Today the Internet makes it remarkably easy to seek the information that you need. With a simple click of a mouse you can find a plethora of resources at your fingertips. Podcasts for example, are a great way to gather information from the experts.
Mark Quail is an attorney who specializes in Entertainment and Media Law. Mark Quail produced a podcast entitled ‘Music Law Publishing’ that deals with the music publishing industry. The podcast is broken down into two parts and can be found here. The first half of the podcast deals with the different licenses that are assigned in relation to musical compositions in the music publishing industry in order to monetize the songs value and garner monetary compensation for the songwriter.
Mechanical Licenses grant permission to record labels so they can manufacture sound recordings. In the US the royalty rate for mechanical licenses is set at 9.1 cents for musical compositions 5 minutes in length or less and an additional 1.75 cents per minute for each minute over 5 minutes. Outside of the US & Canada, the royalty rate is calculated as a percentage rate of the wholesale price. In either case the record label manufacturing the record pays royalties.
Public Performance licenses control the performance of a song in public. This includes radio stations, television, restaurants, clubs and other venues that use music. Synchronization licenses dictate the terms in which a television or movie production can use a song in their work. These fees are dictated by the market and are reached by negotiation. Print licenses allow for the musical work to be sold or distributed in print form – this includes sheet music and folios, as well as the lyrics printed inside CD booklets. The final license is a new media license. This allows songwriters to license their compositions for greeting cards, midi files, streaming and/or downloads as well as software programs.
Each of these licenses comprises a different amount of a music publisher’s total annual earnings. Currently public performance royalties and mechanical royalties account for the bulk of total annual earnings. However, Quail points out that the other licensing opportunities should not be ignored. This is great advice for music publishers who more often like to go after the deals that look more financially enticing.
The second half of the podcast deals with the different types of publishing contracts. A full publishing contract is a 50/50 split of ownership in the musical work’s copyright as well as in the profits derived. This is what makes you think of a ‘songwriter’s share and a publisher’s share’ when you think of dividing the royalties. A co-publishing contract can be thought to be a 75/25 split of ownership. The songwriter retains the ‘songwriter’s share’ as well as ‘50% of the publisher’s share’. These are the most prevalent forms of publishing agreements. Administration Contracts are the most attractive to songwriters but are usually harder to obtain. Under this type of contract the publisher handles all of the copyright administration but does not retain ownership. They receive anywhere from 5% to 25% of net receipts of typical revenue and up to 40% of net receipt for sync licenses. The final contract is a sub-publishing contract. These types of contracts are usually entered into by the original publishing company and are considered to be administration contracts that are focused on one or more countries outside of the songwriter’s home territory.
The Chicago Music Commission is nonprofit organization formed from members in the Chicago music community. They hosted a panel on intellectual property and legal issues that can be heard here. The panel begins my hammering in what most artists should already know – having legal representation in this industry is a must. Legal representation is important because everyone else you deal with in the industry understands that this is a business. If they understand legal and business aspects and you don’t, then your not on an even playing field, therefore you’re not fighting a fair fight with who ever you are trying to negotiate, be it a booking agent or a record label. They also point out that you want to build a team of people who are on your side and looking at things from your perspective, because the people who want to use you will tell you things from their perspective, and not yours.
The panel also proceeds to dispute what has at one point been called ‘the poor man’s copyright’. It has long been assumed in the music industry, by musicians starting out, that you can simply send yourself a copy of your work by registered mail and that the postmark date will serve as the date of copyright. The panel points out that there is no value in mailing something to oneself. In a courtroom it doesn’t prove anything and won’t hold up as evidence.
Daniel Friedman is an Entertainment Attorney who took time from his busy schedule to speak at a music industry forum at Loyola University to speak on artist contracts. The video podcast can be found here. Friedman’s main discussion topic is on Copyrights. One of his main points is emphasizing the difference between a musical work and a sound recording. Both of which will have separate copyrights. The musical work is the underlying musical composition. The songwriter owns the musical work until the songwriter chooses to sign a publishing deal. The sound recording is the version of the song. It is owned either by the artist who covers it or belongs to the record company if the artist is signed to a record label contract. Friedman cleverly points out that – “the real estate of the music business is the copyright to the musical work”.
Friedman continues to talk about joint works. Unless you agree otherwise, the song is owned equally. There must be an agreement to identify the splits otherwise. Lyrics are generally 50% of a song and the music is generally the other 50% of a song. In hip-hop when a producer makes the beat and an artist rhymes over it, it is said the producer has created the music, and thus owns 50% of the copyright. With a band the theory is that the songwriter wrote the song and thus should own 100% of the copyright. However it can also be said that without the band there would be no way to exploit the song. Friedman suggests forming a hybrid between the two scenarios where the songwriter receives more of the copyright share than the rest of the band.
One of his final points is the provision that is often found in recording contracts for artists / songwriters. The controlled composition clause generally provides the recording artist / songwriter to sign for a lower mechanical rate than what they would usually receive. The industry standard tends to be 75% of the standard rate and is usually capped at 10, meaning if the artist releases more than 10 songs on an album; those additional songs are essentially ‘free to the label’.
That’s quite a lot of information to take in from three podcasts, but what better way to obtain your information that from industry experts and attorneys who specialize in the entertainment industry. By listening to three podcasts I have garnered more information about the different types of publishing agreements, the different publishing revenue streams and the fees associated with each type of licenses.
References:
Music Law Publishing
Chicago Music Commission – Musicians at Work Forum
Music Industry Forum – Daniel Friedman
