The document provides an overview of how copyright and contracts work in the traditional music industry. It discusses that copyright automatically exists as soon as a work is created in a fixed form. There are several restricted acts like copying, distributing, and broadcasting that copyright owners can prevent without permission. Record contracts are usually exclusive, requiring artists to only record for that label. Advances are paid upfront but must be recouped from royalties, which are a percentage of sales after deductions. Overall the document gives a high-level introduction to key copyright and contractual aspects of the music industry.

1. Music Industry
How the Traditional Music Industry Works
Copyright & Contracts Part 1
Chris Baker
www.musicstudentinfo.com

2. Nature of the Music Industry
The music industry revolves around copyright and its exploitation
(i.e. the use of copyright works in return for payment) and if the
fruits of people’s creativity were not protected by law, there
would be no music industry as we know it today. Owning
copyright means that the owner can prevent other people using
their work in certain ways without their permission. Giving
permission usually means that the copyright owner receives
payment for use of their work.

3. Introduction to Copyright
Everyone’s heard of copyright & seen the symbol © but what
exactly does it mean?
It is more than just the right to copy the work (more correctly,
the right to stop others copying it). The law is contained in the
Copyright Designs & Patents Act 1988 & sets out several things
that a copyright owner is entitled to prevent others from doing.
These are known as “restricted acts”

4. Restricted Acts
These 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, on
jukeboxes, internet etc)
•Performing in public (i.e. at a live concert, as opposed to playing
of recorded music)
•Adapting (including translating, remixing or arranging)

5. 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.

6. Types of Works Protected by Copyright
Copyright exists in all original works, whether literary, musical,
artistic or dramatic. In a music industry context, literary works
are relevant. The music of a song is, as you would expect,
classified a musical work, and the lyrics are classified a literary
work.

7. Copyright in a Music Industry Context
Copyright in Songs
We know that copyright exists in a piece of music (whether it
has lyrics or not), but where does it come from, when does it
start & how long does it last.

8. How Copyright Arises
There is a widespread belief that to have copyright you have to
“register” your songs. In UK law there is no legal requirement to
register, and copyright immediately & automatically. So when
you right apiece of music, whether you write the lyrics on a
piece of paper, or music on a score, or just record a demo,
copyright exists from the moment the ink is dry or the recording
is made.

9. Proof of Copyright
You may hear of people posting tapes to themselves. This does
not give you copyright, as it already exists as soon as the song is
reduced to a permanent form. Posting to yourself is a way of
providing evidence that you wrote the song at a particular time,
in case someone later claims to have written it themselves. If you
do post tapes or written songs to yourself, enclose them in a
sealed envelope , sign it across the seal, write on the envelope
what songs are in it, put it in another envelope & send it to
yourself by recorded or registered post, and DO NOT open it
when you get it! The postmark and the proof of posting are your
evidence that those songs were written at that time.

10. Duration of Copyright
Copyright in a song lasts for the lifetime of the writer plus 70
years. After that time the song is said to “fall into the public
domain” (such as allot of classical music where the composer
has been dead for more than 70 years) & anyone can use it
without permission or payment.

11. Copyright in Sound Recordings
When a song is recorded (whether on CD, Tape, Vinyl or any
other medium), another type of copyright arises. This is the
copyright in the actual recording of the sounds and is separate
from the songwriter’s copyright in the original song. This
copyright in the sound recording is known as the “phonographic
copyright” (being copyright in a phonographic recording) and is
denoted by a P in a circle. Thus ℗
Look at any CD and you will see the symbol. This copyright now
lasts for 70 (revised from 50 years in 2011 UK) from when the
recording was first released.

12. Copyright in Songs & Sound Recordings
We have looked at “pure” songs & recordings of songs, & have
seen 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 of
copyright 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 & selling
recordings are of course, record companies. You can now see
that the record company needs the permission of the owner of
copyright in the original song in order to to be able to legally
record that song without infringing copyright in it.

13. Copyright in Songs & Sound Recordings
When you enter into a recording contract , this is the main legal
right that you are making available to the record company, and
in return for your permission for them to exploit your copyright,
they have to pay you (these payments are called royalties) the
permission you give the record company is called a “mechanical
license” as historically there had to be a mechanical
reproduction of the song onto a record (now, of course, it is
largely a digital process, but the name has stuck). If you as a
songwriter have a publishing contract then you sell the copyright
in your songs to your publisher & it gives the record company
the mechanical license on your behalf (for a slice of the income,
of course), so substitute “writer” with “publisher” in these
notes.

14. Copyright in Songs & Sound Recordings
Since the record company usually makes the recording of your
songs, it is the record company that owns the phonographic
copyright. Remember that this is independent of your copyright
in the songs embodied in the recording. Because the record
company owns the phonographic copyright in the original
recording, it is the only person entitled to make records from the
master recording of your songs, so no other record company can
use or copy the sound recording that the original company made
until the end of the 70 year period previously mentioned.

15. Recording Contracts Exclusivity
Exclusivity all recording contracts are exclusive, which means
that you cannot make records for anyone else while under
contract. If they were not, then the artist could simply go off &
record for another company and there could be two or more
different recordings of the same songs available at the same
time on different labels, which would not be in the record
company’s or the artists interests.

16. Recording Contracts Exclusivity
How could an artist do this if we said that the record company
owns the copyright in the recording? The reason is that the artist
could theoretically make another new recording of the same
song with a different record, and the record company would
own the copyright in its recording for 70 years. Unless, that is,
the first record contract prevents the artists from recording for
anyone else (both during the contract and for a short time
afterwards, usually five years) in other words unless the contract
is exclusive. This also illustrates that the copyright in the songs
themselves (which the record company does not own) is
different from that in the recording of them (which the record
company does own)

17. Recording Contract Commitment
A record contract might require the artist to record anything
from a one-off single to five or more albums, or any
combination. Usually, all recordings other than the first one
(which the record company obviously heard before it offered the
deal) are at the record company’s option. So a five album deal
may turn out to be nothing more than a one album deal if the
first album is not successful and the record company decides not
to exercise its option for the next album.

18. Recording Contract Duration
How long a record contract lasts usually depends on how soon
the artist fulfills the recording commitment, as the length of
contract is likened to when the albums are delivered.
Sometimes, record contracts state that an album cannot be
delivered earlier than a year before the last one was, to stop
artists giving the company all five albums in one go and walking
away (like Prince/The Artist Formerly Known As Prince/Squiggly
Symbol tried to do)! So a five album deal could last longer than
five years, when you consider there has to be time in between
to tour & promote each album and to record the next one.

19. Record Contract Advances
When you sign a record contract you are usually paid an
advance. This could range from just the cost of recording the
first album/single to “telephone number” sums for superstars.
Further advances are usually payable IF and when the record
company exercises its options for future albums. Sometimes you
have to pay the recording costs out of your own advance,
sometimes the record company will pay these on top of your
advance. If either case, you end up paying the record costs back
by recoupment.

20. Record Contract Royalties
Artists are paid royalties based on record sales. In a typical
major-label deal, the artist will earn somewhere between 14 and
18 percent of the record's dealer price (PPD) which may be
between £6.50 and £8.50.
Before they'll see any money, the artist will have to recoup the
recording costs, advances, and usually 50 percent of all video
costs. The label will make additional deductions, reducing the
real royalty rate still further.

21. Record Contract Deductions
Even though volume CD packaging these days is cheap, record
companies typically make a royalty deduction of 20 to 25
percent deduction for it ! Overall, you might only get paid on 90
percent of actual sales, since retailers are able to return records
they don't sell. The record label therefore holds on to a portion
of your royalties, usually 10 percent, as a reserve, until all sales
are verified. You must make sure that this reserve will be
liquidated (paid out) at regular intervals, and that the artist (you)
receives their entitlement in full.

22. Record Contract Royalties & Deductions
In reality, most 'deductions' are artificial and in no way reflect
the true cost to the label. Packaging on CDs manufactured in
volume is cheap. Similarly, as more records are sold through
digital channels, a reserve for breakages and the allocation of
free digital goods ceases to make any sense at all, other than to
boost the label's profits.

23. The End