Updated: Mar 29, 2019
When building a career it can become difficult to keep up with the legalities of running a music business. Not only is it time consuming to provide high quality material, but from hiring personnel to buying books or classes for self education, resources for entertainment law can be expensive. Even so, the law protects the rights of artists to their work, provides financial incentive to create, and allows works to eventually be owned by the public. In depth coverage of the music industry’s legalities is beyond the scope of this blog, but an outline of issues to look out for helps artists avoid problems down the road. 7 Music Industry legal matters to know:
Record Label Agreements
Internal Band Agreements
Artist Representation in Music Industry
1. Music Copyrights-
What is a copyright?
A copyright is a limited duration monopoly which allows the owner to grant others permission to use the song and sue anyone who uses the song without permission. As soon as a creator commits a song to a fixed, tangible medium, they automatically are the owner of its copyright. However, over time the copyright may be bought or sold, which transfers ownership of the rights to the song to other people. Where there is more than one writer, there are special rules regarding dividing income and selling song copyrights: unless a contract states otherwise rights are divided equally.
What are the rights of a copyright owner?
3. Perform Publicly
4. Perform Sound Recording
Unless the song owner gives permission (license) or unless a law permits the use (compulsory license or fair use), no other person can record, sell, copy, or publicly perform the song. For public performances, it doesn’t matter if the performance is free or nonprofit, physical or digital. Derivatives may include parodies, translations, or abbreviated versions of the song.
Duration of Copyright:
When the term of protection for a copyright ends or expires, the work enters the public domain. A work that is in the public domain cannot be owned by anyone, and anyone is free to use it. While copyright can be very important to provide financial incentives for authors to create and for companies to invest in the production, distribution, and marketing of creative works, the public domain is also very important since it allows creative works to be eventually freely used to create new works.
The laws governing the duration, or the term, of copyright can be complex, mostly due to the fact that there are different terms of protection for different works. Works created and published before 1978 are governed by the provisions of the 1909 Copyright Act, while works created beginning in 1978 are governed by the provisions of the 1976 Copyright Act. The duration provisions of both the 1909 and 1976 Acts have been amended on several occasions, which makes things even more complicated.
Works created on 1/1/78 and after are protected on the date of fixation in tangible form. Generally, protection lasts for the life of the author plus 70 years. For joint works protection lasts the life of last surviving author plus 70 years. Copyright duration for works for hire, anonymous, and pseudonymous works exists 95 years from publication or 120 years from creation, whichever is shorter. Works created before 1978, but published between 1/1/78 and 12/31/2002, are protected upon creation under common law for the life of the author plus 70 years or 12/31/2047, whichever is longer. Works created before 1978, but not published are protected upon creation under common law for the life of author plus 70 years or 12/31/2002, whichever is longer. Works published from 1964-1977 are covered upon publication with copyright notice (if published without notice, may be in public domain) have a 28 year initial term plus 57 year automatic renewal term. Works published between 1923 and 1963 have the same duration as 1964-1977 except instead of an automatic renewal term, registration is filed during 28th year of initial term. Works published before 1923 are in the public domain and copyright duration has expired.
Two types of music copyrights:
1. Sound Recordings
2. Musical Works
Sound recordings and musical works are separately copyrightable works that can be owned by one or more authors. A musical work, or a song, usually means a melody and often (but not always) lyrics; a sound recording is the actual recorded performance of that song. The copyrights in sound recordings and musical works create two different revenue streams for their owner(s) in the form of royalties from record sales and music publishing royalties.
Many people have the mistaken belief that in order to own a copyright to a work, they have to register the work. However, copyright ownership arises automatically upon creation of a copyrightable work and is not dependent upon registration. Section 408 of the Copyright Act provides for an optional registration system. Copyright registration essentially means that someone has made a claim of ownership to a work as of a certain date. The fact that someone has registered a work claiming to be the copyright owner does not absolutely guarantee that they are really the owner, because a registration can be contested in court.
Copyright registration makes it easier to prove that you own the work and to legally pursue infringements if they occur. Specific registration benefits: creates a public record of your claim of copyright ownership, provides prima facie (at first sight) evidence of ownership, gives the copyright owner the ability to file suit, entitles the copyright owner to attorneys’ fees and statutory damages, allows copyright owner to collect mechanical license royalties, and allows copyright owners to block importation of illegal copies. Two ways to register: online or sending an application in the mail. Either way an application must include: a completed application form, submission of a deposit (or copy of the work being registered), and payment of the appropriate application fee.
Copyright notice is a way of informing people that a work is protected by copyright and who it is owned by. Before March 1, 1989, placing copyright notice on published copies was required in order to have copyright protection in the United States. Notices makes it easier to request a license to use a work. Someone who infringes a work that contains notice cannot claim innocent infringement (reducing the amount of damages they are liable for) even if they actually believed the work was in the public domain.
In most cases the author owns the copyright to a work upon creation and can transfer rights or license their work to anyone else if they put it in writing. The exception is a work made for hire. If the author creates a work of music while an employee of an employer, as an integral part of the employment, then it will be considered a work made for hire, and owned by the employer.
What is sampling?
Sampling is the process of copying a piece of recorded music, usually on a computer or sampler, and then reproducing it on your recording (another different legal definition of sampling is the practice of making temporary copies of a recording before purchasing which doesn’t apply to this discussion of sampling).
Is sampling legal?
Sampling is a violation of copyright law if it’s done without the permission of the owner of the recording (usually the record company) and the owner of the song (usually the music publisher). Some companies simplify the process by offering online sample clearance. Some samples have been precleared, it’s okay with the owners for others to sample the recording. Before freely using a sample, check the notice on the recording or disk package to make sure that the material is available for use.
Penalties for sampling without permission:
A court can force the artist or artist’s record label to recall and destroy all of the records containing samples and to pay damages to the copyright owner for each act of infringement. Most recording contracts contain provisions in which the artist promises that all material is original and agrees to reimburse label if it is sued for copyright infringement.
3. Music Publishing-
What is music publishing?
Publishing means presenting something to the public, generally for a price. When something is created, a song, a photograph, a poem, an invention, etc., the owner is legally entitled to a part of any money generated from its sale.
What is a publishing company?
A publishing company completes various administrative tasks to prove ownership of material, set mechanisms in place that ensure the owner gets paid whenever their song is used, and convince others to use the song to generate income.
Sources of publishing income:
1. Public performance royalties
2. Mechanical royalties
3. Synchronization license fees
4. Printed music
Royalties are percentages of the money gained from others’ use of copyrighted work from public broadcasts, reproduced recordings, and printed music. Sync fees are typically one time payments in which the producers of a movie, television show, or advertisement pay the songwriter for the right to include music in their production (once this production is broadcast publicly, the owner is then also eligible to receive performance royalties).
4. Record Label Agreements-
Record companies commonly enter into two types of record contracts with bands: record agreements, where a band agrees to make one or more recordings exclusively for a company; and licensing deals, where a label acquires the rights to release something that a band has already recorded. Common key record agreement elements: the length of time for the agreement (may include options where the record label can choose to extend term), the number of recordings to be delivered, the amount of advance for each recording, the amount of royalty paid for each recording, the deductions from artist’s income, related rights such as merchandising and videos, whether all band members are locked into the agreement even if the band breaks up (aka a key member clause), the presence or absence of a controlled composition clause (when the artist who performs a song is also the writer or co-writer, or otherwise stands to gain financially from the copyright), and whether the band must sign a co-publishing deal.
5. Internal Band Agreements-
A band partnership agreement (BPA) is tailored to the needs of a band. Typically, a BPA: provides a method for resolving disputes, sets standards for firing and hiring band members, creates a system for dividing band income and expenses (including future royalties), establishes guidelines for when members depart or the band breaks up, and defines who may use the band name and songs.
What is a trademark?
A trademark is a word, name, symbol, device, or combination of them used by a business to identify its goods and services and distinguish them from others. A trademark for services is a service mark.
A business can obtain local trademark rights by using the mark in the ordinary course of trade or in connection with the sale of goods or services. In order to obtain national trademark rights, which serve as evidence of ownership of the mark and enable the owner to sue for infringement in federal court, the owner must first apply to register the mark with the United States Patent and Trademark Office (USPTO) and pay a separate filing fee for each class of goods and services for which the applicant wishes to use the mark.
Use of Trademark or Servicemark symbols:
Use of the symbols “™” or “SM” usually indicate a party claims “common law” rights. These symbols are often used before obtaining federal registration.
Proper use of Federal Registration symbol:
The federal registration symbol may only be used once the mark has been registered by the USPTO. While an application is pending, the ® symbol cannot be used until a federal registration has been obtained.
Trademarking your band name:
A band’s rights in its name depend on a few key factors: whether the band used the name first, the geographic area where the band uses the name, and whether the band actually performs under the name. Unless a band has obtained a federal trademark registration giving it an exclusive right to use the name throughout the United States, the band only has the rights to use the name exclusively in the areas where it was the first to use the name.
Protecting band name:
Before securing federal registration, artists can protect their band name by keeping records of where and when they perform and sell CDs and any publicity or advertisements including the band’s name that establish priority of use of the name in various geographic areas. Artists should also try to register the domain name for their band’s website (having a trademark does not necessarily mean that you have the rights to the domain name, and vise versa).
7. Artist Representation in Music Industry-
A manager secures opportunities for earning money, develops a career plan for the band, acts as a liaison between record companies and the band, and shields the band from business pressures. Most managers earn a commission between 15% and 25% of the band’s income after certain deductions have been subtracted. Similar to record agreements, if a band signs with a management company, it can preserve its relationship with an individual manager through a key person contract provision.
The booking agent is the individual who connects an artist with most paid performances. They are also involved in negotiating for artists to appear in commercials, arranging tour sponsorships, and for appearances in television specials. An agent is the person responsible for negotiating the fee an artist will charge a promoter for a concert performance or for an entire tour. Agents usually make 10% of the value of the shows they book.
A business manager is someone who handles income and expenses of an artist and who ensures that what remains after the bills are paid is deposited or invested in ways that build wealth for the artist. Some business managers are accountants, some are certified business managers, and some are certified public accountants. Music business managers typically charge up to 5% of the amount of money handled on behalf of their clients with a cap on earnings.
A band’s choice of an attorney usually depends on the situation. The most common reason that a band hires a lawyer is to review, draft, or negotiate a contract. Some entertainment lawyers only negotiate contracts, some only handle lawsuits between entertainers and companies, and some are in the business of shopping music. Some attorneys perform all of these functions and more. Often a band maintains an ongoing relationship with an entertainment lawyer, and if special problems arise, the lawyer will help the band find a specialist.
No aspect of the music business is one size fits all. Every artist has a different vision, requires a different team, and pulls together its own legal issues. The chaos is ongoing since laws are always changing as business is conducted. Shit happens. The best anyone can do in the face of legal conflicts is keep learning, work with trustworthy people, and g