- John Snyder -
If you have been following the Artists House articles, you know that we are addressing several threads of a musician’s business: copyright, legal, financial, business, production, planning, and marketing. In this article, I’m going to talk about how the revenue streams from your song or recording are created, that is, the “instrument” that takes your rights and turns them into money.
Let’s review: if you render an “original” idea in a tangible form, you are creating a copyright, and when you do that, in that second of concretizing your idea, six “exclusive rights” attach to that work, and they are your rights as the author or creator of that work to do with as you wish.
In past articles you have read about the exclusive rights of reproduction, distribution, and public performance. These exclusive rights mean that no one can reproduce, distribute or public perform your work without your permission. There are some exceptions, but the point is, you control how your work is reproduced, distributed, and performed. The question is, how do you do these things.
The other three “exclusive rights” are the right to make derivatives (translations, books, movies, video games), the right to publicly display (applies more to visual art than to music), and the right to control the digital transmission of your work. But, more on those later.
As I’ve said before, the entire music business is built on they song and the six exclusive rights that apply to it. With those rights you can sell your song and no one else can. How do you allow someone else to sell or use it? How do you allow someone to make money from your rights and share that money with you?
You have to “transfer” your copyright rights to someone or some company to allow them to use those rights to make something and sell it. There are many names for these “transfers”.
George has told you about the “mechanical license” and the “synchronization license”. The first is a license that you, as the owner of the copyright in the song, give to a third party that allows them to use your song on an “audio” recording. The license will specify the use, for how many copies, in what territory, and the rate. The sync license is something you give to a third party that allows them to use your song in a visual production, like a movie, and it has similar terms to a mechanical license. These licenses pertain to the songs themselves, not the recordings, and are examples of how you “transfer” your rights to reproduce and distribute for a specific amount of money, a specific time, and a specific use.
And remember, if you wrote the song and recorded it, you have created a copyright in the song and a copyright in the recording. Also, you can record anyone’s songs and create a copyright in the sound recording (you just have to pay the owners of the songs, by way of a mechanical license). The point is, when you record something, whether you wrote the song or not, you have created a copyright in the sound recording and no one can use it without your permission, without a “license” from you, the “author” of the sound recording. This is often referred to as a “master use” license, and it has the same term categories as the others.
This puts you in the drivers seat, no doubt, but musicians often do not realize that just by doing what they do they are creating rights, and that money can be made by exploiting these rights.
All of these “licenses” or “contracts” or “transfers” involve the same terms, and that’s the point of this article. Once you understand them, and how you can change them, you can control them (which includes giving them away) and tailor them to your own ends. They are:
• Who are the Parties to the agreement? (The whole band? Who’s signing it?)
• Term (how long does it last – 2 years? Forever? How long does copyright last?)
• Territory (where – world, US, Internet, etc.)
• Nature of the Transfer: what rights are you transferring and how are you transferring them: license; administration; work for hire?
• Restrictions/Approvals (exclusivity, artist approvals – what kind of approvals?)
• Money: Advances, Royalties, Accountings, Expenses (money, how paid, different categories, how calculated, what’s recoupable – do the math!)
• Other Rights involved (merch, publishing, name & likeness use, etc.; all involve money and terms).
• Marketing/Promotion commitment (tour support, budgets, radio support – any promises?) – usually the words aren’t even mentioned, so watch out for that.
• Downside Consequences (what can go wrong? Can you end up personally responsible for debts? Is there a “release commitment”? Can the company recoup your recording costs from your songwriter royalties?)
Of course, this can be a huge list. That’s why these deals are often off the charts in complexity and detail. Once I was working for A&M Records and I was trying to sign the great Sun Ra to a recording contract. The territory that record companies routinely require is “the universe”, and usually this doesn’t cause much of a problem. But Sun Ra, wanted to retain the rights for Saturn because, he assured us, he was from Saturn. The record company stood firm on principle and decided that they could not, in good conscience, give up Saturn. And Sun Ra wasn’t about to budge either. I think we solved the problem with a non-disclosure agreement (Sun Ra got Saturn, A&M got Alabama).
In any event, these are some of the most basic terms that you can consider when you are permitting someone to use your work. The “user” (company, licensor, purchaser, etc.) needs your permission in a written agreement specifically transferring the rights in question.
These agreements are called by different names depending on the particular use, but they all involve the same general terms, and they are your terms to set in large measure. (“Mechanical licenses” and “sync” licenses are two prominent examples.) Sometimes you’re stuck with the statutes, sometimes with customary terms of business, sometimes it’s a matter of bargaining power, but what’s really happening is that you are transferring YOUR rights.
When someone comes up to you and says, “I want to produce your songs”, and they take you to his or her home studio and record your songs, what is actually happening in that situation, legally? Are you creating copyrights? Are you agreeing to anything by participating? Are your songs at risk? What should you do to protect yourself in such a situation? Do you need a lawyer just to hang out and cut some tracks? And finally, should you sign anything? Do NOT sign anything! Let’s just start from there.
It is not smart to make records together without some agreement about what you’re doing, who gets what, who owns what. You can see that you are dealing with two kinds of copyrights: the copyright in the song and the copyright in the recording, and you have the same six exclusive rights with respect to each of these two copyrights. The ONLY way some person or company can acquire your rights or the use of your copyrights is if you allow them to, in writing.
If you start making music with a producer, or writing songs with another songwriter, you are arguably creating a “joint work”, which means that both of you own it equally and can do what you want to with the song or recording as long as you account to the other party. This gets even more complicated when you have a band involved. It’s an old truism in the music biz that the money is in the song, so who owns the song? And what is there to own? Remember, for the song, it’s melody and lyrics that are copyrightable, not rhythm and arrangement. (By they way, all serious bands need internal band agreements, but that’s another topic for another time.)
You can see that transferring your right to copy and distribute can get complicated, and that’s why you need an entertainment lawyer to help you do that. But even with a lawyer you NEED TO KNOW the details of your business, the rights involved, and the details of how those rights are being transferred and monetized.
As an artist, a musician, a songwriter, you are the CEO of your own company; you are, as George would put it, your own global micro-brand, attempting to monetize the copyrights your work creates. It’s yours; you own it. Everybody who deals with your work is either working for you or has a contract with you. And that contract has terms that you can control in large part. Now you know what they are, but more importantly you realize that it is YOU who are transferring rights in YOUR property when you sign a record deal or a songwriter’s contract.
You know, in the old world, the music business world I grew up in, artists lost and gave up their rights without even knowing that they had them. In today’s world, artists can hardly get rid of their rights! You may turn over the marketing and management of your rights to somebody else, or even sell those rights, but you retain an interest and they are still yours and you should tend them. What if the people you trust screw up? You may have to do some marketing and accounting from time to time no matter how hard you try not to. Your rights stick to you in the new world, no matter what – for better or worse.
September 5, 2010