Publishing agreement around Beyoncé's song "Sandcastles"

Question

According to this information, why did the song writer Vincent Berry II said that the he couldn't sign the contract because it's a high interest loan? Why is that?

From Wikipedia, who quotes an article of the Los Angeles Times:

Beyoncé received "Sandcastles" in February 2015, more than a year after the song was written. Berry, who was homeless at the time when the song was included on the track listing of Lemonade did not want to sign a publishing agreement and opted out for keeping ownership of the track, saying: "I wanted to own it and that's a harder road. That meant being homeless and sleeping in cars and garages and studios and that's what I was willing to do. I knew I couldn't sign a publishing deal knowing what they are - essentially a high-interest loan. Why would I take that kind of deal?"
Eventually, he received a call from the singer's team notifying him that the song he wrote was included on the album, along with a production credit he would share with Beyoncé.

Answer 1

The typical publishing agreement contract works like this (exact numbers may vary):

1. The overall benefits of the song are split in two:

   • 50% writer's income
   • 50% publishing income

2. Most often, the songwriter trades some or all of the publishing rights to a publishing company in exchange for a large sum of money --enough that Berry could have stopped being homeless. Let's say the offer is for 50% of the publishing. This would leave the writer with 75% of the eventual income (50% writer and 25% publishing).

3. However, the money received is just an advance that will have to be paid back to the company!

These resources can give you more informations about how this works: Types of Music Publishing Contracts and Understanding Co-Publishing & Admin Deals.

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Here is a simple example:

• The company gives you a $10 advance (that you will have to give them back).
• Every time the song makes $1, there is .75 for you and .25 for the company. But the company will keep your .75 until the entire advance has been paid back.
• Only when the song has made a total of $13.34 (13.34 * 0.75 = 10), can you consider the advance has been paid back. Now you can start making profit from the song, 75% of each dollar.

So basically, it is a high-interest loan because you will have to wait until the company earns 125% of what it gave you, before you actually make money. The "interest" is 25% of your income from the song, not just until the loan is paid off, but permanently.

Thus Berry not signing a publishing agreement meant he did not receive any advance (that he would have to refund), but instead keeps 100% of the eventual income from the song, if any. Until the song started to sell, however, he had to stay homeless for a while...