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

Music Business/Law Tips - "Arrangements"

If you are arranging an old song already in the public domain, then you can copyright your new arrangement/version of the public domain work [see copyright.gov for form]; however, with respect to royalties from exploitation, when you register the new work with ASCAP or BMI since its a contemporary arrangement of a public domain work, they have some sort of committee that applies a formula comparing the original version to your new version to see if the new version has changed significantly (i.e., amount of new material) and will give you a writer percentage based on their review (e.g., they might agree to give you 50% writer credit/income instead of 100% as if it were a brand new song you wrote); record companies will normally pay mechanical royalties based on whatever bmi/ascap has determined is your percentage.

If your arrangement is of a contemporary song that is not yet in the public domain, under the copyright law only original words and music are copyrightable and in general an arrangement is not considered copyrightable (except in the rare case of public domain arrangements that are significant - see above); so under this scenario you would not be able to claim copyright (unless you contacted the original publisher and they agree to make you a co-writer of the derivative works which is rare or everyone would be trying to say they cowrote song with the Beatles, etc), but you can list yourself as arranger for what its worth since that is true.

Music Business/Law Tip - "Journalist"

All bands need press and exposure. There are a multitude of fanzines (both traditional and online) that print interviews, review CDs and shows, etc. Try to hook up with one of these as a writer and/or reviewer, even if you have to do it for free at first. All of these fanzines and blogs need content. This will get your foot in the door and give you a calling card to have access to bands. Then, if you approach a band (either directly, through management, PR agent, etc) as a "journalist" and seem to know about the band and its particular scene (make sure you study your subject) - and not act like a wacky fan or stalker - you will be able to speak to the band and get your story. It all builds from there to one day maybe you will be writing for Alt Press or Rolling Stone if you stick with it.

Ben McLane Esq
benmclane.com

Music Business/Law Tips - "Attorney"

In my opinion - and this would apply to any industry person you would want to approach, be it an attorney, manager, booking agent, PR rep, label, etc. - the best time to hit up an attorney is when you have laid the proper foundation to give the attorney the tools to work with so that he/she can actually help you, or have a reason to help you (e.g., touring history, fanbase, great songs, killer image, stability); without these elements in place, you are probably not yet a real business, and despite how "hooked up" the attorney is, it is probably too early to get him/her involved because any situation he/she would introduce you too would no doubt require these elements.

Ben McLane Esq
benmclane.com