Music Business/Law Tips - "Synch Deal"

Common provisions that a songwriter/artist would want to see included in a synch deal are as follows: (1) a fee, (2) a credit, (3) a reversion if the song is not used, (4) limits on how the song is used in the show/film/commercial, (5) a term, and (6) copies of cue sheets sent to writer/artist so he/she can track the usage and make sure they get paid by BMI, ASCAP or SESAC.

Ben McLane Esq
benmclane.com

Music Business/Law Tips - "Publisher"

Publishing companies have many benefits to songwriters. A publishing company/deal can be: (1) a bank to support a songwriter, and (2) a way to get the songwriters songs “covered” by recoding artists or placed in film/tv/commercials which generates income and credits for the songwriter. Publishing deals can also have drawbacks:
(1) the songwriter has to split the income and the copyrights with the publisher (usually forever), and (2) normally the deal is for several years so the writer can only write for the that one publishing company during the term and if the publisher is lazy or short staffed the songs might languish and the songwriter will starve.

Ben McLane Esq
benmclane.com

Music Business/Law Tips - "360 Deal"

A 360 deal is either a “rights grab” by the label to make sure they profit from an artist if the artist blows up, or is an incentive for the label to actually put more effort into marketing and promoting the artist. The truth is probably somewhere in the middle, and the concept is so new there are not yet many known examples for the artist to hang their hat on as a guideline. In any event, unless the artist has a lot of leverage going into the deal, they will probably not have any choice but to enter into this type of agreement in the current music business. If so, at least hold the label’s feet to the fire in the contract by requiring them to pay advances for the extra rights they participate in (i.e., touring, merchandise, publishing), and to commit to spending money to market and promote those rights so that the money pie gets bigger and everyone wins.

Ben McLane Esq
benmclane.com

Music Business/Law Tips - "Reversion"

Most record deals are set up so that the label owns the sound recording copyrights (i.e., masters) forever. This business was built on catalogs - Capitol and RCA would probably not be around today if they did not own the masters to the Beatles and Elvis. Hence, labels do not part with masters easily. However, it’s possible to get a reversion of the masters at some point, but the artist would have to ask the label for this concession to be built into the contract. Normally, a reversion might kick in if: (1) the label fails to commercially release the masters, or (2) a certain amount of time goes by (e.g., 10 years) where the label had time to squeeze all the profits out of the masters (which normally have a life cycle of no more than 5 years unless it’s a big hit). There is also some language built into the Copyright Act that copyrights can revert after 35 years, but that involves some hoops to jump through and no one wants to wait until they are an old fart to get their property back so try to built it into the deal as discussed above.

Ben McLane Esq
benmclane.com

Music Business/Law Tips - "Trademark"

If an artist is serious about a long-term career and branding their name so that they can make money off of it – and also to keep others from ripping them off – it is advisable to trademark the name at the earliest possible stage to lock it down so that the artist exclusively owns it worldwide. The key is using the name in commerce (i.e., for profit) by playing shows, selling CDs, and selling T-shirts under that name before someone else does. Make it official by going to www.uspto.gov and applying online. It’s worth the time and money to avoid name disputes/hassles down the line.

Ben McLane Esq
benmclane.com

Music Business/Law Tips - Accounting/Royalties (Part 2)

The record contract will usually also contain the right to "audit" the books and records of the label. If this clause is absent, the artist should demand the right to audit. The artist will only have the right to audit during the objection period discussed above. Normally, the artist will have the right to audit only once a year. Further, the label generally will require that any audit be performed by an accountant. The labels's rationale is that this makes an audit more expensive and thus discourages audits. Moreover, an accountant should be more efficient and cause less disruption to the label's normal operations. Finally, the label will seek restrictions on what can be audited (e.g., only books and records relating to actual sales reports for the artist).
In the normal course of things, it is only reasonable for an artist to audit an accounting if the artist is making a lot of money because then there is a high probability of underpayment by the label. However, since one never knows who will have the next hit, the artist must ensure that his or her rights are protected in the contract.

Ben McLane Esq
benmclane.com

Music Business/Law Tips - Accounting/Royalties (Part 1)

An artist signed to a label and who has commercially released a record will look forward to the day when he or she can be paid royalties. The process by which an artist is paid royalties is called an "accounting". Incidentally, the accounting process discussed herein is also applicable to a songwriter with a publishing deal.

Accountings are generally made twice a year, within sixty to ninety days after the close of each calendar six-month period. The cut-off for the six-month periods are usually - but not always - June 30th and December 31st. Sometimes, labels make quarterly accountings, which is better for the artist because the waiting time for monies is less. However, on the flip side, some labels account only once per year. When an artist is accounted to, in addition to receiving a check (if any records were sold), he or she will normally receive a statement showing record sales and how the royalties were calculated. Because the artist will only receive royalties on records actually sold, as opposed to records shipped, in some instances an artist has to wait a long time to be paid.

The record contract usually will contain language which allows the artist to "object" to the accounting. An objection occurs when the artist questions the accuracy of the accounting. In other words, the artist believes he or she has been ripped-off. It is important for the artist to understand that the contract will specify a specific time limit to object; otherwise, the accounting becomes final ("binding") and the artist waives the right to audit or sue the label for breach of contract. The objection period is generally stated as being one year after the statement is sent to the artist. The artist should attempt to increase the period to two or three years.

[part 2 next week]

Ben Mclane Esq
benmclane.com