Music IndustryHow the Traditional Music Industry Works Copyright & Contracts Part 1 Chris Baker www.musicstudentinfo.com
Nature of the Music IndustryThe music industry revolves around copyright and its exploitation(i.e. the use of copyright works in return for payment) and if thefruits of people’s creativity were not protected by law, therewould be no music industry as we know it today. Owningcopyright means that the owner can prevent other people usingtheir work in certain ways without their permission. Givingpermission usually means that the copyright owner receivespayment for use of their work.
Restricted ActsThese are:•Copying (in any form whatsoever, whether or not permanent)•Distributing copies to the public (e.g. on CD’s)•Playing or broadcasting in public (e.g. on radio, television, onjukeboxes, internet etc)•Performing in public (i.e. at a live concert, as opposed to playingof recorded music)•Adapting (including translating, remixing or arranging)
Copyright Restricted Acts cont.Anyone who does any of the aforementioned “restricted acts”without the copyright owner’s permission infringes copyright &the owner can take legal action to prevent it.
Types of Works Protected by CopyrightCopyright exists in all original works, whether literary, musical,artistic or dramatic. In a music industry context, literary worksare relevant. The music of a song is, as you would expect,classified a musical work, and the lyrics are classified a literarywork.
Copyright in a Music Industry ContextCopyright in SongsWe know that copyright exists in a piece of music (whether ithas lyrics or not), but where does it come from, when does itstart & how long does it last.
How Copyright ArisesThere is a widespread belief that to have copyright you have to“register” your songs. In UK law there is no legal requirement toregister, and copyright immediately & automatically. So whenyou right apiece of music, whether you write the lyrics on apiece of paper, or music on a score, or just record a demo,copyright exists from the moment the ink is dry or the recordingis made.
Proof of CopyrightYou may hear of people posting tapes to themselves. This doesnot give you copyright, as it already exists as soon as the song isreduced to a permanent form. Posting to yourself is a way ofproviding evidence that you wrote the song at a particular time,in case someone later claims to have written it themselves. If youdo post tapes or written songs to yourself, enclose them in asealed envelope , sign it across the seal, write on the envelopewhat songs are in it, put it in another envelope & send it toyourself by recorded or registered post, and DO NOT open itwhen you get it! The postmark and the proof of posting are yourevidence that those songs were written at that time.
Duration of CopyrightCopyright in a song lasts for the lifetime of the writer plus 70years. After that time the song is said to “fall into the publicdomain” (such as allot of classical music where the composerhas been dead for more than 70 years) & anyone can use itwithout permission or payment.
Copyright in Sound RecordingsWhen a song is recorded (whether on CD, Tape, Vinyl or anyother medium), another type of copyright arises. This is thecopyright in the actual recording of the sounds and is separatefrom the songwriter’s copyright in the original song. Thiscopyright in the sound recording is known as the “phonographiccopyright” (being copyright in a phonographic recording) and isdenoted by a P in a circle. Thus ℗Look at any CD and you will see the symbol. This copyright nowlasts for 70 (revised from 50 years in 2011 UK) from when therecording was first released.
Copyright in Songs & Sound RecordingsWe have looked at “pure” songs & recordings of songs, & haveseen the different types of copyright that apply to each.Obviously, a song is difficult to exploit unless it is recorded.Remember that one of the “restricted acts” that the owner ofcopyright in the song can stop others doing is copying the song,and a recording is a copy.The people who are in the business of making & sellingrecordings are of course, record companies. You can now seethat the record company needs the permission of the owner ofcopyright in the original song in order to to be able to legallyrecord that song without infringing copyright in it.
Copyright in Songs & Sound RecordingsWhen you enter into a recording contract , this is the main legalright that you are making available to the record company, andin return for your permission for them to exploit your copyright,they have to pay you (these payments are called royalties) thepermission you give the record company is called a “mechanicallicense” as historically there had to be a mechanicalreproduction of the song onto a record (now, of course, it islargely a digital process, but the name has stuck). If you as asongwriter have a publishing contract then you sell the copyrightin your songs to your publisher & it gives the record companythe mechanical license on your behalf (for a slice of the income,of course), so substitute “writer” with “publisher” in thesenotes.
Copyright in Songs & Sound RecordingsSince the record company usually makes the recording of yoursongs, it is the record company that owns the phonographiccopyright. Remember that this is independent of your copyrightin the songs embodied in the recording. Because the recordcompany owns the phonographic copyright in the originalrecording, it is the only person entitled to make records from themaster recording of your songs, so no other record company canuse or copy the sound recording that the original company madeuntil the end of the 70 year period previously mentioned.
Recording Contracts ExclusivityExclusivity all recording contracts are exclusive, which meansthat you cannot make records for anyone else while undercontract. If they were not, then the artist could simply go off &record for another company and there could be two or moredifferent recordings of the same songs available at the sametime on different labels, which would not be in the recordcompany’s or the artists interests.
Recording Contracts ExclusivityHow could an artist do this if we said that the record companyowns the copyright in the recording? The reason is that the artistcould theoretically make another new recording of the samesong with a different record, and the record company wouldown the copyright in its recording for 70 years. Unless, that is,the first record contract prevents the artists from recording foranyone else (both during the contract and for a short timeafterwards, usually five years) in other words unless the contractis exclusive. This also illustrates that the copyright in the songsthemselves (which the record company does not own) isdifferent from that in the recording of them (which the recordcompany does own)
Recording Contract CommitmentA record contract might require the artist to record anythingfrom a one-off single to five or more albums, or anycombination. Usually, all recordings other than the first one(which the record company obviously heard before it offered thedeal) are at the record company’s option. So a five album dealmay turn out to be nothing more than a one album deal if thefirst album is not successful and the record company decides notto exercise its option for the next album.
Recording Contract DurationHow long a record contract lasts usually depends on how soonthe artist fulfills the recording commitment, as the length ofcontract is likened to when the albums are delivered.Sometimes, record contracts state that an album cannot bedelivered earlier than a year before the last one was, to stopartists giving the company all five albums in one go and walkingaway (like Prince/The Artist Formerly Known As Prince/SquigglySymbol tried to do)! So a five album deal could last longer thanfive years, when you consider there has to be time in betweento tour & promote each album and to record the next one.
Record Contract AdvancesWhen you sign a record contract you are usually paid anadvance. This could range from just the cost of recording thefirst album/single to “telephone number” sums for superstars.Further advances are usually payable IF and when the recordcompany exercises its options for future albums. Sometimes youhave to pay the recording costs out of your own advance,sometimes the record company will pay these on top of youradvance. If either case, you end up paying the record costs backby recoupment.
Record Contract RoyaltiesArtists are paid royalties based on record sales. In a typicalmajor-label deal, the artist will earn somewhere between 14 and18 percent of the records dealer price (PPD) which may bebetween £6.50 and £8.50.Before theyll see any money, the artist will have to recoup therecording costs, advances, and usually 50 percent of all videocosts. The label will make additional deductions, reducing thereal royalty rate still further.
Record Contract DeductionsEven though volume CD packaging these days is cheap, recordcompanies typically make a royalty deduction of 20 to 25percent deduction for it ! Overall, you might only get paid on 90percent of actual sales, since retailers are able to return recordsthey dont sell. The record label therefore holds on to a portionof your royalties, usually 10 percent, as a reserve, until all salesare verified. You must make sure that this reserve will beliquidated (paid out) at regular intervals, and that the artist (you)receives their entitlement in full.
Record Contract Royalties & DeductionsIn reality, most deductions are artificial and in no way reflectthe true cost to the label. Packaging on CDs manufactured involume is cheap. Similarly, as more records are sold throughdigital channels, a reserve for breakages and the allocation offree digital goods ceases to make any sense at all, other than toboost the labels profits.