Instructor’s Outline
LEGAL AND BUSINESS ASPECTS OF THE MUSIC
INDUSTRY
Copyright © Michael Ashburne
2020
CLASS
ONE:
At the beginning of the
first class, students will introduce themselves and describe any personal music
projects, jobs, and interests relating to the field; also share anything they
are looking to get out of the class and reason for taking it.
It is also a good idea to
review the music terms in the following glossary that will be used from
time to time in the course:
I.
Brief Outline of the History of the Music Industry in the US
A. Mass
reproduction of popular music was not accomplished until the printing of
written sheet music to popular songs that were played by live bands in the
1890's. The first song to sell a million copies of sheet music was Stephen
Foster's "After the Ball" - ultimately sold 10 million copies
B. The first widespread mechanical
reproduction of popular music was accomplished through the sale of piano rolls
for player pianos. Piano rolls were followed by the phonograph which led to
more sophisticated means of reproducing sound by 1920's first million selling
record came along and radio stations began broadcasting music widely.
C. Music publishers made
their money selling sheet music.
Publishers fought the
playing of music for free over the radio. It was “ killing their
market" for sheet music they said. Compare this position with the lawsuits
today against file sharing of music on the internet by record companies.
D. During world war II, the
armed forces network played American music to the GI's and the world which
created a world wide interest in American music which lasts to this day through
the world wide popularity of American films and television shows. After world
war II, GI's came home and there was the availability of inexpensive record
players and records, coupled with widespread coverage of radio and television,
created what we regard as the music industry of today. World War II also
created a large market for American music around the globe which has increased
even more with the advent of the world wide web.
E. Home audio devices have
continued to evolve in the US. From Piano rolls to LPs to Cassettes to CD’s and
now MP3’s and other digital formats and players. Likewise, the distribution of
recorded music continues to evolve and is shaped by the technology. We have
moved from a retail based system of delivering physical recorded products to an
internet based system delivering digital recorded products through streaming
and downloads.
The following basic elements
of the music industry remain the same despite the technological changes:
1. Songwriting and Music
Publishing - writing songs and exploiting the compositions
2. Recorded Music –
producing, engineering and recording songs; distributing and selling songs,
both digitally and physically to music customers
3. Live Music Performance -
performing songs in concert for live audiences and over the media
4. Use of music in
electronic media; radio, television, internet, films, video games, computer
software, advertising, toys
F. What Makes the Music
Business a Business?
People are involved in music
to make a profit based on their efforts. If you are not in the field of music
to make a profit, then you are a volunteer or pursuing a hobby. Some people
make music because it is a hobby that they enjoy. That is wonderful but in my
view they are not really in the music business since they are not intending to
make a living from their efforts.
II.
What Type of Legal Rights and Concepts are involved in the Music Industry?
Music rights are a type of
Intellectual property. What is Intellectual Property? It is literally ‘property
of the mind’. Intellectual property rights have been created by the operation
of law.
A.
What is Intellectual Property?
There
are the four types of Intellectual Property:
(1) Patents (protects
inventions - for example the patent on a CD player)
(2) Trademarks ( protects
brand names for a product or service for example ‘Dr. Dre’ or ‘Def Jam’ etc)
(3) Trade secrets (for
example, the recipe for Coca Cola or Kentucky Fried Chicken)
(4) Copyrights of creative
works.
Copyright is one of the most
important legal concepts to understand in the Music Industry. In addition to
musical works, copyright protects many other forms of creative works as soon as
they are in a tangible form that is capable of being reproduced.
B. What is
a Copyright?
Simply put, a statutorily
created Federal right given to the author or creator of a creative work which
grants to the author the exclusive use (with limited exceptions) of that
property for a limited term. It is not based on state law, but arises only
under Federal copyright statutes.
KEY
CONCEPTS IN THE MUSIC INDUSTRY REGARDING COPYRIGHT LAW:
One Recorded Song = Two
Copyrights
1. The Copyright of the
Musical Composition which was formerly applied for on a PA Copyright form and
now applied for on a CO form.
2. The Copyright of the
Master Sound Recording of the Musical Composition which was formerly applied
for on a SR Copyright form and now applied for on a CO form.
C.
When does copyright protection come into being?
Copyright Law states that
your copyright comes into being as soon as the subject of your copyright comes
into being in a fixed manner capable of being reproduced. In other words, the
creative work must be something tangible. Not a mere idea or unrecorded
performance. Note the difference between a speech which is given in public but
not written down. A written version of the speech could be copyrighted and so
could a recording of the speech. But an oral speech which is not recorded in
some manner is not capable of being copywritten until it is in a form that can
be reproduced.
(note: What other examples
can you think of that are creative works which are not fixed in a tangible
medium of expression?)
D.
What are the stated categories of works that can be the subject of Copyright
under the law?
1. literary works(books,
articles, etc)
2. dramatic works (dramatic
plays, screenplays)
3. choreography (in notation
or recorded form)
4. pictorial, graphic, and
sculptural works
5. motion pictures and other
audio visual works
6. sound recordings
7. musical compositions
E.
What exclusive rights are granted to the copyright owner by law?
1. the right to reproduce
the work
2. the right to sell &
distribute copies of the work to the public
3. the right to prepare
derivative works based on that work
(Note, in music, this means
that only the copyright owner can make changes to his work. If anyone other
than the copyright owner changes the lyrics to a copyrighted song, they do not
acquire any rights to the new lyrics by doing so)
4. the right to perform the
work publicly
5. the right to display the
work publicly
F. What is the Term of
Copyright Protection?
Federal law gives to the
creator or author of an original composition or master recording which is fixed
in a tangible medium of expression certain exclusive rights for the life of the
author, plus 70 years.
(Note; time starts to run
from the date of creation of the subject matter of the copyright, not the date
that it is registered)
G.
Who is considered the “Author” of a Musical Composition?
The writer or writers who
contributed to the finished work.
(Note, until an author assigns
their rights by signing a written document transferring their copyright to
someone else, they retain their copyright. A copyright cannot transfer rights
verbally or orally. If a writer is paid to write or create under a written
“Work for Hire” agreement, or written employment agreement, the person who paid
him is deemed the owner of his copyright. The copyright act specifically
acknowledges that ownership of copyrights can be transferred from creative
parties to others under a work for hire agreement in most cases)
H.
Who is considered to be the “Author” of a Master Recording?
All the creative parties who
contributed to the finished sound recording i.e. singers, musicians, arrangers,
producers, and possibly, engineers. Again, these individuals cannot assign
rights to their copyright to the Master orally. This is why Labels have to have
written agreements with the creative parties responsible for creating the
Master in order to commercially exploit the Master. Typically those parties
would be the vocalists, musicians, producers, arrangers, and mixers. The
artists usually assign rights to their performances in their recording
agreements. The other parties listed above assign rights via Sideman Release
Agreements with Work for Hire clauses. The fact that the label pays for the
recording sessions does not automatically give the label a copyright interest.
(Note: A label does not have
to own the copyright to the Master in order to market and distribute it,
however. A label can license the rights from the owner(s) under a written
agreement. The license can be exclusive or non-exclusive, and is usually for a
specific territory and a specific amount of time)
I.
Why is Copyright Law so Important to the Music Industry?
Without it anyone could make
and sell someone else’s hit record or musical composition. This happens in many
foreign countries unfortunately. China and Southeast Asia countries flagrantly
obtain the latest top selling records and albums from foreign artists and copy
them without any payments to the foreign owners.
J. How
Many People Can own a copyright?
As many as contributed to
the authorship of the completed work.
K.
What is Copyright Registration?
Registration is the process
of filling out the online forms required by the U.S. Copyright Office in
Washington, DC, paying the associated fees, sending in the forms and copies of
the work to the U.S. Copyright Office for review electronically (or by mail)
and obtaining the registration of your copyright with U.S. Copyright Office.
L.
Why is Copyright Registration important?
Registration is advisable
but not required by Law. The benefits of Registration of Copyright are:
1. You cannot file a lawsuit
for copyright infringement without first registering your copyright.
2. You also cannot collect statutory
damages or attorney’s fees for certain acts of infringement without timely
registration i.e. within 3 months of public release or before the infringement began.
M.
What Copyright Forms are currently used in the Music Industry and Where do you
get them?
Copyright Forms are available
on line through Library of Congress, Washington DC. The Copyright Office uses
the form “eCO” for on-line registrations, or “CO” for paper form registrations.
It is cheaper to file on line and more expensive to use the paper forms. If you
use the older paper forms, you must use the form that is appropriate for what
you are trying to register. Form PA is for musical compositions and Form SR is
for sound recordings. Two examples of your work have to be mailed (or
emailed )separately to the Copyright Office.
Keep in mind the difference
between the copyright for a musical composition and that for the master
recording of a song. two copyrights involved. One composition can only be
registered for copyright once. However, there can many different recorded
versions of that same composition, and each time the new master recording can
be copyrighted as a separate work.
(Note, the copyright act
gives the owner of a musical composition the initial right to determine whether
or not to allow anyone to make a commercial recording of his composition. In
other words, only the owner of that song can grant a mechanical license for it
to be recorded. But once the composition is recorded commercially, the act
states that anyone can re-record that composition as long as they pay the
statutory mechanical license fees and do not change the fundamental nature of
the song, this is called a “compulsory license”. The publisher cannot stop
anyone from taking advantage of the compulsory license provisions in the
copyright act as long as the song has been recorded and released commercially
one time, and fees are paid as required by statute. As stated above, the new
recording may not fundamentally change the composition)
N.
Key terms to Understand
See glossary at: https://docs.google.com/document/d/13lCvnVGPSmvSyECuUxqeihMVP2sJnQagit_vgDvY0uM/edit
O.
When Should You File for Copyright Registration?
Just prior to the time when
the work is going to be exposed to the public;
-
New copyright provisions
allow for copyright protection even prior to commercial release to thwart
internet theft and distribution. This is called “Pre-registration”. Here is
what the copyright office has to say about that procedure:
“Preregistration is a
service intended for works that have had a history of prerelease infringement.
It focuses on the infringement of movies, recorded music, and other copyrighted
materials before copyright owners have had the opportunity to market fully
their products. Preregistration is not a substitute for registration. Its
purpose is to allow an infringement action to be brought before the authorized
commercial distribution of a work and full registration thereof, and to make it
possible, upon full registration, for the copyright owner to receive statutory
damages and attorneys' fees in an infringement action.
A person who has
preregistered a work is required, in order to preserve the legal benefits of
preregistration, to register such work within one month after the copyright
owner becomes aware of infringement and no later than three months after first
publication. If full registration is not made within the prescribed time
period, a court must dismiss an action for copyright infringement that occurred
before or within the first two months after first publication. “
III.
Digital Sampling
A.
How Does the Copyright Law Impact Digital Sampling of Records?
1. Copyright is the basis
for claims against Artists and Producers who sample recordings and musical
compositions
2. “Infringement” of the
sound recording and underlying musical composition usually occurs if the master
is sampled directly
3. If the sampled portion of
the recording is re-created, then the sampler would only have to worry about
getting a license from the publisher of the musical composition that was used,
because there was no use of the original Master recording.
4. Licenses are negotiated
with owners of the copyrighted material who listen to the new song and the
original song to see how much was used before quoting a fee or a rate. Usually
the owners want an advance and a royalty for the usage. The use of professional
‘clearing agents’ to clear samples is helpful and often employed
B.
What you are SAMPLING determines the Consent that you need.
1. Sampling the Master
recording requires Two Consents –one from the copyright owner of the
master recording and another from the copyright owner of the musical
composition
2. Television Soundtracks:
Requires consent of Copyright Owner of programs
3. Motion Picture
Soundtracks: Requires Copyright owner of film
4. Human Voices: Calif.
Civil Code 3344 requires written consent before commercial use of
person’s name, voice, or likeness can be used
C. I
Can't Hear It So Why Bother?
Coiurt decisions hold that
any use of someone’s copyrighted Master Recording is infringement, no matter
how small or presumably, how used. i.e. sped up, slowed down, or backwards.
D.
Who Is Responsible for clearing samples?
The producer is usually
responsible if they have agreed to deliver original material, but if the sample
is used and is uncleared, the artist, producer, record label, and distributor
can all be sued.
E.
Who Does the Clearance Work?
Attorneys are usually too
expensive. Therefore, independent ‘Clearing Agents’ used who often charge a
flat fee per clearance for their services
F.
Is the consent of the sampled Artist required?
Not usually, unless the
Artist has a significant stature at the Record Label and has a ‘sample
approval’ clause in their contract or owns their own Masters.
G.
What are the Types of Quotes for Sampling Usage?
An advance against a Penny
Rate for each sale of the Master containing the sample.
H. What are the Factors Affecting Negotiations for Sample Licenses?
1. Release of Record Prior
to Clearance will ensure a higher quote to settle the matter
2. The duration and content
of Sample
I. Negotiating Master Recording
Sample Licensing Agreements: Areas
of Concern
1. Get a Signed Confirmation
Letter from the representative of the copyright owner agreeing to basic terms,
even if formal letter or agreement has not yet been issued.
2. Do you have the right to
use the sample in Music Videos featuring
the Master?
3. Do you have the right to
use the master with the sample in a Film
or Television show?
J.
Negotiating Publishing Licenses for a Musical Composition
1. Is the consent of the
Songwriter required or just the Publisher?
Usually the publisher only
can sign, unless dealing with a high profile songwriter who reserves the right
of approval
2. Types of Quotes
Flat Fee:
For very small usages. Flat
Fees are not very common.
Percentage of the Copyright
for the new song:
Usually sample owners of
publishing rights will quote a fee consisting of a Percentage of the Copyright
of the New Song plus an advance against their mechanical rate.
License fee: Income
participation
Alternatively, the Sample
owner will ask for ‘Income Participation’ Agreements to avoid possible
liability as the copyright owner of the new composition. 'Roll-over' Advances
are often used, triggered by the attainment of a specific number of sales, i.e.
$1,000 up front and $1,000 every time 50,000 units are sold.
K.
Sampling Clauses in Recording Agreements
There are specific
Paragraphs Dealing with Sampling in Recording Agreements and Producer’s
Agreements. They should be reviewed carefully on behalf of the Artist or
Producer. The Impact of Sampling on Artist Recording Budgets can be severe if
multiple samples are used which can be expensive to clear.
1. What is the Impact of
Sampling on Artist Publishing Income?
Each sample will reduce the
amount of songwriting income that would otherwise be earned by the
Artist-songwriter from that composition.
L.
Sampling and Multi-Media Products:
Most films will not license
any songs with samples in them for fear of liability.
M.
Clearing Sampled 'Scratches':
A ‘scratch’ is where the DJ
takes a short piece of a record and adds it to a song. Technically that has to
be cleared with the owner of the Master at least
N.
Sampling on Record Re-Mixes:
Using sampled material in a remix
is not a good idea. Since no publishing rights are awarded to the remixer, any
samples would reduce the publishing share of the original artist/writer, which
would be objectionable.
L.
Release of Records with Uncleared Samples
1. How Do People Get Caught?
Disgruntled parties, work
associates and artist fan clubs
2. What Happens?
Depends on the sales of the
record and the stature of the parties. If the sample is on a small independent
label and has sold hardly any copies, not much will likely happen. If it is on
a major label, or many copies are sold, a letter from a lawyer can be expected
as a first step. Negotiations follow, which, if not successful, and enough
money is involved, will result in the filing of a lawsuit for copyright
infringement.
Assignment for Next Class:
to be advised. In addition to the assignment, you are to create two computer
files to contain assignments and information you create in the course: one can
be titled: “My Record Label”, Label the other “My Publishing Company”( or more
interesting names that you come up with for both).
