10 things marketers need to know about Music Rights

Music Rights Webinar 29th November 2011Music Rights For Marketing & Procurement Executives 10 things you need to know Presented by Richard Kirstein Founding Partner, Resilient Music LLP

.… a bit about meThe Company She Keeps Miro Soul To Squeeze

Quick Poll #1 What’s your role?1. Brand Client Marketing Team2. Brand Client Procurement Team3. Brand Client Finance Team4. Marketing Procurement Consultant5. WFA Team Member6. Other

Why know more about music rights?• Information is power• Knowledge empowers Advertisers to challenge established practices• Greater understanding improves cost & risk management• Procurement can help Marketing if engaged sufficiently early

10 things you need to know• Songs vs. Recordings • Out-of-copyright• Types of licence & who to talk to • Risk avoidance• Approval times • Competitive Tendering• Re-records • Procurement Responsibility• Cost-drivers • Benchmarking

1. Songs vs. Recordings

Songs vs. Recordings COLDPLAY

Songs vs. RecordingsSongwriters Recording Artist COLDPLAY

Songs vs. Recordings Songwriters Recording ArtistSongs / Compositions “Master” Sound Recordings COLDPLAY

Songs vs. Recordings Songwriters Recording ArtistSongs / Compositions “Master” Sound Recordings Music Publisher Record Label COLDPLAY

Songs vs. Recordings Songwriters Recording ArtistSongs / Compositions “Master” Sound Recordings Music Publisher Record Label “Publishing” right “Master” right COLDPLAY

“The Scientist” – Original Artist Recording Martin / Champion / Berryman / Buckland Coldplay Song “Master” Sound Recording Music Publisher Record Label “Publishing” right “Master” right

“The Scientist” – Cover VersionMartin / Champion / Berryman / Buckland Natasha Bedingfield Song “Master” Sound Recording Music Publisher Record Label “Publishing” right “Master” right

Songs vs. Recordings – Now Key Rights OwnersMajor Music Publishers Major Record Labels

Songs vs. Recordings – Future Key Rights OwnersMajor Music Publishers Major Record Labels Subject to regulatory approval

Songs vs. Recordings Key Rights OwnersIndependent Music Publishers Independent Record Labels IMAGEM BEGGARS GROUP BMG RIGHTS DOMINO MUSIC SALES PIAS KOBALT MUTE BUCKS MINISTRY OF SOUND CARLIN WARP BLUE MOUNTAIN PALM PICTURES NOTTING HILL NINJA TUNE MUTESONG COOKING VINYL GLOBAL TALENT NETTWERK NOTE: Some companies are Europe-based only, others also cover North America & Far East

TOP TIPS #1• Be clear which title you wish to use• Be clear if it’s an original artist recording or cover version• Establish which rights owners have an interest in song & recording

2. Types of Licence

Types of Licence Why do you need a licence?• Songs and recordings are someone else’s intellectual property• To use them, you need a licence• Usage without a licence is an infringement of copyright• GET A LICENCE (before usage starts)

Types of Licence Who do you talk to? Songwriters Recording Artist Music Publisher Music PublisherMechanical Right Synchronisation Digital Downloads Use of song in TVC / Video

Types of Licence Who do you talk to? Songwriters Recording Artist Experiential Performing at a live eventPerforming Right #1 Broadcast & in-store “transmission” of songPerforming Right #2 On-line & mobile “transmission” of song Music Publisher OR Music Publisher Mechanical Right Synchronisation Digital Downloads Use of song in TVC / Video PRS (UK-based) used as an example collection society

Types of Licence Who do you talk to?Songwriters Recording Artist Record Label Performing Right #2 On-line & mobile “transmission” of recording Record Record Label Label Synchronisation Reproduction Right Use of recording in TVC / Video Digital Downloads

Types of Licence Who do you talk to?Songwriters Recording Artist Experiential Endorsement Performing at a live event Brand Ambassador Role Artist Artist Manager Manager Record Label Performing Right #2 On-line & mobile “transmission” of recording Record Record Label Label Synchronisation Reproduction Right Use of recording in TVC / Video Digital Downloads

Types of Licence Who do you talk to?Songwriters Recording Artist Experiential Endorsement Performing at a live event Brand Ambassador Role Artist Artist Manager Manager Performing Right #1 Broadcast & in-store “transmission” of a recording Record Label Performing Right #2 On-line & mobile “transmission” of recording Record Record Label Label Synchronisation Reproduction Right Use of recording in TVC / Video Digital Downloads PPL (UK-based) used as an example collection society

Types of Licence Who do you talk to? Songwriters Recording Artist Experiential Experiential Endorsement Performing at a live event Performing at a live event Brand Ambassador Role Artist Artist Manager ManagerPerforming Right #1 Performing Right #1 Broadcast & in-store Broadcast & in-store “transmission” of song “transmission” of a recording Record Label Performing Right #2Performing Right #2 On-line & mobile On-line & mobile “transmission” of recording “transmission” of song Music Publisher OR Music Record Record Publisher Label Label Mechanical Right Synchronisation Synchronisation Reproduction Right Digital Downloads Use of song in TVC / Video Use of recording in TVC / Video Digital Downloads

Licence Exclusivity• Relevant to all licence types EXCEPT performing right• Limited by Term & Territory• Can be limited by product category or across all brands• Always attracts a premium fee

TOP TIPS #2• Be clear which rights you need (determined by proposed usage)• Be clear who controls those rights• Bring all parties to the table from the outset• Don’t approach artist management for synch rights for signed writers / artists

3. Approval Times

3. Approval Times Why does it take so long?Licence Request UK Publisher US Publisher Manager Songwriter Brand (or agency) UK Record Label US Record Label Manager Artist US controlled repertoire From 1-2 days to 1-2 weeks

3. Approval Times Why does it take so long?Licence Request UK Publisher US Publisher Manager Songwriter Brand (or agency) UK Record Label US Record Label Manager Artist US controlled repertoire From 1-2 days to 1-2 weeksGranting Approval (or Denial!) Songwriter Manager US Publisher UK Publisher Brand (or agency) Artist Manager US Record Label UK Record Label US controlled repertoire From 3-5 days to 2-3 months

TOP TIPS #3• Start as early as possible• Always have back-up tracks• “No” (usually) does mean “No” – Be prepare for denial of licence• Accept that not everyone loves your brand as much as you do

Quick Poll #2How many music rights negotiations have you previously been involved in?1. None2. 1 - 53. 6 - 104. Over 10

4. Re-records

4. Re-recordsMartin / Champion / Berryman / Buckland Arranger / Producer Song : “The Scientist” Engaged Services Music Publisher Re-recording “Publishing” right Assigned or Licensed Brand (or Agency)

Re-records : The Facts Taking an existing published songRe-record and re-recording it specifically for the campaign The publishing rights (in the song)Publishing DO have to be cleared with the appropriate publisher(s) The master rights (in the original Master sound recording) DO NOT have to be cleared with the record label

TOP TIPS #4 Changing the LYRICS always Parody requires more complex approval & usually a higher fee Directly copying the original“Passing Off” recording may risk a “Passing Off” claim from the artist or their label Change singer gender, key,Risk Reduction instrumentation for a noticeable difference

5. Cost-drivers

5. Cost-drivers Channel vs. Context B2C vs. B2B Usage Term, Territory, Media Stature Song vs. Artist Rights Owner Major vs. Independent Timings Urgent vs. Not UrgentCompetitive Environment Single choice vs. optionsExtending Licence Terms Options included or not

Channel vs. ContextHigh Licence Fees Low Overt Subtle Branding

Usage Broadcast / ATLHigh World On-line Experiential Licence Fees In-store Internal UK Term 1 Yr 2 Yrs Low High Low Usage

StatureHigh Licence Fees Low High Low Fame

Rights OwnersHigh Licence Fees Low High Low Fame

TimingsHigh Licence Fees Low High Low Urgency

Competitive EnvironmentHigh Licence Fees Low High Low No. of track options on the table

Fees to extend licence termsHigh Licence Fees NOT Included in Original Licence Included in Original Licence Low Inclusion of Pre-negotiated Options

TOP TIPS #5• Only buy the “must-have” usage you need now• Include options for all “nice-to-have” usage within the licence• Include options to extend the term into a 2nd & 3rd period (usually @ 10%)• Always have back-up tracks• Be very aware of balance of power between licensee & licensor

6. Out-of-Copyright

How long does copyright last? Songs Recordings Publishing Rights – EU Law Master Rights – EU LawCopyright in the song / composition Copyright in the sound recordingRemains “in copyright” for 70 years Remains “in copyright” for 70 years from the death of (youngest) from date of first commercial composer / songwriter release Outside Europe, laws vary, notably USA.

“The Scientist” – Original Artist Recording Martin / Champion / Berryman / Buckland Coldplay Song “Master” Sound Recording First registered 2002 First released 2005 Assume last writer dies aged 85 Copyright expires end 2075 (in 2063) Copyright expires end 2133

So, what is out-of-copyright (in the EU)? Songs RecordingsAny song or composition whose last Any sound recording commerciallysurviving writer/author died in 1940 released in 1940 or earlier.or earlier. Elgar d. 1934 Wagner d. 1883 Benny Goodman Septet “Ad Lib Blues” Recorded: NYC October 28, 1940 Includes : Original 78rpm discs Excludes : remastered CDs Beethoven d. 1827 J.S.Bach d. 1750

TOP TIPS #6• If it’s in Copyright – you need a licence• Copyright Term varies between songs and recordings• Copyright Term varies between territories• For internet usage, you must abide by US law• Don’t make assumptions without proper due diligence

7. Risk Avoidance

TOP TIPS #7• No sound-a-likes• No intent to infringe• No minor changes (6 note myth)• Identify all interested parties• Myth re attempted search• Escrow accounts

8. Competitive Tendering

Competitive EnvironmentHigh Licence Fees Low High Low No. of track options on the table

STAGE #1 : SOURCING TRACKSCreative Requirement Business RequirementEmotional Objective Budget & Usage Music Brief Commercial Terms Brief Music Sourcing Tender Music Rights Owners Track Submissions Track Shortlist Hero Tracks & Back-ups

STAGE #2 : PURCHASING TRACKS Simultaneous Shortlist Research Negotiate from Position of Strength Secure Multiple Approvals Final Choice Optimal Outcome

TOP TIPS #8•Start early •Start late•Collate all usage data up-front •Have incomplete usage data•Clarify optional usage •Have no option data•Clarify deadlines •Have fluid deadlines•Don’t move the goalposts! •Have fluid parameters•Have back-up tracks •Track is a must-have

9. Procurement Responsibility

Who handles music procurement for your agency? In-house TV Producer “Sister” company supplier Independent supplier

Who handles music procurement for your agency? • How are they charged? • Hour/Day rate or flat fee? • Is this the default agency choice? • Are they proven as “best in class”? • Remunerated by flat fee or commission? • Truly independent or preferred supplier? • Sourced by competitive tendering? • Remunerated by flat fee of commission?

TOP TIPS #9• Challenge agency on default supplier choice• Insist on competitive tendering to source supplier• Avoid remuneration by commission (conflict)• Incentivise supplier to broker the best deal

10. Benchmarking

Are you benchmarking your music procurement? • Post-project auditing • Assessment of fees paid to rights owners • Matching invoices to POs • Assessment of fully executed contracts • Visibility by client-side Legal prior to signature

TOP TIPS #10• Challenge agency on full accountability• Insist on proper due diligence• Spot-check contracts for full execution• Spot-check invoice & PO matching• Insist on removal of agency mark-up on any costs• Share anonymous data with peers

RECAP: 10 things you need to know• Songs vs. Recordings • Out-of-copyright• Types of licence & who to talk to • Risk avoidance• Approval times • Competitive Tendering• Re-records • Procurement Responsibility• Cost-drivers • Benchmarking

Thank Yourichard@resilientmusic.com+44 (0)7976 2022705+44 (0)20 3137 0324richardkirsteinwww.resilientmusic.com@resilientmusicwww.linkedin.com/in/richardkirstein

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10 things marketers need to know about Music Rights

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10 things marketers need to know about Music Rights Presentation Transcript