Archive for the ‘Contracts’ Category

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In today’s fast-paced music world, lyricist, songwriter-producer James kazualkazh Owens upholds the craft of professional songwriting. Los Angeles based Owens has carved out an impressive reputation in a crowded field. He co-wrote alongside Keyshia Cole, Missy Elliot, Mary J. Blige and Pink to name a few. “Creating songs is a classic example of talent meeting opportunity” a concept he stresses in his upcoming book “Music Business 101 (The Business Behind The Music).

Owens is also polishing a new album of songs he created on the journey that he’s calling TheInfatuation and is hard at work on new projects for A barrage of A-List recording artist including Rihanna and Dr. Dre

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Songwriter Agreements:

Songwriters exist in many different forms on this earth. Some are lead singers of your favorite bands that you can recognize immediately, and some wrote your favorite song, though you’ve never even heard their name. And they exist everywhere in between, writing songs for themselves, co-writing with others, and writing songs just for other people. Without this diversity, chances are good that we’d have many less great songs in the world than we do.

Though there are many artists out there that write songs purely for their own enjoyment, songwriting can be, obviously, a very lucrative venture. And some of the most successful songwriters only write for other artists to perform. But how do the writers have their songs recorded by others? This is often where a publisher comes in, to take songwriter’s songs and present them to artists to perform and, hopefully, turn into the next number one hit. Publishing houses make a lot of money doing this, and writers know that they can, in turn, also make money by partnering with a publisher. Writers often sign exclusive agreements with publishers, providing songs directly to (and only to) a specific publisher, who then sells the songs to other artists. These exclusive agreements will have many different stipulations depending on the writer, publisher and other circumstances, but must touch on the following topics:

Term:

The duration of the contract is very important, as the writer cannot sell songs to any other entity during this time. Length of the contract will be discussed before the contract is written.

Rights of the Publisher:

As with many specifics of songwriting contracts, the actual language of this section will vary widely depending on what the two parties agreed to beforehand. Usually, these will state who obtains and owns copyrights to the work, and additional rights the publisher has with the compositions. The contract will often state the publisher has power of attorney over the songs in the writer’s name.

Compensation:

Again, this will change with each situation, but this section will state what the writer will get paid for presenting compositions to the publisher. Usually expressed in percentages, the amount owed to the writer will be broken down into different categories, such as money received from the wholesale selling price, net sums and from printed sheet music. Additionally, the contract will stipulate when the publisher must pay the writer.

Collaboration:

Since many writers co-write with other songwriters, songwriter contracts will often include notes of what will happen when there is a co-writer on a song. Often this will state that separate agreements must be agreed to at the time a co-written song is submitted.

Depending on the specifics of the contract, there will be many additional clauses. These will state any obligations the writer is under, that the writer is an independent contractor and that confidentiality agreements are in place. As these contracts can be very complex and cumbersome, it is crucial that there be a mutual agreement between the two parties before the contract is written, and that, with the help of a music lawyer, all the language is understood. When hit songs are written, both parties have the opportunity to gain greatly from songwriter contracts, so it’s important these contracts are fair in the beginning.

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FOREIGN LISCENSING

Posted: August 20, 2011 in Business, Contracts, Publishing

FOREIGN LISCENSING 101

If you are an artist or indie label, one way to significantly expand your universe is to license your master recordings to record companies outside the United States.

There are various advantages of doing so. Aside from the obvious advantage of generating additional record sales, there is also the advantage of creating a relationship with a record company outside the United States who will have various music business relationships in that foreign country and who can connect you up with booking agencies, venues, festival organizers, music publishers, etc. in that territory. This may enable you to do touring and to build an audience in those countries that otherwise might not be practical to try to do.

THE BASICS OF LICENSING

When you enter into a music licensing agreement with a foreign record company, you are in essence authorizing them to duplicate and sell copies of existing masters, in exchange for paying you a royalty for each record sold. The label is responsible for paying all costs, such as the costs of manufacturing, promotion, and advertising, and it is up to the foreign label to manufacture CDs and to get those CDs distributed in their territory.

One alternative to a foreign licensing arrangement is to manufacture your CDs in the United States yourself, then export them to distributors in other counties. However, one big disadvantage in going the “export” route, at least if you do it legally, is that for most foreign countries, you will usually be paying a government-imposed tariff in those countries of 20% to 40%. Also, a distributor gets a much smaller piece of the pie, and generally is not going to do the level of proactive marketing and promotion that will need to be done to break you successfully into foreign markets.

As a result of these various factors and others, the best alternative for the vast majority of U.S. indie artists and labels trying to break into foreign countries is going to be a licensing arrangement with labels based in those countries, rather than a distribution agreement in those countries.

APPROVAL RIGHTS
A U.S. label that wants to enter into licensing arrangements with one or more foreign labels must first make sure that it has the rights to do so under the terms of its recording contracts with its artists. If the label doesn’t already have such rights, then the label needs to get its artists’ approval before entering into any such licensing arrangements with foreign labels.

NEGOTIATING CLOUT
As a general rule, it is going to be much easier for a U.S. label or artist to get a foreign licensing deal, and especially a deal on terms that are quite favorable to the U.S. label or artist, if its records are already selling well in the U.S. and the artists already have a significant reputation in the U.S.

BASIC DEAL POINTS
The basic deal points of the typical music licensing agreement are as follows:

1. Scope of License. The license may cover only one or a few specified recordings, or may cover your entire catalog. It is sometimes a good idea to start out with less than your entire catalog, so that you can “test drive” the relationship first, before committing your entire catalog.

2. Territory. if you are licensing masters to indie foreign labels, you will normally be licensing only for a particular county or for a particular group of countries. Often the agreement will be for so-called “bundled countries,” such as Benelux (standing for Belgium, the Netherlands and Luxembourg) and GAS (Germany, Austria, and Switzerland). On the other hand, if you were entering into a foreign licensing agreement with one of the major worldwide labels, such as WEA or BMG, you might be licensing your masters to one company for all countries outside the United States in one fell swoop. As a practical matter, though, a deal with one of the “majors” is normally not available to a U.S. artist or label unless you already have major sales in the U.S.

Incidentally, if the territory is defined in the licensing agreement as the “European Union” or similar terminology, the territory will in effect change over time as more countries join the European Union.

3. Term. Typically the term of the agreement will be for five years, though sometimes such agreements are for three years and sometimes for seven years. Generally, the smaller the advance, the less of a justification there is for entering into a longer term.

Normally, there is also a “sell off” period added to the end of the term of the agreement, which allows the label to sell off any existing inventory for an additional six months to a year after the end of the term. If there is a “sell off” period included in the agreement, it is wise to add a clause prohibiting the label from manufacturing more copies of a CD during the original three, five or seven year term than they can reasonably expect to sell during that three, five or seven year term.

A practical tip: As soon as the licensing agreement expires, it is a very good idea to send the label a “Notice of Termination” even if the contract doesn’t require it. (It usually doesn’t.) Otherwise, there is a significant risk that the foreign label will, innocently or not so innocently, continue selling your records. The risk of that happening can be significantly reduced by sending them a “Notice of Termination.” Be sure to send any such notice in such a way that you have proof that it was actually received.

4. Exclusivity. Normally the agreement is “exclusive,” in which case you cannot later authorize any other company in that territory to sell your records during the term of the licensing agreement.

5. Royalty Rate. Unlike the United States, where royalty rates are usually based on the retail price of records, the royalty rates in most other countries are based on some price that is somewhere between the wholesale price and the retail price. For example, in some countries the price is based on the “PPD” (“Published Price to Dealer”) price. In other countries, like France, they often use the so-called “BIEM-IFPI” rate.

Typically, the royalty rate is in the 15% to 20% range (and sometimes more) – which is higher than the typical rate in the U.S. – because the foreign royalty rate is not based on the retail price as in the U.S., but instead (as mentioned above) on a price that is significantly lower. Hence, in order for you to come out roughly the same in terms of dollars and cents, the foreign royalty rate has to be higher.

In any event, here are a few random tips about evaluating the royalty rate being offered:

A. The best way to evaluate the royalty rate is to run the royalty calculations and figure out what you will be earning for each record in dollars and cents, rather than getting fixated on percentage rates etc. In order to do any useful number crunching, you will need to find out the exact price that the label is currently using, then convert that amount to U.S. dollars, and then do your royalty calculations based on the royalty terms contained in the proposed licensing agreement.

B. There is often a difference from one county to the next in regards to what are considered acceptable royalty provisions. What is customary in one country is often not customary in another country. So, if you are negotiating royalty provisions for particular foreign countries, you need to know what is customary in that country. For example, in the U.S., royalties are typically not paid on promotional free goods that the record company gives away, but in some other countries that is not the case.

C. If you’re comparing offers from two or more companies, you need to investigate and compare the reputation and financial stability of each company. You can sometimes end up doing much better financially with an average deal from a relatively honest company than you will do with a great royalty rate from a crooked or financially borderline company.

D. If the licensing agreement contains any definitions of, for example, the “PPD” price, read the fine print very carefully.

6. Advances. The amount of the advance that is paid, if any, will depend on the foreign label’s forecast of how many records can be sold in their territory. Advances vary wildly and can be anywhere between $500 and $50,000 (but sometimes higher and sometimes lower).

In some cases, it will make sense for you to enter into the licensing agreement even if the advance is minimal, if there is a good chance that your relationship with the foreign record company will significantly help you to get established in their territory. By the same token, because of the difficulty of auditing foreign countries and trying to collect money from foreign companies, often times you have to assume that the advance is the only money that you will ever see from the deal.

By the way, the advance should be described in the contract as being non-refundable (i.e., you won’t have to ever pay it back). Also, the advance is normally deemed “recoupable” (i.e., the label can reimburse itself for the advance from your future royalties), so if your advance is $5,000, and if the total royalties end up being $15,000, the label later will pay you only $10,000 (i.e., the $15,000 in royalties minus the $5,000 advance).

7. Release Commitment. You should have a clause in the licensing agreement requiring the label to release the record by a certain date, and that if they don’t do so, you have a right to terminate the agreement.

For masters that already exist at the time of the licensing agreement, you will normally want to have a fixed calendar date by which time the record has to be released. For records not yet recorded, but that will be recorded and released during the term of the licensing agreement, the release commitment is usually 90–120 days within the date of your delivery of the master to the label.

You want to be careful that the contract language is very specific and precise, and you will also want to be sure to ship the masters in such a way that you will later be able to prove the exact date of delivery if necessary.

8. Sharing in Other Types of Income. Sometimes there is potential income from sources other than record sales. For example, a U.K. ad agency might want to use a track in a film, and so the licensing agreement needs to deal with this scenario. If at all possible, have the contract provide that the rights to enter into those kinds of deals stays with you and are outside the scope of the licensing agreement. By the same token it usually makes sense to give the label the piece of any such deal that they find for you, so that they have a motivation to make such deals happen.

Sometimes the contract will say that the foreign label has the rights to enter into such deals for your masters, but only for territory/countries covered by the agreement, and that in return, you will receive a share of the income from such deals.

The bottom line here: The main thing you absolutely want to avoid here is a contract that gives a foreign label the right to enter into such deals, but doesn’t spell out your rights to receive a certain specified share of the income from such deals.

9. Payment. Payments are usually made semi-annually. The agreement should provide for the royalties to be wired to your account at the label’s expense (as opposed to the label mailing you a check, which can cause very long delays in your actual receipt of the money and the clearing of the check).

10. Foreign Taxes. You will also normally want a clause requiring the foreign label to help you file the necessary paperwork with the foreign government(s) involved, so that the foreign label will not have to withhold foreign taxes from the royalties that are otherwise payable to you. If that is not possible, you will at the very least want some arrangements whereby the foreign label gives you a formal statement at the end of each year as to the amount of foreign taxes that were withheld that year, so that you can claim the appropriate tax credits on your United States tax returns.

11. Audits. There should be a clause allowing you to audit the foreign label’s business records, and providing that if there is a discrepancy of more than 10%, they must pay your audit costs. However, as mentioned above, it very likely will not be practical for you to audit the foreign label’s business records, but you want to have that option if at all possible.

MECHANICAL ROYALTIES FOR FOREIGN SALES

Mechanical royalties –- i.e., the royalties that record companies pay to music publishers/songwriters based on how many records are sold –- are handled differently almost everywhere outside the U.S. than they are handled in the U.S.

The details are really too complex to cover well here, but the main thing to remember is this: If you are an artist who is also a songwriter, or if you are a label that also operates as a music publisher, and if your material is on records being sold outside the U.S. and Canada, and if you are not represented by a worldwide music publisher and have not entered into sub-publishing agreements with foreign publishers, then you need to take the necessary steps to make sure that you receive the foreign mechanical royalties that you are due.

HOW TO FIND MUSIC LICENSING OPPORTUNITIES
There are a various ways to find music licensing opportunities, for example:

1. Researching Foreign Labels. You can obtain the necessary contact information from such directories as the Billboard International Buyer’s Guide. (Check with the “Reference Librarian” at your local library to see if they might have a copy on hand that you can use, and if not, ask if they can borrow a copy for you through an inter-library loan from another library.)

Also, some Internet searching can be very helpful in locating foreign labels that are appropriate for you.

Before submitting material to a foreign label, it’s usually a good idea to send them a professional and non-hypey e-mail first, just to find out whether they are even interested in considering your material.

2. Tip Sheets. Tips sheets such as “New On The Charts” allow subscribers (and sometimes non-subscribers) to post a listing of masters that they have available for licensing.

3. Referrals. Check with any established artists and American labels that you know of, in case you think they might be able to turn you on to appropriate foreign labels.

4. MIDEM. There is a large international music business conference in Cannes, France every year (in late January), called “MIDEM,” where people negotiate music licensing deals. The practical side of it is that unless you are a well financed artist or label, it won’t be affordable to attend that conference. One alternative is to buy the MIDEM conference directory, which you can use as another resource directory to locate appropriate labels.

Incidentally, there are occasionally people who will advertise that, for a cash fee, they will shop your material at the MIDEM conference. Be very careful with any such arrangements and check those people and their track records out thoroughly. You obviously don’t want to find out after the fact that you have just financed someone’s vacation in the south of France and have nothing to show for it.

​A Look At Music Contracts
It has been said that a verbal contract isn’t worth the paper it’s written on. And for many bands, singers, DJs, producers and many others whose work is in a creative field, it’s often easier to just have that verbal agreement than to worry about the financial aspects of their art. Too many times, however, the lack of a written contract has cost artists money, ownership of their work and, in some cases, even their careers. Music contracts are too important to overlook just because it seems easier to trust that those working around you will always do what they say they’re going to do.

And the world of music contracts (and any legal contract) is a convoluted one, filled with dense legalese that often can be hard to wade through by anyone without a law degree. But these contracts are ones that you will have to not only read, but also understand as you enter into partnerships and working relationships with others to help your career grow. Often, you will find you need a lawyer to look over the contracts to ensure that you understand exactly what you are signing, and that the contract will be a benefit to your art. When your career reaches a point that you need to employ an entertainment lawyer, you will even need a contract for your lawyer’s services. Though the amount of contracts is seemingly endless, once you begin to recognize your needs, you realize just how helpful these contracts will be in the future success of your career.

In the following section, I’ll lay out some typical cases in which you need certain types of contracts. This is by no means a comprehensive list, and it will vary from artist to artist, but it will give you an idea of what contracts you’ll need and when in your career that you will need them.

Band Partnership Agreements
If you’re in a band, this should be one of your starting points as you begin to look at making a career of music. Your best buddies may be in the band with you, but even the best of friends find ways to fight over money and song rights.

Manager Contracts
Managers can play many different roles depending on artist type and success level, but as soon as your career succeeds to a level that you need someone on the outside to look after the affairs of your career, it’s time to find an manager and ensure, with a Manager Contract, that everyone agrees to work for fair terms.

Record Label Contracts
Oh, the dream…that elusive record deal. You’ve been starry-eyed over this one since you first strummed a guitar (or sang into a mic, or sat behind a piano, etc.). But these can be some of the most dangerous and career killing pieces of paper out there. Record companies, no matter how dedicated to their artists, exist to make money, and tales of artists’ careers dying at the hands of a record label are all to common. On the other hand, a good contract is still the dream, and record contacts make dreams come true, as long as you understand what’s in it for you.

Songwriter Contracts
These contracts are important whether your songs are being recorded by someone else or if it’s your own band performing the songs. From the outset, a contract should specifically state who wrote what percentage of each song; this will help prevent fights and lawsuits when the money starts coming in later.

Again, this is by no means all the contracts that should be looked at, nor is it all the contracts available on this site. But it should start you thinking about which contracts you will need as your career progresses, and how to ensure you get a good deal on each one you sign.

Band Partnership Agreement (Abbreviated)
This Band Partnership Agreement “Agreement” is made this [insert date], by and between [insert all band member names] collectively referred to as “Band,” individually referred to as “Partners”).
1. Partnership Name. The Partners shall establish themselves as a general partnership (the “Band Partnership”) known as ___________________________.
2. Band Name. The Band Partnership will do business under the name _______________ (the “Band Name”). The Band Name belongs to the partnership, and Partners shall not be permitted to use the name independently without the written consent of the Band Partnership.
3. Indemnification. Each Partner indemnifies the other Partners from all claims, demands, and actions from any breach of this agreement.
4. Warranties. Each Band Partner warrants that each Band Partner is free to enter into this Agreement and under no restriction that will interfere with this Agreement.
5. Profits and Losses. Unless agreed upon otherwise in writing by the Partners, the Partners will share equally in all payments that are paid to the Band Partnership or to any Partner as a result of Band Partnership activities, after deducting Band Partnership expenses.
6. Unanimous Consent. (List issues that require unanimous consent)
a. ______________________
b. ______________________
c. ______________________
d. ______________________
e. ______________________
7. Majority Voting. Any matters that require a majority vote shall be listed here and a 2/3 affirmative vote will be required to adopt any Partnership decision.
a. ______________________
b. ______________________
c. ______________________
d. ______________________
e. ______________________
8. Mediation; Arbitration. If a disagreement arises under this Agreement, the Partners agree to first try to resolve the dispute with the help of a mutually agreed upon mediator. Any costs and fees other than attorney fees will be shared equally by the Partners. If it proves impossible to arrive at a equally acceptable resolution, the Band Partners agree to submit the dispute to binding arbitration in the same city or region, conducted on a confidential basis under the Commercial Arbitration Rules of the American Arbitration Association.

_____________________________________ ____ ________________________________
Band Member Signature/Date Band Member Signature/Date

____________________________________ _____________________________________
Band Member Signature/Date Band Member Signature/Date

CD Artwork Agreement

This Artwork Agreement “Agreement” is made this [insert date] between _________, having its principal place of business at ________________ (“Band”) and ________________ _______, having its principal place of business at ____________________________ (“Artist”).

1. CREATION. The Band hereby employs Artist to create Artwork for the cover, cd booklet, inserts, and any additional artwork for the album currently titled ____________. The artwork will be completed on the following date: ____________

2. COMPENSATION. The Band agrees to pay the Artist $_ ___ per hour OR a flat fee of $__ __ for the entire Artwork project. Band has paid the sum of $__ __ as an initial deposit to the Artist. The remainder of the balance shall be paid when the Artwork is completed.

3. EXPENSES. Band agrees to reimburse Artist for all reasonable production expenses including but not limited to halftones, stats, photography, disks, or illustrations. These expenses will be itemized on invoices, and in no event will any expense exceed $50 without approval from the Band.

4. RIGHTS. Artist assigns all copyright of Artwork to the Band and agrees to cooperate in the preparation of any documents necessary to demonstrate this assignment of rights. Artist retains the right to display the work as part of Artist’s portfolio and to reproduce the Art in connection with the promotion of Artist’s services.

5. ROYALTIES: In addition to any other payments provided under this Artist is entitled to _ ____ % on net profits from sale of merchandise.

6. CREDIT. Credit for Artist will be included on reproductions of the Art as: ______________________________________________________________________

7. WARRANTIES. Artist warrants that Artist has the power and authority to enter into this Agreement. The Artwork will not infringe any intellectual property rights or violate any laws. If necessary the Artist has or will obtain all necessary rights or licenses associated with any artwork, photos, or illustrations incorporated into the Artwork.

8. INDEMNIFICATION. Artist indemnifies Band and will defend Band from any claims and damage arising out of any breach of this Agreement or of claims arising out of copyright infringement.
9. GOVERNING LAW: This AGREEMENT shall be governed and construed in accordance with the laws of the State of _____________ and by the laws of the United States, excluding their conflicts of law principles.

Signature below will constitute this as a binding agreement.

DATED: _______________________

Band Partnership Name: ____________________________________

Band Partner Name and Title: ________________________________

Band Partner Signature: ______________________________________

Address: __________________________________________________

Date: _____________

Artist Name: ______________________________________________

Artist Signature: ___________________________________________

Address: _________________________________________________

Date: _____________

Notice of Intention to Obtain Compulsory License for Making and Distributing Sound Recordings

To ___________________________________, the copyright owner of ____________________, written by _____________________________.
Pursuant to the compulsory license provisions of the U.S. Copyright Act (17 U.S.C. 1115), we apply for a license to make and distribute sound recordings of _____________________ and provide the following information:
Legal name of entity seeking the compulsory license: _________________
Fictitious or assumed names used for making and distributing sound recordings: ____________________________________________________________
Address: ____________________________________________________
Names of individuals who own a beneficial interest of 25% or more in the entity: __________________________________________________________
If a corporation, names of the officers and directors:
__________________________________________________________
Configuration(s) to be made under the compulsory license: ___________________________________
Catalog number(s): __________________________________________
Label name(s): _____________________________________________
Principal recording artists: ____________________________________
Anticipated date of initial release: _____________________________
We agree to pay the copyright owner royalties at the statutory rate provided by the Copyright Act.

By: _____________________________________________________
Name and Title: ___________________________________________
Date: ______________

EMPLOYMENT CONTRACT

This Agreement for Employment (hereinafter referred to as “AGREEMENT”) is between ______________, having its principal place of business at____________________ (hereinafter referred to as the “COMPANY”) and ____________, located at____________________ (hereinafter referred to as the “EMPLOYEE”).

The COMPANY employs the EMPLOYEE on following terms and conditions:
1. Employment
The EMPLOYEE is employed in capacity of __________________. EMPLOYEE hereby accepts such employment in accordance with the terms of this AGREEMENT and of employment applicable to regular employees of COMPANY. Election or appointment of EMPLOYEE to another office or position, regardless of whether such office or position is inferior to EMPLOYEE’S initial office or position, shall not be a breach of this AGREEMENT.

2. Duties of Employee
The following duties and responsibilities shall be competently performed by the EMPLOYEE:
_________________________________________________________________.
In addition to the duties stated above, the EMPLOYEE shall perform all such duties typical of the office held by EMPLOYEE as described in the bylaws of COMPANY and such other duties and projects as may be assigned by a superior officer or the board of directors of COMPANY.

3. General Obligations During Employment
a) During your normal working hours and at such other times as reasonably be required of you, you shall devote the whole of your time, attention, skill and abilities to the performance of your duties under this Contract and shall act in the best interests of the COMPANY. You shall not undertake any work or employment, other than for the COMPANY, during your hours of work.

b) Outside your normal hours of work, you shall not be entitled to be employed by, work for and/or be engaged by other parties and/or carry out any other sporting, physically recreational and/or associated activities of a paid or unpaid nature, unless you obtain prior written consent from the COMPANY.

4. Protection of Confidential Information :
EMPLOYEE agrees, during or after the term of this employment, not to reveal confidential information which includes information relating to COMPANY’S business, or trade secrets to any person, firm, corporation, or entity. Should EMPLOYEE reveal or threaten to reveal this information, the COMPANY shall be entitled to an injunction restraining the EMPLOYEE from disclosing same, or from rendering any services to any entity to whom said information has been or is threatened to be disclosed, the right to secure an injunction is not exclusive, and the COMPANY may pursue any other remedies it has against the EMPLOYEE for a breach or threatened breach of this condition, including the recovery of damages from the EMPLOYEE.
5. Compensation

During the term of this AGREEMENT, EMPLOYEE will be compensated as follows:

a) A base salary of _____________ ($________) per year, payable in installments according to COMPANY’S regular payroll schedule. The base salary shall be adjusted at the end of each year of employment at the discretion of the board of directors.

b) During the term of this AGREEMENT, an incentive salary equal to ____________________________________ of the adjusted net profits of COMPANY, beginning with year end 20___ and each fiscal year thereafter. “Adjusted net profit” shall be the net profit of COMPANY before federal and state income taxes, determined in accordance with generally accepted accounting practices by COMPANY’S independent accounting firm and adjusted to exclude: (i) any incentive salary payments paid pursuant to this AGREEMENT; (ii) any contributions to pension and/or profit sharing plans; (iii) any extraordinary gains or losses (including, but not limited to, gains or losses on disposition of assets); (iv) any refund or deficiency of federal and state income taxes paid in a prior year; and (v) any provision for federal or state income taxes made in prior years which is subsequently determined to be unnecessary. The determination of the adjusted net profits made by the independent accounting firm employed by COMPANY shall be final and binding upon EMPLOYEE and COMPANY. The incentive salary payment shall be made within thirty (30) days after COMPANY’S independent accounting firm has concluded its audit. If the final audit is not prepared within ninety (90) days after the end of the fiscal year, then COMPANY shall make a preliminary payment equal to fifty percent (50%) of the amount due based on the adjusted net profits preliminarily determined by the independent accounting firm (subject to payment of the balance, if any, promptly following completion of the audit by COMPANY’S independent accounting firm). The maximum incentive salary payable for any one year shall not exceed __________________of the then applicable base salary of EMPLOYEE.

6. Benefits.

a) Holidays. EMPLOYEE will be entitled to at least ______ paid holidays each calendar year and _____ personal days. COMPANY will notify EMPLOYEE on or about the beginning of each calendar year regarding the holiday schedule for the coming year. Personal holidays, if any, will be scheduled in advance, subject to requirements of COMPANY. Such holidays must be taken during the calendar year and cannot be carried forward into the next year. EMPLOYEE is not entitled to any personal holidays during the first six months of employment.

b) Vacation. Following the first six months of employment, EMPLOYEE shall be entitled to _____ paid vacation days each year.

c) Sick Leave. EMPLOYEE shall be entitled to sick leave and emergency leave according to the regular policies and procedures of COMPANY. Additional sick leave or emergency leave over and above paid leave provided by COMPANY, if any, shall be unpaid and shall be granted at the discretion of the board of directors.

d) Medical and Group Life Insurance. During this AGREEMENT, COMPANY agrees to include the EMPLOYEE in the group medical and hospital plan of COMPANY and to provide group life insurance for the EMPLOYEE at no charge to the EMPLOYEE in the amount of _________________________. EMPLOYEE shall be responsible for payment of any federal or state income tax imposed on these benefits.

e) Pension and Profit Sharing Plans. EMPLOYEE shall be entitled to participate in any pension or profit sharing plan or other type of plan adopted by COMPANY for the benefit of its officers and/or regular employees.

f) Automobile. COMPANY will provide to EMPLOYEE the use of an automobile of EMPLOYEE’S choice at a gross purchase price not to exceed $___________________. COMPANY agrees to replace the automobile with a new one at EMPLOYEE’S request no more than once every two years. COMPANY will pay all automobile operating expenses incurred by EMPLOYEE in the performance of an EMPLOYEE’S company duties. COMPANY will procure and maintain in force an automobile liability policy for the automobile with coverage, including EMPLOYEE, in the minimum amount of $1,000,000 combined single limit on bodily injury and property damage.

g) Expense Reimbursement. EMPLOYEE shall be entitled to reimbursement for all reasonable expenses, including travel and entertainment, incurred by EMPLOYEE in the performance of EMPLOYEE’S duties. EMPLOYEE will maintain records and written receipts as required by COMPANY policy and reasonably requested by the board of directors to substantiate such expenses.

7. Term and Termination.

a) The Initial Term of this AGREEMENT shall commence on ______________,
20__, and it shall continue in effect for a period of __________ year(s). The AGREEMENT shall then be renewed upon the mutual agreement of EMPLOYEE and COMPANY. This AGREEMENT and EMPLOYEE’S employment may be terminated at COMPANY’S discretion during the Initial Term, provided that COMPANY shall pay to EMPLOYEE an amount equal to payment at EMPLOYEE’S base salary rate for the remaining period of Initial Term, plus an amount equal to ___________________ of EMPLOYEE’S base salary. In the event of such termination, EMPLOYEE shall not be entitled to any incentive salary payment or any other compensation then in effect, prorated or otherwise.

b) This AGREEMENT and EMPLOYEE’S employment may be terminated by COMPANY at its discretion at any time after the Initial Term, provided that EMPLOYEE is paid _____________________ of EMPLOYEE’S then applicable base salary. In the event of such a discretionary termination, EMPLOYEE shall not be entitled to receive any incentive salary payment or any other compensation then in effect, prorated or otherwise.

c) This AGREEMENT may be terminated by EMPLOYEE at EMPLOYEE’S discretion by providing at least thirty (30) days prior written notice to COMPANY. In the event of termination by EMPLOYEE, COMPANY may immediately relieve EMPLOYEE of all duties and immediately terminate this AGREEMENT, provided that COMPANY shall pay EMPLOYEE at the then applicable base salary rate to the termination date included in EMPLOYEE’S original termination notice.

d) In the event that EMPLOYEE is in breach of any material obligation owed COMPANY in this AGREEMENT, habitually neglects the duties to be performed under this AGREEMENT, engages in any conduct which is dishonest, damages the reputation or standing of COMPANY, or is convicted of any criminal act, then COMPANY may terminate this AGREEMENT upon five (5) days notice to EMPLOYEE. In event of termination of the agreement for this reason, EMPLOYEE shall be paid only at the then applicable base salary rate up to and including the date of termination. EMPLOYEE shall not be paid any incentive salary payments or other compensation, prorated or otherwise.

e) In the event COMPANY is acquired, or is the non-surviving party in a merger, or sells all or substantially all of its assets, this AGREEMENT shall not be terminated and COMPANY agrees to use its best efforts to ensure that the transferee or surviving company is bound by the provisions of this AGREEMENT.

8. Ambiguity.
In the event of any conflict or ambiguity between the terms of this AGREEMENT and employment applicable to regular employees, the terms of this AGREEMENT shall be upheld.

9. Notices

Any notice required by this AGREEMENT or given in connection with it, shall be in writing and shall be given to the appropriate party by personal delivery or by certified mail, postage prepaid, or recognized overnight delivery services.

10. Final Agreement

This AGREEMENT terminates and supersedes all prior agreements and may be modified in writing, provided both parties are in agreement.

11. Headings

Headings used in this AGREEMENT are provided for convenience only and shall not be used to construe meaning or intent.

12. No Assignment

Neither this AGREEMENT nor any interest in this AGREEMENT may be assigned by EMPLOYEE without the prior express written approval of COMPANY, which may be withheld by COMPANY at its absolute discretion.

13. Severability

If any term of this AGREEMENT is held by a court of competent jurisdiction to be invalid or unenforceable, then all of the remaining terms will remain in full force and effect as if such invalid or unenforceable term had never been included.

14. Arbitration

The parties agree that they will use their best efforts to amicably resolve any dispute arising out of or relating to this AGREEMENT. Any controversy, claim or dispute that cannot be so resolved shall be settled by final binding arbitration in accordance with the rules of the American Arbitration Association. Judgment upon the award rendered by the arbitrator or arbitrators may be entered in any court having jurisdiction. Within fifteen (15) days after the commencement of the arbitration, each party shall select one person to act as arbitrator, and the two arbitrators so selected shall select a third arbitrator within ten (10) days of their appointment. Each party shall bear its own costs and expenses and an equal share of the arbitrator’s expenses and administrative fees of arbitration.

15. Governing Law

This AGREEMENT shall be governed and construed in accordance with the laws of the State of _____________ and by the laws of the United States of America, excluding their conflicts of law principles. Any dispute or legal proceeding regarding the AGREEMENT shall take place in the county of _____________, in the State of _________________.
IN WITNESS WHEREOF, the COMPANY has caused this Agreement to be signed and its corporate seal to be hereunto affixed by its duly authorized officers, and EMPLOYEE has hereto set his hand and seal on the date first above written.
Attest:

(NAME OF COMPANY)​(NAME OF EMPLOYEE)

By:
—————————​——————————-

Mechanical License
and Authorization for First-Time Recording of Song

This Agreement is made and effective on this [insert date] between ___________________, having its principal place of business at _________________ (“Song Owner”) and ____________________, having its principal place of business at _________________ (“Record Company”),.
WHEREAS, Song Owner owns certain Songs and related rights described below in this Agreement as “Band Rights”;
WHEREAS, Record Company desires to have license and Authorization from Song Owner to record such Songs;
Song Owner desires to give such license and Authorization to the Record Company on the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements promises set forth herein, the parties agree as follows:
1. Authorization:
________________________, the copyright owner of ________________________, written by ________________________, authorizes ________________________ to record and distribute ________________________.

Catalog number(s): ______________________________________________________________
Label name(s): _________________________________________________________________
Principal recording Song Owners: ________________________________________________________
Anticipated date of initial release: __________________________________________________

2. Payment:
________________________ agrees to pay the mechanical royalty rate of $_________ and issue statements and pay royalties on a quarterly basis.
3. Warranties:
The song owners acknowledge that they are the sole song owners and that they have the right to authorize this first recording. The song owners do not require that a notice of intention to obtain a compulsory license be served or filed.
4. Indemnification:
Song Owner hereby agrees to indemnify Record Company and defend Record Company from any claims and damage arising out of any breach of this Agreement or of claims arising out of copyright infringement.

5. Relationship of Parties:
The Parties acknowledge and agree that nothing in this Agreement shall be deemed to constitute a partnership, joint venture, agency relationship or otherwise between the parties.

6. Final Agreement:
This Agreement terminates and supersedes all prior understandings or agreements on the subject matter hereof. This Agreement may be modified only by a further writing that is duly executed by both parties.

7. Waiver:
Except as expressly provided in this Agreement, waiver by either party, or failure by either party to claim a default, of any provision of this Agreement shall not be a waiver of any default or subsequent default.

8. Notice:
Any notice required by this Agreement or given in connection with it, shall be in writing and shall be given to the appropriate party by personal delivery or by certified mail, postage prepaid, or recognized overnight delivery services.
If to Song Owner:
(Specify the name and address of Song Owner)
​If to Record Company:
​(Specify the name and address of Record Company)
9. Arbitration:
If a dispute arises under this Agreement, the parties agree to first try to resolve the dispute with the help of a mutually agreed upon mediator. Any costs and fees other than attorney fees will be shared equally by the parties. If it proves impossible to arrive at an equally acceptable resolution, the parties agree to submit the dispute to binding arbitration in the same city or region, conducted on a confidential basis under the Commercial Arbitration Rules of the American Arbitration Association.

10. Severability:
If any provision of this Agreement is held to be invalid or unenforceable for any reason, the remaining provisions will continue in full force without being impaired or invalidated in any way.
11. Headings:
Headings used in this Agreement are provided for convenience only and shall not be used to construe meaning or intent.

12. Governing Law:
This Agreement shall be governed by and construed in accordance with the laws of State of _____________ and by the laws of the United States, excluding their conflicts of law principles.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement as on the effective Date.

Band or Record Company
Name of Company That Owns Recording: ___________________________________________
Representative Name & Title: _____________________________________________________
Representative Signature _________________________________________________________
Address: _____________________________________________________________________
Date: ______________

Song Owners
Name of Company That Owns Song: _______________________________________________
Song Owner Name & Title: _______________________________________________________
Song Owner Signature ___________________________________________________________
Address: _____________________________________________________________________
Date: ______________

PHOTOGRAPHER CONTRACT

​AGREEMENT made this _______ day of ____________, 20__, by and between the undersigned PHOTOGRAPHER and the undersigned CLIENT.

​This Agreement is entered into in the City of ________and County of ________________, State of __________ and is guided by and governed by the laws of that state.

​The undersigned parties hereby agree that all rights, copyrights, titles and interest in any photographs taken by photographer, on behalf of Client belong solely and exclusively to the Owner free from any claims whatsoever by the Photographer.

​The enticement and consideration for this Agreement is the promise by the Client to pay the Photographer the amount of $______________. This is a one-time compensation for
Photographer’s services (sometimes known as a work-for-hire) and Photographer understands that this will comprise Photographer’s complete and sole payment.

​IN WITNESS WHEREOF we have entered into this written contract as of the date above written.

___________________________ __________________________
PHOTOGRAPHER​ CLIENT

RECORDING AGREEMENT

Date:___________________

Dear Artist:

​[Company Name] hereby employs you as vocalist and song stylist for the purpose of making phonograph records. Your services are non-exclusive.

​Two record sides have been recorded. Additional recordings shall be made only if we both wish to. The musical compositions and arrangements to be recorded shall be selected by you; and the manner of presentation shall be approved by you.

​We will pay you in respect of recording made hereunder a royalty of TWELVE (12%) of the wholesale list price in the country of manufacture, on NINETY (90%) percent of all records sold and paid for embodying performances hereunder on both sides thereof. However, that for records sold outside the United States, the royalty rate shall be one-half of the amount actually received by us. Royalties shall be paid to you when received by us, our affiliates, subsidiaries or associates or otherwise on our behalf. All royalties are payable to you when received by us in the United States and in the dollar equivalent at the rate of exchange at the time we receive payment. We agree to convert royalties from foreign countries into local currency.

​The charges for recording costs, album photography, art, color separation, type setting, distribution and promotion shall be taken from your royalties when earned. We will render an accounting to you within SIXTY (60) days after the 30th of June and after December 31st of each year. You may audit our books during normal business provided you have given us notice one week in advance.

​You may terminate your obligation to record at will. Our obligation to pay royalties shall continue after your termination. You will not perform any musical compositions recorded hereunder for any other person, firm or corporation for the purpose of making phonograph records, within FIVE (5) years after the recording is made. The term “phonograph records”, as used herein, shall be deemed to mean all methods of duplication of the performances embodied on the recordings including, but not limited to phonograph records, cassette tapes, digital audio tapes, compact discs and any other method of duplication now in existence or which may come into existence in the future. You acknowledge that your services are unique and extraordinary. Nothing contained herein shall be deemed to restrict you right to record other musical compositions.

​All recordings and all reproductions made, together with the performances embodied therein, shall be entirely our property, free of any claims whatsoever by you or any person deriving any rights or interests from you. Without limitation of the foregoing, we shall have the right to make records or other reproductions of the performances embodied in the recordings, or we may, at our election.

​In connection with recordings and reproductions made pursuant to this contract, we shall have the right to use and allow others to use the names, likenesses of you and biographical an publicity material concerning you for advertising purposes and for purposes of trade. Notwithstanding the foregoing, we shall have no right to utilize your name, likeness, or any other material, or authorize such use in any manner that would constitute a direct or implied endorsement of any products or any kind or nature.

Yours Truly,

ACCEPTED THIS ___ day of ____________________, 20__.

By Artist:_____________________________________________________

WORK-FOR-HIRE AGREEMENT

This AGREEMENT (hereinafter referred to as the “Agreement”) is made on this _____ day of _______________, 200__ by and between ____________________, located at ________________________________________ (hereinafter referred to as the “Contractor”) and ____________________, located at ________________________________________ (hereinafter referred to as the “Client”).

WITNESSETH:

In consideration of the respective covenants contained herein, the parties hereto, intending to be legally bound hereby, agree as follows:

1. Services. The Contractor agrees to provide following Service:
________ (please specify the work in brief for which Contractor is hired) (hereinafter referred to as the “Work”).

2. Ownership of Work and Copyright Assignment. In consideration of compensation as specified in Clause 3 of this Agreement, Contractor certify and agree that all of the results and proceeds of the services of every kind heretofore rendered by Contractor in connection with the Work created for Client is and shall be deemed a work “made-for-hire” and it constitutes a work specifically ordered by Client for use as a contribution to Work. Accordingly, Contractor further acknowledge, certify and agree that Client is and shall be deemed the author and/or exclusive owner of all of the foregoing Work for all purposes and the exclusive owner throughout the world of all the rights of any kind comprised in the copyright thereof, and of any and all other rights thereto, and that Client shall have the right to exploit any or all of the foregoing in any and all media, now known or hereafter devised, throughout the universe, in perpetuity, in all configurations as Client determines. Contractor hereby agrees not to make any claim against Client or any party authorized by Client to exploit the Work based on such moral or like rights. To the extent that Contractor may be deemed the “author” of the Work, Contractor hereby grant and assign to Client all rights of every kind and nature whether now or hereafter known or created (and so far as may be appropriate by way of immediate assignment of future copyright) throughout the universe in perpetuity and, in connection therewith Contractor hereby grant to Client the right as attorney-in-fact to execute, acknowledge, deliver and record in the U.S. Copyright Office or elsewhere any and all such documents if Contractor shall fail to execute same within five (5) days after so requested by Client. In connection therewith, Contractor hereby grant to Client the exclusive worldwide right in perpetuity to sell, reproduce, adapt, distribute, transmit, communicate and otherwise use the Work in any form and by any method now or hereafter known, including, without limitation, via cable transmission, satellite transmission, electronic transmission, transmission via the Internet (including any promotional or commercial downloads), to lease, license, convey or otherwise use or dispose of the Work by any method now or hereafter known, in any field of use, to use the Work under any trademarks, trade names, or labels, or any other method now or hereafter known, all upon such terms and conditions as Client may approve. Contractor agrees that all rights, copyrights, titles and interest in the Work created by the Contractor on behalf of Client, belong solely and exclusively to the Client, free from any claims whatsoever by the Contractor.

3. Compensation. The consideration for this Agreement is the promise by the Client to pay the Contractor the amount of $____________. This is a one-time compensation for Contractor’s services known as a “work-for-hire” and Contractor understands that this will comprise Contractor’s complete and sole payment.

4. Delivery. The Work will be completed by the Contractor no later than ________________

5. Client’s Alterations. There shall be no charges to the Client for revisions or corrections or additions made necessary by errors on the part of Contractor. No additional payment shall be made for changes required to conform to the original assignment description.

6. Modifications of the Agreement. Modifications of the Agreement must be written, except that the invoice may include, and the Client shall pay, fees that were agreed by the Client in order to progress promptly with the work.

7. Warranty of Originality. Contractor warrants and represents that, to the best of its knowledge, the Work hereunder is original and has not been previously published, or that consent to use has been obtained on an unlimited basis; that all work or portions thereof obtained through the undersigned from third parties is original or, if previously published, that consent to use has been obtained on an unlimited basis; that Contractor has full authority to make this agreement; and that the work prepared by Contractor does not contain any scandalous, libelous, or unlawful matter. CONTRACTOR EXPRESSLY AGREES THAT IT WILL HOLD CLIENT HARMLESS FOR ALL LIABILITY CAUSED BY THE CLIENT’s USE OF WORK TO EXTENT SUCH USE INFRINGES ON THE RIGHTS OF OTHERS.

8. Hold Harmless. Contractor hereby indemnifies and holds the Client harmless from and against all claims, suits, threats, demands, liabilities, settlements, negotiation costs and expenses, other costs, and attorney fees relative to any third party’s claim that the Web Site or any of the Web Site content, infringes upon or interferes with any proprietary right of such third party, including but not limited to copyrights, trademarks, trade secrets, privacy rights, moral rights, patents, publicity rights, or any other right that may now or at any time in the future exist under any federal or state law.

9. Arbitration. Should a dispute arise regarding the rights or obligations of the parties under this Agreement, either party shall have the right to submit said dispute to binding arbitration in accordance with the then effective rules of the American Arbitration. If binding arbitration does not work, the losing party shall pay the attorney’s fees to the winning party.
10. Severability. In the event any provision of this Agreement shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining provisions hereof, and this Agreement shall thereafter be construed and enforced as if said illegal or invalid provisions had never been included therein.

11. Governing Law. This Agreement shall be interpreted, construed and enforced in all respects in accordance with the laws of the State of________________, excluding its conflict of laws principles. The parties irrevocably agree that any action to enforce the provisions of this Agreement or arising under or by reason of this Agreement shall be brought solely in the _____County, ________ (specify the state) Superior Court or a federal court impaneled in _______County, _________ (specify the state).

This Agreement is entered into in the City of __________ and State of __________ and is guided by and governed by the laws of that State.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.

AGREED TO AND ACCEPTED:

“Contractor”
____________________________

By: _________________________
Title: _______________________

“CLIENT”
(COMPANY NAME)
____________________________

By: _________________________
Title: _______________________

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What are music royalties?

Royalties have been defined legally as an agreement between a creator and someone who uses that creation. A royalty can be a percentage of future profit from sales or regular income, and will be settled by an agreement (usually in writing) between the parties. Songwriters in particular are given the right to license or sell their copyright to others in exchange for specific monetary compensation. For the music industry, this money earned is called a royalty.
Music Royalties and the U.S. Copyright Office

For some music royalties, the U.S. Copyright Office has set up specific rates of royalty payments. Mechanical licensing fees (e.g., for songs played over a radio or sold on CDs) are among these. For these fees, the play rate is 9.1 cents per song or 1.75 cents per minute for songs over 5 minutes long. Internet broadcasters have lower rates than radio, but these rates have been steadily creeping upward for years. Note that though there are specific royalty rates (e.g. – the mechanical rate), the reality is that U.S. copyright rates are only used as guidelines…and are often not followed. This is because there is no easy or completely accurate way to keep track of all public uses.

US Copyright law gives songwriters the exclusive right (for a limited period) to transfer, lend or even sell part or all of their exclusive copyright protections. In return for these licenses, grants, assignments, and/or sales, the copyright owner receives “royalties.” Thus, music royalties are generally considered monies earned from songs and/or sound recordings.
How Royalties Are Promoted and Enabled

The music publisher is usually the key player in promoting and tracking profits from several types of licensing:
•Synchronization Royalties: music that’s placed in movies and multimedia.
•Mechanical Royalties: physical product sales containing your music, e.g., CDs.
•Print Music Royalties: printed forms such as sheet music/ arrangements.
•Grand Rights: this is the “show music” category.
These royalties are generally collected in two ways. One way is through direct payments, usually for a specific use, and is negotiated on a case-by-case basis. Live performances or television specials are two common examples of this. The second way is through professional groups, which represent artists or recording companies for the specific purpose of collecting royalties. The largest group that represents record companies is called SoundExchange, and has aggressively sought to calculate and collect profits from Internet and satellite broadcasters. The largest groups collecting for individual artists include: SESCAP, BMI, and ASCAP.
The process can get complicated because everyone in the process wants to negotiate their cut of the royalties: the artist negotiates with the music publisher, the music publisher negotiates with radio stations, the radio stations negotiate with record companies, and so on.

There are four (4) different types of royalties, each derived from a separate and distinct copyright. The four potential sources of royalty revenue in the music recording and publishing industry are:

(1) Mechanical royalties: paid from record companies for record sold based on the exclusive to reproduce and distribute copyrighted works.

(2) Public performance royalties: paid by music users for songs in the operation of their businesses and broadcasts based on the exclusive right to perform publicly copyrighted works.

(3) Synchronization fees: paid by music users for synchronizing music with their visual images based on the exclusive right to reproduce and distribute copyrighted works and to prepare derivative works of copyrighted material.

(4) Print music income: paid by music printers for sheet music and folios based on the exclusive right to distribute copies of copyrighted material.

Royalties are determined and divided according to their type and source. They are calculated and divided as follows:

Mechanical Royalties: Record companies pay the publisher mechanicals based on the amount of phonorecords sold. Sales of sound recordings are determined by the record companies through Sound Scan and other sales reporting systems. Unlike most countries, which base mechanical royalties on percentages, US mechanical royalties are calculated on a penny (¢) basis per song. Record companies pay the recording artist either a current minimum statutory penny rate, or a “reduced” penny rate. The current statutory rate for a U.S. copyright is 7.1¢ per song. This minimum rate is effective until January 1, 2000, after which it will go up every two years until 2006, at which time it will remain at 9.1¢ per song until changed.

However, recording artists rarely get maximum (statutory) rates from their US record companies. This is because most of their the domestic recording or production contacts usually contain a standard “controlled composition” clause which allows the record company to pay the artist and/or music publisher less than the minimum rate for songs written or “controlled” in whole or in part by the recording artist. This negotiated or “reduced” mechanical royalty rate is generally a percentage of the minimum compulsory license rate, up to a maximum number of songs. A common example is 75% (of 7.1¢) per song, with a cap of 10 songs, no matter how many songs are recorded and released on the album. This negotiated “min stat x 10 rate” is collected by the music publisher, which then pays the residual to the recording artist per their publishing agreement.

Before the artist/songwriter eventually receives their “reduced” US mechanical royalties, there are numerous withholdings by the recording company pursuant to the artist’s recording contract. There are frequently several clauses that give away “freebies” and eat away at the artist’s basic royalty rate (e.g., getting paid on less than 100% of units sold, receiving no royalties for “free goods” or promotional CDs, or for “non-controlled” songs, getting a lower royalty rate for CD’s, cassettes, and record club or budget records, giving free licenses for promotional music videos, etc).

There are also other provisions in the recording contract that delay and reduce payment of royalties. For example, most record companies pay mechanicals on a quarterly basis, i.e., 60 to 90 days after each quarter. Moreover, a certain percentage of the reduced royalty rate is withheld by the record companies in “reserve against returns”,.i.e. in case of over shipment and returns.

After the record company takes out its numerous deductions and withholdings, it pays the mechanicals royalties to the music publisher, if any. Under a typical “co-publishing” deal, American music publishers also deduct their 25% publisher’s share and sometimes take out “administrative” deductions. Sometimes, a music publisher may also deduct for using the services of a third party to help administer and audit compositions or catalogues.

Foreign mechanical royalties are calculated differently from domestic mechanical royalties. Unlike in the US (where musical compositions are licensed on a cent per-song basis), foreign mechanical societies grant mechanical licenses for the entire record based on a percentage of the wholesale or retail price, regardless of the number of songs. The rate of foreign and/or domestic mechanical royalties paid to the songwriter is determined by the US publishing and/or sub-publishing agreement by specifying in those contracts whether the writer will be paid by an “at source” or “receipts” method of calculation. “At source” means the percentage paid to the sub-publisher is based on earnings in country where earned (e.g. England), which is considered the “source”. “Receipts” means the percentage of the foreign mechanicals paid to the sub-publisher is based on earnings in country where received (e.g. USA).

(2) Performance Royalties: Each quarter, the US PRO’s first deduct from gross receipts a small administrative fee for “operating” expenses. They may also get reimbursed for payment of fees to foreign societies for their sub-publishing percentage. Then the remaining net performance fees are divided among the participants of the same PRO, depending of the amount of their respective radio and TV air play. After “weighing” the air play, the PRO then bypasses the music publisher and pays all of the net “writer’s share” performance income to their songwriter member writer directly, with the music publisher getting paid their “publisher’s share” separately.

The amount of public performance monies collected by the PRO’s depends on their survey and consensus of how many times your songs were played, when, and on what type of medium. The amount of blanket license fees charged to music consumers and received by the U.S. PRO varies, as each have their own unique monitoring systems and detection techniques based on either a random survey, census, sampling, or digital detection method.

ASCAP uses the random survey and consensus method to detect performance royalties. In contrast, BMI uses a scientific sampling method of tracking performances. SESAC relies on cue sheets for TV royalties, but, utilizes a more accurate and cutting edge method of detecting radio performances. It uses digital pattern recognition technology created by Broadcast Data System (BDS), the same company that monitors radio air play and that Billboard magazine relies on to help determine chart positions.

Under a “standard” co-publishing deal, and per a letter of direction to the PRO with which the author is affiliated, the song writer gets 100% of the writer’s share, and 50% of the publisher’s share, or 75% of all performance royalties. The music publisher gets the “publisher’s share” of performance royalties, or 25%.

(3) Synchronization Fees: Unlike mechanical royalties, synch fees are purely negotiable and are not regulated by statute; they are strictly contractual and vary greatly in amount depending on the usage, subjective importance of the song and production, and medium used. Ranges can vary as low as free for an unsigned artists for an unknown and un-released song for a local public TV program, up to $250,000 or more for a major artist’s hit song featured in a high-budget feature film. Generally, however, synch fees are determined and negotiated by custom and practice based on a number of objective and subjective factors.

(4) Print Income: Domestic (US) print royalties are paid by printers to the song owner that granted the print music license (usually the music publisher). The print licenses are usually non-exclusive and limited to three to five years in duration. For a single-song sheet music, publishers are usually paid 20% of the marked retail price (or about 70¢ @ $3.50 retail price). Folio royalties are paid at 10% to 12½¢ of the marked retail price (or about $14.95 to $16.95). There is usually an extra 5% of marked retail price for personality folios, which requires an additional license or consent for the right of publicity.

Foreign print music is collected by the foreign sub-publisher(s), which base their charge depending on whether they actually manufacture and sell the material. If they do, they generally charge from 10% to 15% of the marked retail selling price. If they license out the print music, the sub-publisher retains the same percentage as all other income (15% to 25%), and remits the balance to the writer.

If a folio is the selected work from a single songwriter, only that writer’s music publisher receives the print royalties. If the writers on a folio collection vary, different music publishers will receive their pro-rata share. For example, if one publisher owns 10 songs from a 20 song collection, it gets 50% of the (10% to 12.5%) royalty.

Under a standard “co-pub” deal, after taking their 25% share, the music publisher pays the artists 75% of their pro-rated share. For personality folios, the extra 5% for the use of name and likeness (if any) is paid directly to the artist.

How are royalties collected?

Royalties are collected depending on the nature and source of the revenues. There are four (4) potential types of royalties in the music recording and music publishing industry:

(1) Mechanical Royalties: Domestic (US) mechanical royalties are collected by domestic record companies for records sold. Foreign mechanical royalties are collected from foreign Performance Rights Organization (“PRO”) by sub-publisher(s) for records sold in their territory.

(2) Performance Royalties: Domestic (US) performance royalties are collected by one of the three main Performance Rights Organization: (1) ASCAP; (2) BMI; and (3) SESAC. These PRO’s issue blanket licenses to music users for publicly performing their songs in the operation of their businesses and broadcasts. To ensure prompt and timely payment of performance income from a PRO, each songwriter and music publisher must first join as a member and properly register their songs and current whereabouts.

Foreign performance royalties are collected by foreign, government-owned PRO’s. To ensure prompt and timely payment of performance income from a foreign PRO, each songwriter and music publisher should enter into a “sub-publishing” agreement and properly register their songs and current whereabouts with the sub-publisher in each territory their songs are performed. The foreign performance societies contact each sub-publisher in their territory and request they designate an agent for the performance rights in all their songs. They then contact the users of those songs in their territory (e.g. local radio stations, nightclubs, TV, etc.), and grant them performance licenses to use all the songs of all the sub-publishers they represent. The foreign PRO’s then collect and pay the publisher’s share of performance income to sub-publishers, and pay the writer‘s share to one of the American PRO’s (ASCAP, BMI or SESAC), which then pays the artist. If there is no foreign sub-publishers, the publisher’s share eventually is paid to the US music publisher via one of the American PRO’s, but this process takes much longer.

(3) Synchronization Fees: Synchronization fees are collected by the song writer and/or music publisher that grants a synchronization license to users or broadcasters of the songs, which then create a derivative audiovisual work in the form of movies, TV programs, commercials, etc.

(4) Print Music Income: Print music income is collected by the song writer and/or music publisher that grants a print music license to music printers which then prints sheet music or folios.

Artist Recording Contracts

Allows bands, individual artists, or record labels to draft professional-quality recording contracts for recording artists.
Can be used to define compensation, royalty payments, and distribution requirements.
Allows you to add renewal options.
Also covers production details, promotional appearances, termination, mediation, and more.

Anatomy of a Recording Contract

Term:

the length of the agreement
Recording commitment by the artist:
The amount, length and quality of recording.

Recording schedule:
primarily completion and release dates
Personal commitments by the artist: including performance and publicity
Distribution commitment by the

company:
outlines efforts by the company to distribute the recoding

Rights over recording:
Assignment of all rights by the artist to the company, artists assign all rights, titles and interests over the recording to the company, including the right to manufacture, sell, license, release, advertise, perform, assign and use likenesses of the recording or even the artist

Copyright:
the company has the right to obtain and secure a copyright over the recording

Exclusivity / non-circumvention:
the artist records exclusively for the company, and cannot interfere with the company’s rights

Financials:
Payments from company to artist: an outline of the amount as well as payment format and schedule for advances and royalties paid to the artist

Costs:
an outline of who pays the recording costs, the producer costs, and other related expenses

Artist’s warranties and representations:
Artist is under no disability, restriction, or prohibition to execute the agreement and perform the terms

Good faith and fair dealing:
parties will act in good faith, not be unreasonable (for example, to withhold reasonable consent)

Arbitration:
rules for arbitrating disputes regarding the contract, including the applicable jurisdiction / law, as well as attorney’s fees

Termination:
Right of termination by the company: under what conditions the company may terminate the contract

Right of termination by the artist:
under what conditions the artist may terminate the contract

Notices:
format of notices to either party

Because of their legal complexity, recording contracts can be quite hard to decipher. They come in different shapes and sizes, and will often vary depending on the label, and the status of the artist involved. Even so, many of their commercial terms are similar. They certainly require closer inspection in an article of this scope.

New digital methods of music delivery, such as downloads and mobile phone ringtones, should be covered by modern recording contracts.

Recording contracts are legally binding agreements, enabling record companies to exploit an artist’s performance in a sound recording, in return for royalty payments.

Exploitation is achieved through physical sales, such as CD, vinyl and cassette; the public performance and broadcasting of works; and the sale of digital products such as downloads and mobile ringtones. The contract will define a record to include audio-visual devices as well. So ‘Dualdisc’, DVD and other new technologies will be caught by this definition.

* Exclusivity

The recording contract will usually require the artist to sign to the label exclusively. This means that they can’t record for another label without permission, nor can they leave the contract if they’re unhappy. The label, however, remains free to sign and promote as many artists as it wishes. Record labels invest huge sums of money in breaking an act and claim that they need this level of control in order to improve the chances of making a profit or, as is more often the case, to cut their losses. Occasionally the artist gets one over on the label. Mariah Carey described the termination of her long-term deal with EMI in 2002, as “the right decision for me”. This, however, may have had something to do with the £19m EMI had to pay her to end the relationship!

Mariah Carey came out of her 2002 split with EMI some £19m richer, but it’s rare for an artist to triumph quite so impressively.
If an artist wants to make a guest appearance on another artist’s record, they’ll need a ‘sideman’ provision to cover this. Chris Martin, of Coldplay fame, recently showed up on the Nelly Furtado track ‘All Good Things’, albeit with his plaintive vocal somewhat obscured in the mix. Likewise, DJs and producers will sign deals under a specific alias, leaving them free to contract with other labels under a different pseudonym. Dave Lee, AKA Joey Negro, Raven Maize and Jakkata, is a case in point.

* Territory

Major labels will normally sign the artist to a worldwide deal. Companies such as Universal and Sony/BMG have offices in all the key markets, together with the vast distribution network capable of delivering their latest offerings to a supermarket near you. Split-territory deals are less likely with major record labels, but independents may be more willing to agree to such an arrangement.

* Term

This relates to the duration of the contract. It is calculated by reference to an initial fixed period of maybe 12 months — when you’ll make your first album — followed by further option periods, also usually of 12 months, allowing the record company to extend the contract if they wish. There will be a minimum commitment within each period, requiring you to deliver a certain number of tracks, to a releasable standard, with perhaps a total of five or six albums expected under the deal.

Try to avoid wording that masters must be ‘commercially acceptable’ — a euphemism for ‘radio hit’ — as delivery and acceptance requirements may have a knock-on effect on how long the artist is tied to the deal. Where a label is only willing to accept commercial recordings, as opposed to merely technically satisfactory ones, the artist may have to rework or re-record material before the label is finally satisfied of the record’s chart potential. The option period in which the album is due could thus overrun by a good few months, before the label accepts it and commits to a release date. It will be a further 3-6 months before the label can determine the album’s success, which in turn will delay the exercise of the next option, and so on. It is sensible therefore, to negotiate a ‘long-stop’ provision, so that the overall duration of your contract won’t exceed six or seven years maximum.

* Rights Granted

Under most exclusive recording contracts, the artist will assign copyright in the sound recordings to the record company. An assignment is a transfer of ownership for the full life of copyright. In the case of sound recordings this will be 50 years from release.

Having made a lot of money for his former label, Warner Music, but still not having access to the masters of his own material, Simply Red’s Mick Hucknall turned his back on what he described as an ‘immoral’ deal, to go his own way with simplyred.com.
Two issues are of particular concern here. Firstly, even unreleased recordings remain the property of the label for the artist’s entire career. And secondly, even once the artist has repaid all recording costs, the label will still own the masters. This was one of the reasons why Mick Hucknall decided to part company with Warner Music in early 2000, claiming that his deal was ‘immoral’. Warner made approximately £192m from the relationship, and kept all the masters, whereas Mick earned a paltry £20m! Hucknall has since taken control of his destiny, along with a greater share of the profits, releasing music on his self-financed label, simplyred.com.

In rare instances, an artist will secure a reversion of copyright clause, allowing them the return of their masters at a future date. Robbie Williams’ ground-breaking 2002 deal with EMI granted him such rights — but then again, how many Robbies are there?

Other rights the label will wish to acquire include rights in the album artwork and the right to use the artist’s name and likeness in connection with the sale and promotion of the records.

* Release Commitment

The artist should aim to secure a positive release commitment from the label (at least in the UK), coupled with a minimum marketing spend to support the release. Should the label fail to release your record, you should be able to terminate the deal, and/or buy back your recordings, so they can be licensed to another label, or perhaps self-released.

About The Author
Richard Salmon is an Entertainment lawyer and lectures in media and IP (Intellectual Property) law at London Metropolitan University.
* Key-man Provision

What if the A&R guy who signs you leaves the label, or the MD who’s a big fan of your music is suddenly fired? In this situation you might be glad you’d negotiated a key-man clause in your contract, allowing you to leave the label as well. This would enable you to sign a new record deal elsewhere and avoid being left on the shelf.

* Advances

These are sums of money paid to the artist on account of future royalties. They’re paid when the artist signs to the label, and again as and when further options are exercised.

Robbie Williams, on the other hand, was able to use his considerable stature to swing a revolutionary deal that guarantees that his masters will eventually revert to him.
More generous advances should be negotiated for the exercise of successive options — ie. when the next album becomes due — irrespective of whether previous advances have been recouped. Recoupment is a process by which the label will first recover the advance against any artist royalty income. Care should be taken to remove any wording stating that an advance is repayable. This would have the effect of turning it into a personal debt, which you could be liable for at any time. You should only ever have to repay advances where your record sales generate sufficient royalties to cover them. Failing that, the label bears the loss.

Remember, you’ll probably have to split your advance with your manager and other members of your band (if there are any), as well as with the taxman, who will also take his cut. So even a generous advance can be eroded quite quickly.

* Recording Costs

Advances are often provided as part of an inclusive recording fund. A certain amount will be allocated to the recording budget and any surplus goes into the pocket of the artist. The full amount is recoupable, so avoid the temptation to go and blow it all on a lost weekend with Paris Hilton, as not only will you be left with nothing to live on, you’ll have no record to release either!

You must also make sure you only allow your manager commission on the non-recording portion of the fund — specifically, what’s left over after the recording budget has been agreed. This is your personal advance, on which your manager will take his 20 percent.

Although the thought of large advances may get you excited, they come at a price. Often, if the advance is large there’ll be more pressure on an artist to succeed immediately. Then if the first record is a flop the label may cut its losses and simply ‘drop’ you. If you’re after a little more stability and you truly believe in yourself, you should probably opt for a smaller advance and instead aim to secure a higher royalty rate.

* Royalties

Artists are paid royalties based on record sales. In a typical major-label deal, the artist will earn somewhere between 14 and 18 percent of the record’s dealer price (PPD).

Before they’ll see any money, the artist will have to recoup the recording costs, advances, and usually 50 percent of all video costs. The label will make additional deductions, reducing the real royalty rate still further.

Standard deductions — or standard as far as record labels are concerned — include a packaging deduction of 20 to 25 percent on CDs, a reduced royalty rate on foreign sales, budget records and record clubs, a reduced royalty on TV-advertised albums, and often no royalty at all on free goods (records given away to retailers and the media). Because you only get paid on royalty-bearing records, you’ll need a cap on free goods, otherwise you’ll be in trouble.

Even though volume CD packaging these days is cheap, record companies typically make a royalty deduction of 20 to 25 percent deduction for it — which might look like a bit of a rip-off…
Overall, you might only get paid on 90 percent of actual sales, since retailers are able to return records they don’t sell. The record label therefore holds on to a portion of your royalties, usually 10 percent, as a reserve, until all sales are verified. You must make sure that this reserve will be liquidated (paid out) at regular intervals, and that the artist (you) receives their entitlement in full.

In reality, most ‘deductions’ are artificial and in no way reflect the true cost to the label. Packaging on CDs manufactured in volume is cheap. Similarly, as more records are sold through digital channels, a reserve for breakages and the allocation of free digital goods ceases to make any sense at all, other than to boost the label’s profits.

* Producer Royalty

The artist is further expected to pay the producer royalty from their own royalty share. So where, for example, a producer is paid a three percent royalty and the artist 15 percent, the artist will end up with an actual rate before deductions of 12 percent. Don’t forget that the artist still has to pay their manager a percentage of earnings, recoup advances and, in the case of a band, possibly split royalty income five ways. The producer, however, will be earning a healthy three percent from the very first record sold.

It’s important not to allow the record company to recoup from the artist’s royalty-income advances paid to the producer. In the UK, producer advances are the responsibility of the label.

* Secondary Income

A well-negotiated deal will ensure that the artist is entitled to a 50:50 share of any secondary income earned by the label. This could be in the form of advances paid by overseas labels licensing your record, income from compilations, or sync fees that are paid when a sound recording is used in a film or TV commercial or on a computer game.

Synchronisation exposure can sometimes provide a much-needed boost, taking the artist’s career to the next level.

Touring can be expensive, especially if you like to be as over the top as legendary rockers Iron Maiden. If you go on tour to promote a record release, don’t forget that the cost of tour support will be recouped by the label from your royalty, so it’s a good idea to cap what can be spent.

* Promotion

In order to raise the profile of a release, the artist will have to undertake some domestic and international promotional work. In the event that you don’t follow in the footsteps of Sandi Thom, by webcasting your ‘tour’ from the comfort of your living room, the record company will deploy an army of radio, press, and new media marketeers to talk up your record. The considerable cost this may incur should not be recoupable from artist royalties. After all, the record label benefits whenever the record sells, and promotion is a reasonable overhead of their business. And, of course, with a likely earnings ratio of 3:1 in the label’s favour, they’re going to break even a lot quicker than any artist can recoup.

* Artist Warranties

The artist will have to promise the label that they will perform their duties to the best of their ability, and that they are free to enter the agreement — ie. not currently signed to another record label. More specifically, they’ll have to promise to attend interviews and undertake personal appearances and all other reasonable promotional duties. Costs incurred in connection with the latter (for example, travel and accommodation) should be borne by the label.

The artist will also have to warrant that they haven’t breached copyright in another person’s work in making their record. The label should be notified of any uncleared samples and all session musician consents must be obtained before the label will accept the record.

* Tour Support

Tour support paid by the label to get the artist on the road is recoupable, so it’s best to agree a limit on spend for obvious reasons.

* Leaving Members

In the case of a group signed to a label, usually the company will reserve the right to terminate the contract should a key member of the band decide to leave. The label may also try to obtain a clause allowing them to sign any leaving member as a solo artist — and if the group break up before releasing a record, but after spending their advance, they’ll probably be sued for breach of contract and return of the monies they’ve received!

Care should be taken not to allow the label to recoup advances paid to leaving members for solo releases against the remaining members’ royalties.

* Re-recording Restrictions

Another protection the label will ask for is a re-record restriction. This prevents the artist from re-recording their music on another label for a certain number of years following expiry of the contract. Any restriction you agree should apply for a maximum of five years following the end of the contract, and should only ever cover records actually released.

* Controlled Compositions

If the artist is also a songwriter and the label are releasing your music in the USA, you’ll have to deal with the thorny issue of how your mechanical royalties are paid. Essentially, mechanicals are royalties paid to songwriters when their compositions are reproduced on sound carriers for sale: CDs, vinyl, DVDs, and so on. These are quite separate from public performance royalties, which performers and composers are entitled to when their works are broadcast on radio or TV.

In the UK the mechanical royalty rate is set as eight and a half percent of the dealer price on physical product and eight percent of gross revenue (excluding VAT) on downloads. In the US, however, most record companies are only willing to pay 75 percent of the fixed statutory rate for mechanicals. There is also a limit on the number of tracks the US labels will actually pay mechanical royalties on when the artist is also the songwriter. Normally the maximum is 10 songs per album, even though the artist may have composed, say, all 14 songs on an album. In this way it could be said that the US labels control the compositions, as well as capping the total amount they will pay to artist/writers. The most successful acts are eventually able to negotiate a 100 percent rate, but it may take several hit albums before they get there.

Ultimately, the mechanical royalty issue boils down to the bargaining power of artists and the might of the North American record companies. Mechanical royalty reductions are fairly ‘standard practice’ over the pond, although to the uninitiated artist it looks remarkably like daylight robbery. If you want further clarification of this matter, your publisher — who administers your song rights — will be able to help.

* Accounting

The artist only receives a royalty cheque once they’ve recouped. However, the label should still be sending royalty statements to the artist twice a year, detailing all relevant territories, tracks and earnings. For major labels, accounting normally happens 90 days following the end of the June and December periods — ie. in September and March.

To avoid headaches of the Tupac/Biggie variety, you should make sure your accountant has the right to inspect and audit the record labels’ books if they believe there’s been an under-payment. Normally you have to accept the statement if you haven’t challenged it within two to three years from receipt. Having said that, if recent reports are to be believed, the Beatles are suing EMI over ‘accounting irregularities’ some 37 years after they split.

An audit can be time-consuming and costly — think what it’s like just getting your bank to send you a duplicate statement — so try to secure a provision that the label will pay the cost of the audit, in the event that it reveals an under-payment of at least 10 percent of the sum owed. And of course, you’ll need to be paid your money in full, plus interest. The label may resist, and try to make the artist bear the audit cost. This may exceed any discrepancy in the artist’s favour, and merely serves to dissuade the act from scrutinising payments too closely, unless they’re confident a large sum is missing.

* Termination

The contract should anticipate scenarios that could give the parties the right to terminate the agreement. There should be safeguards where the label goes into liquidation, or fails to release the record, or where either side is in breach of contract.

If the record company does go into liquidation, you should be able to terminate the agreement and get the rights in your recordings back. Otherwise your copyrights could become the property of third-party creditors fighting over the remains of the now-defunct label. A similar provision, but much harder to obtain, is to allow the artist the right of termination where the label is sold, merged, or taken over. Don’t forget: the label is still obliged to continuing paying the artist on all recordings sold, even after termination.

COPYRIGHTS

Posted: August 20, 2011 in Business, Contracts, Music

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Copyrights

Under the United State’s Code Title 17 section 106 (copyright law), copyright owners have a number of exclusive rights such as the right to reproduce the work in copies of phonorecords. Under copyright law copyright owners also have the exclusive right to prepare derivative works based upon the work as well as the right to:
Distribute copies or phonorecords of the work to the public by sale or other transfer of ownership, or by rental, lease, or lending.
Perform the work publicly, in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audio visual works.
Display the work publicly, in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audio visual work.
In the case of sound recordings, copyright law gives copyright owners the exclusive right to perform the work publicly by means of a digital audio transmission.

A derivative work is a reworking of your old copyrighted material into something new. The best example is a song remix. While the lyrics and traces of the melody may be the same, the overall song is different and can be exclusively re-copyrighted. This right is given exclusively to the copyright owner to prevent plagiarism. Plagiarism occurs when a copyright infringer makes slight changes to the work and then claims it as their own.

Under the fair use doctrine, found in section 107 of the 1976 Copyright Act, there are some examples of uses that others can do without being sued:
Quotation of excerpts in a review or criticism for purposes of illustration or comment;
Quotation of short passages in a scholarly or technical work, for illustration or clarification of the author’s observations;
Use in a parody of some of the content of the work parodied;
Summary of an address or article, with brief quotations, in a news report;
Reproduction by a library of a portion of a work to replace part of a damaged copy;
Reproduction by a teacher or student of a small part of a work to illustrate a lesson;
Reproduction of a work in legislative or judicial proceedings or reports;
Incidental and fortuitous reproduction in a newsreel or broadcast of a work located in the scene of an event being reported.”

Under copyright law, the author also has the right to authorize others to exercise these rights and prevent others from exercising them regarding his or her copyrighted work.

I. The Importance of Copyright Law
Strangely enough, it may be the United Nations that best sums up the purpose of copyright laws:
To encourage a dynamic creative culture, while returning value to creators so that they can lead a dignified economic existence, and to provide widespread, affordable access to content for the public.

II. The Historical Significance of the Copyright
To understand the importance of today’s music copyright laws, and what they can mean to a modern songwriter’s financial wellbeing, it is necessary to revisit the origins of copyright laws in general. As may be expected, the original copyrights laws applied to the written word, and these governances date back to the first days of the printing press in the 15th Century. After years of censorship of printing presses by the British Government and religious groups, the Parliament of Great Britain passed the Statute of Anne—an act that is now commonly known as the first copyright law. The statute was enacted to promote the dispersion of written works and, therefore, knowledge, by granting publishers a specified period of legal protection to the right of a work, and also the ability for a work to eventually enter the public domain. Censorship, which had previously run rampant in publishing houses, was not necessarily ended, but at least curtailed from its previous highs.

Today, many cases come before courts across the world, which constantly uphold and redefine the protection offered by the DMCA and other nations’ similar laws. Notable U.S. court cases tried under the DMCA include an incident when Viacom sued YouTube (and its parent company Google) for infringement for posting 160,000 videos owned by Viacom. One of the first cases to set a precedent in the way music can be presented on the Internet arose when A&M Records (along with several other record labels) sued Napster in 2000 for the infringement of copyright, claiming that the DMCA did not permit the file sharing company to present free digital copies of copyrighted songs to internet users. Napster lost the case but was, upon appeal, able to continue operating as long as they could block content that fell under the terms of copyright infringement. Though Napster was unable to do this (and eventually shut down their original format), the case was one of the original precedents that continues to be modified today as the constantly evolving internet allows users more and more ways to present an obtain digital music.

III. How Copyright Protects Music
While the historical context of copyright law shows the significance and importance of these laws to both protect an artist’s work as well as promoting the motivation to produce new works, the reasons for this importance lie in what copyright actually protects. And understanding the protection copyrights grant is crucial to not only recognizing the importance of these laws, but also in how to protect created works.

There are two distinct types of copyright that must be understood to recognize how musical compositions are protected.

Common Law Copyright
As soon as a song is written, it is protected under individual state laws as common law copyright. No notice or registration is required for a work to receive common law copyright protection; it is automatic upon creation. Common law copyright completely protects the author of a work against unauthorized commercialization of the work. An important stipulation of common law copyright is that the composition cannot be fixed in any tangible media. Once a song is recorded or otherwise fixed in any tangible form, it requires the protection of statutory copyright.

Statutory Copyright
Applying to both published and unpublished works, as soon as a song is fixed in a recorded or otherwise visible form, they are protected under federal copyright law, namely the Copyright Act of 1976. This is how the act defines publication:

“Publication” is the distribution of copies or phonorecords of a work to the public by sale or other transfer of ownership, or by rental, lease, or lending. The offering to distribute copies or phonorecords to a group of persons for purposes of further distribution, public performance, or public display constitutes publication. A public performance or display of a work does not of itself constitute publication.

IV. What Is, and Isn’t, Protected by Copyright Law
A look at what is protected under the Copyright Act of 1976 may best be originated by exploring what is not protected. An idea cannot be protected—only the expression of those ideas. As an example, both Waylon Jennings and David Allan Coe can both write songs about Hank Williams (as they did with “Are You Sure Hank Done It This Way” and “The Ride,” respectively), but neither could claim ownership to the other’s actual song, which is the expression of the idea to write a song about Williams. Additionally, song titles cannot be copyrighted, nor can chord structures. With a finite amount of chords, the arrangement of the order of those chords into a song is also finite; therefore the actual chord structures do not lend themselves to protection.

Additionally, as stated in the aforementioned language of the Copyright Act of 1976, musical compositions that accompany a motion picture are not protected as a phonorecord or sound recording. In the case of movies, the songs used therein are copyrighted with the movie as part of an “audiovisual work.” An exception to this is when a soundtrack album is released before the movie is released, in which case the album would be protected under a separate phonorecord copyright.

Derivative Works
A work is considered a derivative work if it takes an existing work and creates a new sound recording; the new sound recording will be protected under copyright law. If the existing recording is not public domain, the author of the new derivative work must receive authorization from the owner of the existing work.

Anytime an artist records a version of the traditional “Jingle Bells,” the resulting sound recording and phonorecord is protected for the artist as a derivative work. Another common example of derivative work is a remix that significantly alters the original song (i.e. a “dance club” remix).

Still, sampling is a common practice that occurs often in current new music, and copyright protection of the sampled music is often also evaluated on a case-by-case basis. For example, the Beastie Boys won a case filed against them for a sample of a flutist they used in their song “Pass the Mic” because the sample was deemed “not substantially similar” to the original. However, when Vanilla Ice sampled the bassline of the Queen and David Bowie classic “Under Pressure” for his hit “Ice Ice Baby,” he was forced to grant songwriting credit (and therefore royalties) to writers Freddie Mercury and David Bowie.

Royalty payments to the original copyright owners of sampled music are also paid on a case-by-case basis, depending on the artists involved. Sometimes a flat rate will be issued, and other times a percentage of royalties will be charged. In a famous example, after the Verve sampled an orchestral cover version of the Rolling Stones’ “The Last Time” for their hit “Bittersweet Symphony,” the band was forced to relinquish 100 percent of their royalties for the song.

V. The Process of Copyrighting a Work
The procedure for registering for a musical composition with the U.S. Copyright Office is a relatively simple and inexpensive process. Whether the song or album is published or unpublished, the best course of action for the owner of the copyright is to register the work with the copyright office as soon as it is fixed into “tangible media,” thereby qualifying for federal copyright protection as a sound recording. Registration of copyright places ownership of the copyright by the author on public record, so legal action can then proceed against any perceived infringement cases.

VI. Duration of Music Copyright
After registration of a work in the U.S. Copyright Office, the owner has full protection of their copyright under federal law for the duration that the copyright is protected. In the United States and most other countries that have copyright laws, the laws protect the work for a certain amount of time, at which point the work enters the public domain.

Duration of copyrights for sound recordings and phonorecords in the United States vary depending on when the copyright was first acquired, in accordance to how copyright law have changed over the years. But for any work created after December 31, 1977 by a natural person (i.e. not a corporate author), the duration of the copyright will extend throughout the author’s lifetime plus 70 years. If more than one author owns the copyright to a work, the duration will be measured at 70 years from the death of the last surviving author. If the work is a “work for hire,” or an anonymous author whose death date will not be documented, the copyright extends 95 years from publication or 120 from creation, whichever comes first.

VII. A Look at Public Domain
As stated in the previous chapter, after the copyright expires on a work, that work is automatically placed into the public domain. Merriam-Webster’s dictionary describes public domain as “the realm embracing property rights that belong to the community at large, are unprotected by copyright or patent, and are subject to appropriation by anyone.” Therefore, any work in the public domain is free to be used in anyway an artist sees fit, with no royalties or other payments required.

But what is the advantage of this? The purpose of public domain is stated in the Copyright Act of 1976, presented that after.

VIII. The Significance of Performance Rights Organizations
An important distinction should be recognized in the fact that registering a song for copyright purposes is not the same as registering a song with a performance rights organization (PRO). While securing a copyright for a work automatically entitles the author(s) to the right to collect financial gain from public broadcast or other use of the work, many artists use PROs as an intermediary to actually collect and deliver those monies.

There are three PROs currently operating in the United States: the American Society of Composers, Authors and Publishers (ASCAP), Broadcast Music Inc. (BMI) and the Society of European Stage Authors & Composers (SESAC). All three perform various duties for their members, but the one common duty is that all three keep track of public broadcast of member’s songs, collects licensing and royalty fees, and then pays those to the owner of the copyright.

IX. What it Means to Your Music
As is hopefully clear from the contents of this writing, obtaining the copyright for original works is one of the most important things an artist can do. Copyright law not only protects the creator of the work (along with granting them the exclusive right to profit from his or her creation), but also furthers artistic culture of society in general both now and in the future. As discussed, the process of obtaining copyright is simple and relatively inexpensive, and is the one way to fully guarantee protection of a work against future infringement. A small amount of time spent securing a copyright as soon as you create or publish a work can be greatly beneficial to an artist’s future career.

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MUSIC PUBLISHING – AN OVERVIEW

A Look At Music Publishing
To get an idea of how to go about getting a music publishing deal, the first and most important thing to understand is exactly what music publishing is. In its core form, music publishers control the business aspects of a song. They are responsible for getting the song played on radio and licensing songs for TV and movies, as well as collecting revenue that comes from these sources. There also are other venues songs can be used that will generate income, and publishers are responsible for finding these venues and making payments to the writer. Publishers also take songwriters’ songs and find artists to perform them and, hopefully, make the song into a hit.

And obviously a publisher will be compensated for these services. For payment purposes, a song is divided into two portions, a share for the writer and a share for the publisher. While this varies depending on the publishing deal struck between the writer and the performer, there will be certain percentages assigned to each share. Of all income coming in from a song, the publisher may pay the writer, say, 50 percent while retaining the other 50 percent for their services.

Publishing deals will also vary in many other aspects, as far as the duration of the contract, as well as if the publisher has exclusive access to all of the writer’s songs. These terms will also depend on whether the songwriter is also the performer, or, as often is the case, just attempting to get his or her song heard by artists that would perform the song.

With the basics of how publishing works out of the way, the business of obtaining a publishing deal is much trickier. Whereas many record labels have demo submission policies for artists wishing to obtain a record deal, this is often not the case when it comes to publishers. Many publishers rely exclusively on other music industry contacts or talent scouts to tip them off to the next great songwriter, but that doesn’t mean that you can’t get your music heard by a publisher.

The most important thing is to get your name out there—network, network, network. As stated above, if you have even a little name recognition, you are much more likely to have a publisher listen to your song. If you live in or near an area with high populations of publishers (New York, L.A., Nashville, etc.), find out where publishers often congregate and go there with the intentions of getting to know others in the business. Don’t bother anyone to the point of annoyance, but it’s fairly easy to strike up conversations with people as friends who may turn out to be in the music industry or know people who are. If you do not live in one of these areas, you can still make your name known. Start by building your following where you do live and build a strong internet presence. When you have started to become known, it’s time to contact publishers who deal with similar artists and try to set up a meeting, or at least receive permission to send your demos. Having spoken with someone in the publishing office and gotten permission to send your work is a great way to avoid having your material thrown into a trash can as soon as it arrives.

Finally, be persistent. You will most likely receives “no’s” in your search for a music publisher. You may well be told “no” many times, in fact. But if your songs are good enough to compete with the best songs being played on radio, and you consistently make connections and make yourself known to those in the industry, you will eventually land that deal.

This article is designed to give an overview of music publishing. Although the details can be less than fascinating, music publishing remains one of the most financially lucrative areas in the music business, and one of the few areas where artists can generate real money. As a result, it is particularly crucial for recording artists and songwriters to protect their publishing rights. The best way to start is to learn the basics of the music publishing business.

WHAT IS A MUSIC PUBLISHER?
Before the invention of the phonograph, songwriters earned income by relying on music publishers to sell sheet music of their songs. Even as radio and television replaced the piano in the parlor, music publishers continued to play an important role as popular singers continued to rely upon established songwriters to provide their material. However, with the advent of rock and roll (and especially the Beatles) popular recording artists began to write more of their own songs. Since that time, the music publishing industry has taken on a less important role. Nevertheless, music publishers continue to perform several important functions that you should be aware of.

WHAT DOES A MUSIC PUBLISHER DO?
Today, music publishers are concerned with administering copyrights, licensing songs to record companies and others, and collecting royalties on behalf of the songwriter. Some of the more important music publishing activities are listed below:

Mechanical Royalties
The term “mechanical royalties” initially referred to royalties paid whenever a song was reproduced by a mechanical device (remember that one of a copyright owner’s exclusive rights is the right to authorize the reproduction of their work). The term “mechanical royalties” was applied to the reproduction of songs in music boxes, player pianos rolls, and later, phonograph records. This term is still used, and “mechanical royalties” now refers to royalties paid for the reproduction of songs on CD, DAT, audiocassette, flexi-discs, musical greeting cards, and other devices sold on a “per unit” basis.
The amount of money a record company must pay for a mechanical license is generally set by the Copyright Royalty Tribunal. This rate is sometimes referred to as a “statutory” rate. The current statutory rate through December 31, 2007 is nine and one-tenth cent ($.091) per song. This means that a single song can generate up to $.91 cents for every 10 records sold. Unfortunately, it is record industry custom to pay only 75% of the statutory rate to new or moderately successful songwriters. This means that a typical songwriter without enormous clout would generate a little more than 68 cents for every 10 records sold. After the publisher collects this money from the record company and takes its share of the income, a songwriter may receive as little as half of this amount.

Foreign Monies
Foreign countries sometimes have different laws governing the collection and distribution of mechanical royalties. As a result, it is often necessary for publishers to enter into agreements with a foreign publisher (or “subpublishers”) to collect a songwriter’s mechanical royalties in that territory. After the subpublisher takes a cut (anywhere from 15% to 25%) the rest of this foreign income is divided between the publisher and the songwriter according to their agreement.

Synchronization Licenses
Whenever a song is used with a visual image, it is necessary to obtain a “synchronization” (or “synch”) license permitting the use of that song. Music publishers issue synch licenses to television advertisers, motion picture companies, video manufacturers and CD-Rom companies. A portion of this money (usually 1/2 the net proceeds) is paid to the songwriter.
Transcription Licenses
Because radio is not a visual medium, the use of a song as part of a radio commercial requires a separate license, known as a “transcription license.” Sometimes songwriters are able to negotiate provisions in their publishing contract preventing their songs from use in certain contexts, such as ads for alcohol, tobacco, political campaigns or other uses the songwriter may find offensive.

Print Licenses
Although sheet music sales have diminished over the years, many songs are still available in print form. These include books of songs by specific artists, instruction books or compilations of hits within a given genre (i.e., “100 Country Hits of All Time”). The music publisher issues print licenses and collects this income from the sheet music company, while the songwriter receives a small royalty derived from the sale of his or her song in print form.

Administration and Registration of Copyrights
Because music publishers generate money by licensing copyrighted compositions, they must also perform various administrative tasks involving copyright transfers and the registration of musical copyrights with the U.S. Copyright Office. Registering your copyright with the US Copyright Office provides added protection to copyright holders, and can permit the copyright owner to recover statutory damages of up to $100,000 and attorneys fees if the copyright is subsequently infringed.

Public Performance Royalties
A copyright owner also has the exclusive right to authorize the “public performance” of that work. This is why radio and television broadcasters must enter into licenses with performance rights organizations such as BMI, ASCAP and SESAC. These performance rights organizations collect income on behalf of songwriters and music publishers whenever a song is publicly broadcast. A future column of the Fine Print will discuss these performance rights organizations in more detail.
Even though music publishers do not collect this performance rights income, publishers remain entitled to 50% of the money received by BMI, ASCAP, SESAC and others. Publishers also register songs with these performance rights organizations.

“Song Plugging”
This obscure term refers to music bizzers who promote the compositions of others. This may involve convincing popular artists to cover your song, or convincing Disney to use your latest tune in their next animated feature.
Translations
Publishers may also authorize translations in order to generate income from cover versions of a particular song in foreign countries.

Obtaining a Record Deal
Music publishers are usually generally most in signing established songwriters or recording artists who write their own material. However, some publishers may be willing to sign new songwriters or bands without a record deal. If a publisher believes an undiscovered artist will one day sell lots of hit records, they may help the artist record demos and assist in trying to land a major record deal. If the artist gets signed, the music publisher will hope to see a reward for its investment in the form of mechanical royalties, public performance royalties and other derivative income. A publisher may even be willing to contribute to tour support or provide extra promotions money in order to generate future publishing income from record sales and airplay.

WHY CONSIDER A PUBLISHING DEAL?
The main reason is money. Music publishers may be willing to pay a substantial cash advance for a songwriter’s past, present or future material. In exchange, the publisher will own a percentage of that artist’s musical copyrights and keep a percentage of money these songs earn.
Of course, publishers are unlikely to pay an advance unless they believe they can make a profit on the deal. Like everyone else in the industry, music publishers are in the business of buying something of yours in order to sell it to others at a profit. Unfortunately, many artists do not realize how valuable their publishing rights are. The history of the music business is littered with sleazy promoters who paid pennies for songs that later generated millions in income.
Not every artist needs a publishing deal, and some artists may be better off by avoiding traditional publishing deal altogether. Many different publishing options may be available to an artist today. Some publishers may be willing to enter into a more limited “co-publishing” deal, and “administration” deals may be available for independent artists who seek to retain their valuable copyrights.

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