Survey of Music Business Test #3
|Copyright-|| Limited, Duration, Monopoly|
Purpose-To promote the progress of science and useful arts by giving creators exclusive right to their work for limited time.
|Criteria To Be Copyrighted|| 1) Must be ORIGINAL|
2) Must be of sufficient materiality to constitute a work
|(T/F) Under US copyright law as soon as you make a tangible copy of something, you have a copyright.||TRUE|
|(T/F) Written Down = Copyright||TRUE|
|Exclusive Rights Of Copyright|| 1) REPRODUCE the work|
2) DISTRIBUTE copies of the work
3) Make a DERIVATIVE WORK (a creation based upon another creation)
4) DISPLAY the work publicly
|Compulsory Licenses||Exceptions to the copyright monopoly. Copyright holder holder must issue a license to someone who wants to use the work.|
|Compulsory Licenses Examples|| 1) Cable TV rebroadcast|
2) Public broadcasting system (Stations at a cheap rate)
4) Digital performance of records (Allowed performances of masters on digital radio and webcasting)
5) Phonorecords and digital downloads of NONDRAMATIC musical compositions: aka Compulsory Mechanical License
|US Copyright Law Says... Once a song has been recorded and released to the public, the copyright owner must license it...||To anyone else who wants to use it in a phonorecord (Not video) and for a statutory rate|
|In order to issue a compulsory mechanical license to be issued:|| 1) The song is a non-dramatic musical work |
2) Has been previously recorded
3) Has been distributed publicly as a phonorecord
4) Doesn't change the basic melody or fundamental character
5) New recording is only used in phonorecords
ALL MUST BE PRESENT
|Non-Dramatic Musical Work-||Songs not used in operas and musicals|
|Previously Recorded-||Compulsory license does not apply to the first use of a work nor to unauthorized first uses of work.|
|Ponorecord Use-|| 1) In 1995 added digital phonorecords as well|
2) Does not apply to DVDs
|No Major Changes||Can't rewrite lyrics or add another melody|
|The Statutory Rate||1.75 cents/min of playing time|
|More Than 5 Mins Means...|| 10.5 cents for songs over 5 but not over 6 mins|
(1.75 x 6 = 10.5 cents)
|What is mechanical royalties payable on?||Payable on all records "made and distributed" as opposed to "made and sold", so mechanicals are payable on free goods.|
|Why Are Ringtone Rates Higher?||Because master tones require payments to both the publisher (copyright holder) and the record label (copyright of performance)|
|Are compulsory licenses used in real life?||Nope, producers grant a direct license so we don't go through Washington.|
|Do rates vary across countries?||Yes|
|Derivative Work||A work based upon another work.|
|Mechanical Royalty||The monies paid on copyright owners for the manufacture and distribution of records.|
|Publisher||The copyright owner of a song.|
|Digital Phonorecord Delivery (DPD)||The delivery of a phonorecord by digital transmission.|
|Statutory Rate||The set fee per record stated in the US Copyright Statute.|
|Copyright Royalty Board (CRB)||A group of three administrative judges who review and determine the statutory rate.|
|First Use||The first recording of a song.|
|(T/F) A songwriter sells the ownership (copyright) of his/her song||FALSE! Songwriter assigns the ownership in exchange for a variety of services|
|Typical Services For Copyright|| 1) Pitching the song|
2) Creating a collaboration opportunities with other songwriters
3) Issuing licenses
4) Collecting song earnings from licenses
5) Negotiating synch fees
6) Accounting for the earnings of songs
7) Paying royalties to the writer
8) Paying demo costs for songs
|Parts Of Publishing Companies|| 1) An Administrator- Takes care registering copyrights in the songs, issuing license, collecting money, paying writers and co-publishing etc.|
2) A "Song Plugger"- Pitches songs for placements
3) Creative Staff- Finds writers, develops those writers and creates collaboration opportunities.
|Types Of Publishers||1) Majors- The major publishing companies affiliated with major record label|
2) Major Affiliates- Independent publishers with a full staff of professionals who's administration is handled by a major publisher either in certain territories or throughout the world.
3) Stands Alone- A publisher not affiliated with a major, which handles its own administration (Indies!)
4) Writer-Publishers- A publishing company fully controlled by the songwriter.
|Where do the majority of publishing revenue come from?||Mechanicals and performances monies. (But is changing)|
|Mechanicals-||The publisher issues a license to the record company, saying the record company will pay a royalty equal to a specific # of pennies for each manufactured and distributed and for each copy downloaded.|
|Two Major Companies That Issue mechanical Licenses-|| Harry Fox Agency (currently charges 6.75%)|
Canadian Musical Reproduction Rights Agencies (CMRRA) (currently charges 6%)
|What do the Fox and Canadian Agencies do?||Issues mechanical licenses for the publishers, polices those licenses (makes sure the user is paid), and accounts to the publishers.|
|Do many publishers issue licenses themselves?||Yes they do! But larger publishers use Fox and CMRRA because its cheaper than employing staff for the same services|
|How often are publishers paid?||They tend to be paid by the record labels quarterly (4 times per year) typically 60-90 days after the close of each calendar quarter.|
|Reserves-||Record companies typically take reserves of 50-75% on mechanicals because overpayments can only be recouped from earnings of that specific composition.|
|Controlled Composition Clauses||A clause in most recording contracts, regulating payment on all songs controlled by the artist|
|What do controlled clauses include?|| 1) Any song in which the artist has an income or other interest|
2) Sometimes includes compositions owned or controlled by the producer of the recordings as well.
|Why are there controlled clauses?||Because unlike artist royalties, the record company doesn't recoup advances, recording costs, or anything else from mechanicals. This $ has to be paid form the distribution of record 1, so they are hyper-cautious about payment.|
|Two Ways In Which Record Companies Limit Mechanical Royalties|| 1) Rate per Song - Normally limited to 75% of the minimum statutory rate|
2) Rate per Album - A limit of 10 or so times the single song rate for each album
|Ways That Labels Attempt To Limit The Single-Song Rate||1) Percentage of Statutory (75% of statutory rate)|
2) Minimum Statutory Rate- Limit per composition usually based off minimum statutory rate (songs 5 mins or less only)
3) Changes in Statutory Rate- Locked into the current statutory rate in effect on the one of these dates:
1. Date of recording
2. Date the master is delivered
3. Date of first release of the master
4) Free Goods- Controlled comp clause says no mechanicals paid on free goods
5) Reduced Rates- The label asks for reduced rates on albums sold through record clubs, budget records, and TV-advertised. (The labels are paid only a percentage of wholesale on sales through those outlets)
6) Public Domain Arrangements- Record labels say that they won't pay mechanicals on arrangements of public domain songs; artists have some leeway to fight this
7) Noncontrolled Songs- The artist's mechanicals well be reduced in proportion to the outside songs that must be paid at full rate.
8) Canada- Mechanicals for sales in Canada will be paid at 75% in the industry royalty rate.
|What did congress add in 1995?||Congress added digital downloads to the compulsory mechanical license provisions.|
|DPD?||Digital Phonorecord Delivery|
|Impact of Congress' decision in 1995-||Controlled Composition Clauses do NOT apply to DPDs, so as digital sales become higher, eventually controlled clauses will become less important.|
|Public Performance Royalties -|| 1) Exclusive rights of US copyholder.|
2) Right to perform the composition in public
3) Administered by Performing Rights Societies or PROs (example BMI)
|Blanket License* -||In exchange for a fee, the user gets the right to perform all compositions controlled by all the publishers affiliated with that society.|
|What About Publishers and Writers Affiliated With PRO's separately?||They are paid separately for their share of the performance monies.|
|How PRO Payments Are Handled...|| 1) Fees are collected from the licenses (radio stations)|
2) Monies are used to pay the operating costs of individual societies.
3) All remaining money is divided among the participants based on: radio airplay, TV play, digital streaming data and live events.
|How Do PROs Monitor Airplay?||1)Radio- Station keep logs of what songs are played|
2) TV- Stations keep cue sheets
3) Digital- Service providers have precise data of what's been played, how often and to what # of people.
4) Live Events- The venues or artist managers for the top 200 grossing tours provide set lists; sports stadiums and arenas are tracked.
5) Muzak- Songs are logged
6) US Movie Theaters- For historical and political reasons PROs are not permitted to collect monies
7) Foreign Films- Paid a % of the box office receipts.
|Administration Rights||The rights to present the interests of a song, including finding users, issuing licenses, collecting $ and paying the writer.|
|Publisher's Share||The share of earning from a song kept by the publisher to cover overhead and profit; typically 50% of the earnings form a song.|
|Writer's Share||The share earnings from a song owed to the writer; typically 50% of the earnings from a song.|
|Rate||A mechanical royalty of less than statutory rate.|
|Controlled Composition||A song that is written, owned or controlled by the artist (in whole or part)|
|Outside Songs||Songs that are NOT written, owned or controlled by artist.|
|Mechanical Cap||The contractual limit on the total mechanicals payable for each album.|
|Ten times Rate||10 times 75% of the statutory rate|
|PROs||Performing Rights Societies- Societies that are granted the rights by publishers to issue licenses, collect and pay money related to the public performance of songs (BMI, ASCAP, SESAC,)|
|Some Key Sources Of Income From Publishing|| 1) Print$|
4) Foreign $
|Majority Of Printed Music Revenue|| 1) Sheet Music |
|Minority of Printed Music Revenue||Reprints of Lyrics in books, magazines, greeting cards, etc...|
|Royalties Paid On Single-Song Sheet Music||Typically 20% or marked retail price|
|Royalties Paid On Folios|| 10-12.5% of the marked retail price.|
*Personalities folios add 5% paid to artist
|Royalties Paid On Greeting Cards||Publisher receives the greater of a penny rate (12.5-15 cents/unit) or a % of the wholesale price (5-8%)|
|Other Printed Products||6-8% of wholesale|
|Advertising Uses||Are flat fees that can run as much a $25,000 or more for major reasons. (billboard, newspapers, magazines etc.)|
|Term Of Printing||1) Licensing for print music are for limited periods of time (3-5years) during which the printer has exclusive print rights.|
2) Normally the printer has the right to continue to sell any existing inventory but not continue to print for a period of 6-12 months after the term expires.
3) Print licenses tend to prohibit stockpiling, dumping, and distress sales.
|Digital Print Includes|| 1) Lyric Posting|
3) Downloadable Sheet Music
|Digital Rights On Lyric-Posting Websites|| 1) Current the most frequently used digital print use is by website that post song lyrics without music. These sites tend to be free to the consumer because they are advertising supported.|
2) Publishers receive approximately 50% of the ad revenue from those sites.
|Digital Rights On E-Cards||Publishers receives the greater of 10-15 cents per unit or 5-8% of the retail price.|
|Digital Rights On Downloadable Music|| 1) The retail price is about the same as printed sheet music ($4.95/song)|
2) The Publisher receives 50% of the income.
3) The licenses are nonexclusive for the sites
|Synch Licenses||Issued for the use of songs with visual images. Fees vary with the use and the importance of the song to that use.|
|Transcription Fees||Cover radio commercials, since there are no visuals involved.|
|Prices of synch fees in a major studio motion picture|| 1) General Range $15,000-$100,00|
2) Main title (opening credit) $50,000-$250,000
End Credit only $35,000-$100,000
3) Fees are higher for out of context uses $25,000-$250,000
|Synch fees in an independent motion picture|| tends to be less standardized and more creative due to budget limitations|
1) Step Deal- an initial fee for the use with an equal amount paid on release to home video
2) Kickers- Additional fees if the film's earnings pass a certain threshold, or is broadcasted on TV later.
|Synch Fees For TV|| 1) Historically TV fees were for limited rights, with options for the TV producer to pay set additional amounts for additional rights. |
2) Currently because of the uses for TV shows have increased, TV licenses are now all rights in perpetuity and include all rights now or hereafter known.
|Synch Fees For Commercials||Ranges from $50,000-$200,000 for a one year national usage in the US on TV and radio.|
|Synch Fees For Video Games|| 1) Typically a flat fee 0-$50,000|
2) Royalties are paid for music based games (Guitar Hero)
|Synch Fees Apply To|| 1) Major Motion Pictures|
2) Independent Motion Pictures
5) Video Games
|Untethered Downloads||Treated the same as CD sales; Publisher paid a full mechanical royalty and not treated as a performance.|
|Non-interactive Audio Streaming||Publisher paid performance monies from the PROs.|
|Interactive Audio Streaming||Established by US Copyright Royalty Board (CRB)...|
The publisher will receive the greater of...
1) 10.5% of subscription fees paid by the consumer of 10.5% of gross advertising revenues or..
2) If the record company pays the publisher, the publisher will receive 17-18% of the fee paid for master/publishing combined; If the streaming service pays the publisher, the publisher will receive 21-22% of what is paid to the record company or...
3) 15-20 cents per subscriber/month
*For all of these payments 5% of gross income with be deducted for the PROs
|Tethered downloads||Treated as sales, so mechanicals are paid to the publisher, but NO performance royalty|
|Video Streaming|| still unsettled|
1) CRB has no jurisdiction over videos so the cannot set a rate
2) The publisher receives a % of the fees paid to record companies by the user
|Podcasting||Currently too rare to have a financial model!|
|Subpublisher||When publishers make deals with local publishers of foreign territories to collect $ on their behalf.|
|How are subpublishers paid?||Subpublishers keeps 10-20% of $ earned.|
|Publishing Licenses in US and Canada VS. Rest of the world|| US and Canada- Paid on a per-song basis|
Rest of the world- Paid for a % of wholesale price regardless of the # of compositions on the album
|Subpublishers Customary Deal||The Subpublisher pays the US publisher an advance against their ultimate earnings.|
|Collection Deal||A deal with no advance to publisher from subpublisher.|
|Translation/Adaption Deals|| When a US song is popular and replayed in other countries|
1) Local lyricists gets a share of royalties.
2) Subpublishers want to charge the US publisher for this deduction
3) Translators should be registered separately with the PRO and excluded from the US royalties
|DART $ (Audio Home Recording Act Of 1992) effects||1) Established that consumers who copy records at home for their private, noncommercial use are not committing copyright infringement.|
2) Imposed a tax on digital audio recorders and digital audio tapes, which would be paid in various %s to record labels, featured artists, unions, songwriters, and publishers separately.
|Two Problems with Audio Home Recording Act Of 1992|| 1) Digital audio recorders and digital audiotape are not really in use anymore|
2) It did not include computers, which was a big mistake.
|Sheet Music||Printed music of a single song.|
|Folios||Printed collection of sheet music.|
|Mixed Folio||Printed collection of sheet music by various artists.|
|Matching Folio||Printed collection of sheet music from one particular album.|
|Personality Folio||Printed collection of sheet music from one particular artist with that artist's imagery throughout the packaging.|
|Stockpiling||When a music printer manufactures excessive quantities of sheet music right before the end of the term of their license.|
|Dumping And Distress Sales||When a music printer sells print music inventory at deep discounts (below wholesale) after the term of their license.|
|E-card||Digital greeting card with music playing in the background; considered a form of digital print music.|
|In-Context Advertising||A song is used in the ad exactly the same way in which it is used in the film.|
|Out-Of-Context Advertising||A song is used differently in the ad from the manner in the which it is used in the film.|
|Ephemeral Recording||The server copy of a song, stored by a radio station for broadcast.|
|Cover Record||A new recording of a previously released song.|
|Black-Box-$s||Unclaimed song earnings.|
|The Songwriter Deal Involves...|| The Songwriter |
the Publisher (Copyright holder)
|Writer's Share||50% of revenue from songs with exception of print music.|
|Three Major Manufacturers of Secular Printed Music|| 1) Hal Leonard |
3) Music Sales
|Typical Charges That Publisher takes out of the Songwriters earnings|| 1) Cost of record demos|
2) Collection Costs
3) Subpublishing fees
*ALL other costs should be financial responsible of the publisher and not shared with the writer.
|Songwriting Agreement||When the writer gives the publisher all of the songs he writes during the term.|
|Songwriting Agreement Term|| 1) LIke a recording agreement divided into periods. |
2) usually tied to delivery of songs.
3) Ends after delivery of the required songs.
4) Only denotes the period during which the writer agrees to exclusively deliver his songs
|Advances to Songwriters|| 1) "True Songwriters" receive a monthly advance.|
2) For an established writer, advances are based upon a historical analysis of her song earnings.
3) new trend is for advances to be paid on songs that are recorded and released, rather than monthly.
|Songwriters Delivery Requirements|| 1) What the writer must deliver to move the term of the deal forward.|
2) What the writer must deliver to receive an advance.
|Major Problem With Some Songwriting Deals||It is possible for the term NEVER TO END if the songwriter is unable to get songs placed and released by a major label.|
|How Are Songs Divided?|| Historically %50 to %50|
Now days all writers sign a song split sheet showing their % to their respective publishers.
|Creative Control and Moral Rights||In US songwriters can secure some more rights over the work by inserting clauses in their publishing agreements that the publisher must secure the writer's approval before it can do any of the following|
1) Changes to the music
2) Change in english lyrics
3) Add foreign lyrics
4) changes in the title
5)Grant Synch licenses
6) Use the song in a commercial and print ads.
|Favored Nations||A contractual clause that says a party's rate goes up if anyone ever gets more; appear in any kind of contract, not just publishing.|
|Co-Terminus||A reference to two or more deals with the same term.|
|Self-Contained Artist||An artist who both writes and records songs.|
|True Songwriter||A writer who doesn't come with access to someone who records/uses their songs; a songwriter who is not also an artist or producer.|
|Collaborators||People with whom a writer writes.|
|Track||The background rhythm and instrumentation, on which the melody and lyrics are laid.|
|Sample||A portion of another son incorporated into a new song.|
|Moral Rights||The legal concept that an author may stop any mutilation of his work, even if they no longer own that work.|
|Reversion of Copyright||A contractual provision stipulating that the publisher must give back the copyright and all additional rights to a song at some point in the future.|
|Copublishing Deals||Deal where more than one party shares copyright ownership.|
|Most Common Copublishing Deals|| 1) B/t artist and songwriters (songwriter retains writers share + some of publishers share.|
2) B/t 2 songwriters
|Net Publisher's Share||$ divided on the publisher's side.|
|Gross Income||Writer's Share+ Publisher's share combined.|
|Direct Expenses||Expenses connected to one specific song.|
|Examples Of Direct Expenses|| 1) Copyright office registration|
2) Demo creation costs
3) Collection costs
4) Preparation of lead sheets
|1 of 2 Most Common ways of Administration (one administrator)||one party has the exclusive right to administer on behalf of all.|
|2 of 2 Most Common ways of Administration (one administrator with restrictions)||One party has exclusive rights, but it cannot license certain usages without consent of other parties.|
|Other Forms of Administration not commonly used||1) One Administrator with direct payments to other parties- Exclusive rights but certain $ is paid directly to other parties |
2) True Co-Administration- All parties have the right to administer their share of the composition
3) Co-Administration with exceptions- All parties co-administer, but only one party acting alone can issue certain licenses.
|Controlled Compositions||If one of the parties is an artist, he could issue the necessary permissions w/o permission form the co-publisher|
|Statutory rate licenses||Either party can issue a mechanical license for the whole song at the statutory rate as long as its not a first use|
|One of the parties may have an exclusive agreement for print, while the other party may not.|
|Parties Involved In Administration Agreements||Original publisher and the administrator.|
|Administrator|| 1) Takes an administration fee 10-25%|
2) Deducts direct expenses
3) Pays the balance to the original publishers
|Typical incentives for Covers in Administration deals|| 1) The administrator gets an increased % of all income (not just covers)|
2) " " retains administration rights to the covered song for an additional period of time.
3) The administrator gets copyright ownership for covers
4) Any combination of 1-4
|Lead Sheets||A document containing the words and musical melody line of a song.|
|Joint Work||A song created jointly by the efforts of 2 or more people.|
|Work for Hire||When a person creates a work while under the employ of another.|
|Collective Work||A collection of individual works, each of which is independently capable of copyright.|
|Compilation||A work made by compiling a bunch of things like a collective work; however is also includes works where the compiled materials are not separately copyrighted.|
|Pseudonymous Work||A work written anonymously or under a phony name.|
|Take-down Rights||The copyright owner may require a website to pulldown certain materials at their request.|
|Work For Higher Way #1|| The work is made by an employee within the scope of employment. The legal test of employment is: |
The employer must be actually directing or supervising the creation of the work in a very specific way.
|Work For Higher Way #2||The work meets ALL of the following Criteria|
1) The work must be commissioned (requested)
2) Must be created under a written agreement
3) Must be created for use in one of the following
a) A motion picture of other audiovisual work
b) A collective work
c) A translation of a foreign work
d) A supplementary work
|Copyright is???||Limited duration monopoly!|
|Prior to 1978...|| 1) Copyright was max 56 years.|
2) Lasted 28 years + 1 renewal of 28 years
|The 1976 Copyright Act|| 1) Copyright was life of author + 50 years|
2) Right of Termination was introduced
|1988 Congress Extended the Term|| 1) Pre 1978 songs copyright total of 90 years|
2) songs after 1/1/78 life of author + 70 years
3) Joint works copyright= 70 years after death of last surviving author
|Sound Recording Act of 1995||For the first time in history artists and record companies had the right to be paid when the record is performed.|
|When can Artists and Record Companies be paid for performances of the master?|| When all of the following apply|
1) It must be a digital public performance
2) It must be an audio-only sound recording
|Sonny Bono Copyright Term Extension Act of 1998||Copyright extended life of author + 70 years for all works after 1/1/78|
|Consequences of Sonny Bono|| 1) Gave Libraries and archives the right to make copies of works during their last 20 years of protection |
2) Created a new termination of transfer right and expanded the old one
3) strongly suggested that motion pics studios and talent collaborate on how to divide $ earned during the final 20 years
|Fairness in Music Licensing Act of 1998||Stores, restaurants and bars under a certain size don't need a license to perform music.|
|master sample|| use of the original recording of another song.|
clearance from both label and publisher
|Replay sample|| Duplication of an original track, by performing it in-studio|
clearance from only the publisher More Used!