper hierarchies of larger production companies, broadcasters or SVODs. Enlisting the help of your creative partners and having them advocate on your behalf with the network can be a more efficient way of reaching a compromise.”

*Note: In an increasingly globalised entertainment industry, Australian composers are now more frequently than ever being asked to relinquish the so-called publisher’s share of public performance royalties, especially by large multinational production companies, networks or streamers, often without an increase in the upfront fee. The Australian Guild of Screen Composers encourages their members to advocate for higher up-front fees when faced with the loss of their publishing to compensate them for the loss of this potential income. However, on most low to mid budget local commissions it is still common for Australian composers to retain their publishing.

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