Music Business/Law Tips - "Controlled Composition" (Part 2)

One potential problem that an artist faces with the controlled composition clause, is that generally such a clause requires a rate for all songs on the album. This issue becomes real when some of the songs recorded for the album are written by outside writers who refuse to accept a reduced rate. If the artist cannot convince the outside writer to take a reduced rate, the artist must pay out of his/her royalties the extra 25% payable to any producer or outside writer who will not agree to the 75% rate.

It is significant that under the 1976 Copyright Law the minimum statutory rate changes over time. The minimum rate is set to increase at certain yearly intervals based upon the U.S. Consumer Price Index. The label will want to lock-in the rate at a certain point in time, usually: (a) the date of signing the contract, (b) the date of recording, (c) the date of master delivery, or (d) the date of first release of the master. It is advantageous to the artist to get the latest possible date, since there is a strong chance the rate will go up.

Although it is usually the case that a new artist does not have much leeway with respect to negotiating a rate higher than 75% of statutory, it does not hurt to request a "full rate", or perhaps an 85% rate.

Ben McLane Esq
benmclane.com

Music Business/Law Tips - "Controlled Composition" (Part 1)

One of the key provisions in any record deal is known as the "controlled composition" clause. It is important that the artist understand this provision.

A controlled composition is related to the concept of mechanical royalties ("mechanicals"). Mechanicals are the fees paid by the label to the owner of the copyright ("song") - whether it is the artist or the artist's publisher - for the use of the song on a recording sold to the public. A controlled composition is a song written, owned or controlled by the artist. Many labels insist that any song written by the producer shall also be a controlled composition.

The purpose of a controlled composition clause is to put a limit on how much the label has to pay for each controlled composition. Labels want to put a limit on how much they have to pay to use the song, because unlike artist royalties, labels generally do not recoup advances, recording costs, etc. from mechanicals. Hence, in the record contract, labels will only offer an artist what is called a "rate" on controlled compositions. The rate is usually 75% of the minimum statutory rate set forth in the 1976 Copyright Law for each song. Further, the rate for an album is usually a limit of ten times the 75% minimum statutory rate. In other words, labels will only pay mechanicals on ten songs for any album at the reduced rate (and only two times the minimum statutory rate for singles), regardless of how many cuts are on the album. Labels will normally require an even further reduced rate of 50% of the minimum statutory rate for record club or budget record sales.

[part 2 next week]

Ben McLane Esq
benmclane.com

Music Business/Law Tips - "Songwriter Collaboration" (Part 2)

Third, the writers must agree that if expenses are incurred for the preparation or presentation of the song, each of the writers shall be responsible for a percentage of the expenses. The percentage is usually in the same proportion as would apply to the net profits.

Fourth, it should be agreed that expenses shall only be incurred upon all parties' consent.

Fifth, the writers should agree that at any time before the song is placed with a publisher, the writer may withdraw his/her collaborative contribution freely, provided that he/she shall have no claim to, or rights in, any subsequent collaboration on that particular song.

Sixth, the writers should agree that the collaboration agreement only applies to the song listed, and no other.

Seven, the date, signatures, addresses and social security numbers of the writers should be included at the end of the agreement.

So that there is no confusion as to rights and profit splits, when two or more persons write a song together, a simple agreement including the above will make life much easier if and when the song makes money.

Ben McLane Esq
benmclane.com

Music Business/Law Tips - "Songwriter Collaboration" (Part 1)

Whenever two people sit down to write a song together, they create a "joint work" and both of the writers own the song. Although each person may create a distinct part (such as the lyrics or the music), each writer has an interest in the entire work. In other words, a situation where there are different contributions to just one song is analogous to having the co-writers pouring small glasses of water into one large glass; it is virtually impossible separate the parts.

For example, if A writes only the music and B writes only the lyrics, B still owns half of the music and lyrics, as does A. When there is a joint work, either of the writers can deal nonexclusively with the entire song, subject to the obligation to pay the other writer(s) his/her share of the net profits. Therefore, it is advisable that the writers enter into a collaboration agreement which sets forth how the profits should be split if it is intended that the split be anything which deviates from a 50/50 ratio. Fortunately, a collaboration agreement can be quite simple and need only include a few major points:

First, the title of the song collaborated on must be listed in the agreement.

Second, the writers must agree to divide any and all net profits received from the sale of the song. To do this, next to the composer's name, there needs to be a percentage share he/she is entitled to. It should be specified whether the composer contributed music and/or lyrics.

[part 2 next week]

ben mclane esq
benmclane.com