Music Business/Law Tips - "Album Sales Calculations"

With the actual sales of digital download albums and physical CD albums going down all the time, for charting purposes in Billboard Magazine (i.e., what album makes the Top 40, Top 10, #1), Billboard and the record industry had to come up with some new calculation methods to cover the way people consume music now. 2 of the biggest new methods are: 1. Streaming Equivalent Album ("SEA"): 1500 streams on Spotify, etc. = 1 album sale; 2. Track Equivalent Album ("TEA"): 10 individual downloads of songs from an album via iTunes, etc. = 1 album sale. Ben McLane Esq benmclane.com

Music Business/Law Tips - "Label/Publisher Royalty Split"

Historically, royalty splits from record sales between the record label that recorded and released the record and the music publisher that provided the song embodied on the record have greatly favored the label. For downloads and physical record sales - after the distributor deducts its share - the publisher receives about 13% of the revenue (mechanical royalty), while the label is paid the rest. This trend continues with streaming. According to Spotify, it pays 21% to publishers, while the label is paid the rest. Hence, labels on average seem to make between 4-5 times as much as publishers from sales and streaming. Because of this, there is a lot of chatter about trying to make the splits more favorable to publishers/songwriters since records do not sell as much anymore and streaming does not pay as much (yet). It will be interesting to see if any changes occur down the line. Ben McLane Esq benmclane.com

Music Business/Law Tips - "YouTube Is King"

Industry sources indicate that YouTube is growing faster than all other music streaming platforms combined. Although you may hear a lot about Spotify, Google Play, Apple Music, Rdio, etc. in the world of streaming - YouTube in still the primary destination of choice for free music consumption. According to new data from Nielsen Music, video music streaming sites like YouTube (and to a lesser extent Vevo) are growing 60.6 percent faster than all on-demand audio streaming services combined, paid or free. Streaming is the fastest-growing way people are getting their music today. On the other hand, digital and physical sales are down. The trick will be to find a way to make streaming more lucrative to the content creators. Let's hope the growing volume will translate, and clearly an artist with new music should have a video on YouTube, etc. for the exposure and byproduct possibilities. Ben McLane Esq benmclane.com

Music Business/Law Tips - "Spotify Breaking Acts"

Spotify is the world's largest subscription service. Most people use its "freemium" model where they do not have to pay to listen. The good part about this is that Spotify has become a platform for new artists to be discovered, and on occasion Spotify will help promote and launch a new artist. Recently, Spotify helped break Hozier 's "Take Me To Church" and Major Lazer's "Lean On" into the Top 10 via its "Today's Top Hits" Playlist, adding the songs to its artist development platform called "Spotlight", and targeted banner placements in "browse" sections of the Site. By putting the focus on these tracks and exposing them to millions of potential listeners, this caused more repeated "listens", and listeners started to share the tracks and add them to their own personal playlists - where ultimately the songs became viral hits. Sounds like the new radio to me. Let's hope there is room for indies as well as major label backed artists to participate. Ben McLane Esq benmclane.com

Music Business/Law Tips - "Web Infringement"

With the simplicity of posting music and video online, one may think it is easier to prove copyright infringement, but according to recent court rulings this is not necessarily the case. Under basic Copyright Law, in order to prove copyright infringement, one must show: (1) that the claimant truly owns the copyright (i.e., song or video), and (2) that the infringer "copied" the copyright without permission. The second prong has two elements: (i) the copy must be substantially similar to the original, and (ii) the infringer had to have access to the copyright being infringed. The "access" element is very strictly interpreted when it comes to posting a song on the Internet for example. Courts have held that availability of the copyright on the Internet by itself is insufficient to prove access. In other words, just because something is online does not mean that the defendant saw it there and copied it. The plaintiff will have to show that there is "widespread dissemination" of the copyright being infringed. This can be demonstrated by lots of downloads and website traffic. The more traffic, the greater the likelihood that the defendant actually saw or heard the infringed work. For example, in a recent case involving Angry Birds video game infringement, since the Angry Birds app has been downloaded 1 billion times and has 40 million active users, that was enough to show widespread dissemination. Clearly most content online is not that popular, so be wary about bringing a copyright action until it is easy to prove. Ben McLane Esq benmclane.com

A "Sunset Clause" in a Management Agreement essentially means that the manager still gets paid a commission after the deal ends on money the artist is still making off deals the artist signed during the term of the Management Agreement, but at a reduced rate from the what the commission percentage was during the term of the Management Agreement. For example, if an artist signs a 3 album deal during the term of the Management Agreement and the 3rd album comes out after the Management Agreement Term is over, the manager still gets paid a commission for the money the artist makes from that release, but at a reduced commission rate for a certain number of years post-term (on average 3-5 years), and the rate goes down to eventually 0% (e.g., 1st year post-term = 15%, 2nd year post-term = 10%, 3rd year post-term = 5%, thereafter 0%). Ben McLane Esq benmclane.com

Music Business/Law Tips - "Consumer Data = $$$"

Universal has formed The Global Music Data Alliance (GMDA) which will analyze billions of pieces of digital consumer data to hopefully provide new revenue streams to labels and artists. Essentially, GMDA will inspect behavioral patterns of listeners/buyers (e.g., what songs a Democratic voter listens to) to find patterns that can be used for target marketing. This should allow artists to monetize their fan bases more effectively, and allow advertisers to better figure out where to put their ad dollars/which artists to tie in with. Ben McLane Esq benmclane.com

Music Business/Law Tips - "Employee vs. Independent Contractor"

In the entertainment business there are a lot different employment situations: part-time, full-time, consultancies, internships, working remotely, etc. One of the most common arrangements is for someone to be an independent contractor. However, there are legal ramifications to this status, and often neither party really knows exactly if the worker is considered an independent contractor or a true employee with benefits. Although there is no exact definition of an "independent contractor", the California Department of Industrial Relations provides 12 factors that a court would consider if there was ever a dispute: 1. The most significant factor to be considered is whether the person to whom service is rendered (the employer or principal) has control or the right to control the worker both as to the work done and the manner and means in which it is performed. 2. Whether the person performing services is engaged in an occupation or business distinct from that of the principal. 3. Whether or not the work is a part of the regular business of the principal or alleged employer. 4. Whether the principal or the worker supplies the instrumentalities, tools, and the place for the person doing the work. 5. The alleged employee’s investment in the equipment or materials required by his or her task or his or her employment of helpers. 6. Whether the service rendered requires a special skill. 7. The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision. 8. The alleged employee’s opportunity for profit or loss depending on his or her managerial skill. 9. The length of time for which the services are to be performed. 10. The degree of permanence of the working relationship. 11. The method of payment, whether by time or by the job. 12. Whether or not the parties believe they are creating an employer-employee relationship may have some bearing on the question, but is not determinative since this is a question of law based on objective tests. Ben McLane Esq benmclane.com

Music Business/Law Tips - "Joint Work"

If a song is written by 2 or more people with the intent to merge their respective parts (i.e., words and music) to create a brand new copyright – that is considered a “joint work”. Even though each part contributed is separate, once merged each writer co-owns the entire work. In other words, the lyric writer would then co-own the music portion, and vice versa. Under the Copyright Act, for a “first use mechanical license” (i.e., first release recording/cover) all the writers must sign off. However, for all other types of non-exclusive licenses (e.g., synchs), either writer can license the song on behalf of all co-authors, so long as all the writers are properly credited and paid for their shares. If a writer/artist does not want to create a joint work – he/she needs to make sure to have a written agreement with the producer, arranger and musicians that such third parties’ creative contributions are “works made for hire”, so they cannot claim they are a co-writer. Ben McLane Esq Benmclane.com

Music Business/Law Tips - "Become A YouTube Star"

Musical artists would be well advised to follow the lead of the dorky YouTube duo "Smosh" (i.e., 2 bozos with a webcam) who have built an empire of 7.4 billion combined views and become very rich in the process (grossed 10 million in 2013 according to Forbes). Here are a few tips of how they did it: 1. Make a video performing a popular song (their first successful video was a goofy cover of the "Pokemon" theme); 2. Post new content often (over 10 years they have uploaded over 3,000 videos); 3. Target and create content for a specific audience/demographic (in their case teens is the market they connect with); 4. Diversify the brand (they have a YouTube Channel, a website, a blog, an app, a videogame, they release records, they have their own merchandise line, they filmed their own theatrical movie for digital release, they created an original web series - they even have Spanish language versions of their content); 5. Encourage fans to create their own original Smosh related content/take-offs and upload them to YouTube to expand the brand; and 6. Partner with a larger media entity to help push and fund more content and create more advertising revenue (e.g., YouTube, Maker, Machina, Awesomeness TV, etc.). Advertisers pay big bucks to be affiliated with a brand that has lots of views online. A recent Variety survey polled teens ages 13-18 about the Top 10 most popular stars in digital media. The top 5 were YouTube Stars and Smosh were #1 (Katy Perry was #9). Clearly becoming a viral sensation on YouTube is serious business these days and a great way to launch a real career. Ben McLane Esq benmclane.com

Music Business/Law Tips - "Music and Money in China"

American made entertainment content (i.e., music, movies, TV) has really never had a foothold in China - which has a vast consumer population - due to censorship, piracy, distance and culture. However, via the dominant Chinese e-commerce site Alibaba (whose business model is sort of an amalgam of Amazon, Spotify, Netflix, Ebay and Google) doing potential business with majors such as Sony, UNI and Warners, US content may now have a legitimate pipeline to a billion+ people. Let's hope that such arrangements can be made soon in places like China and India which have such a large number of potential fans to be turned on to US entertainers, which will lead to more business and money for the US economy and the US media business. Ben McLane Esq benmclane.com

Music Business/Law Tips - "Freedom to Remix?"

Last year there was a brouhaha in the US Department of Commerce when it raised the issue of the creation of a compulsory license for derivative works, including remixes, mash-ups and sampling. Essentially, this would mean that anyone could do a remix of a famous song without obtaining the permission of the copyright owner. A similar concept already exists under Copyright Law which allows for a compulsory mechanical license to re-record (i.e., "cover") a song, so long as the cover maintains the fundamental character of the original work. However, a remix can substantially change a song, so most copyright owners want to maintain the right to approve as otherwise it could dilute the artist's and his/her music's brand. For most artists, approval over the use and change of their works is a big deal, and licensing is normally subject to a negotiation on such things as scope of the change, how will it be exploited, fees, royalties, a piece of the copyright in the derivative work, etc. Some artists like The Eagles and Lou Reed historically never approve any uses of their works. Others are fine with it. It's important to note that for some works there is already a Creative Commons right attached which does allow for anyone to remix, mash-up or sample a song. It remains to be seen if this issue will rear its head again in the halls of congress anytime soon as it was under review in committee - things move slowly in Washington. Stay tuned. Ben McLane Esq benmclane.com

Music Business/Law Tips - Live Video Violations?

This year live streaming apps are the hot topic. For a musical performer, this allows a show to be broadcasted and viewed worldwide for free via a smartphone, so long as the viewer follows the performer on Twitter. It is a great way to promote an artist and gain new fans, but there are some potential legal pitfalls. The focus of this article will be on the Meerkat app which steams in real time (i.e., there is no ability to archive). The 2 main issues are: (1) rights clearances, and (2) privacy. (1) A broadcaster is technically supposed to have licenses from BMI, ASCAP and SESAC to legally stream live music performances. Of course, most artists would not have that/those in place. (2) As for privacy, a live stream could capture persons that do not give consent to be broadcast or have no knowledge of the broadcast. Again, most artists would not have signed consent forms before a show. Since its a new technology and damages are speculative, it remains to be seen if there are going to be any lawsuits that help set parameters for how to legally use the app without running afoul of the law or people's rights. At a minimum, an artist may want to be up front with an audience and let them know they are being broadcast via a live streaming app (either mention from the stage or post a sign). Ben McLane Esq benmclane.com

Music Business/Law Tips – "Big Data>Hit Predictor>Deal"

Record companies these days are analyzing what is known as “Big Data” to predict which new artists are bubbling up and might become superstars. Big Data is information generated by digital platforms like Spotify plays, Twitter mentions, Facebook likes, YouTube views, etc., that helps labels pinpoint what songs can be hits by what fans are reacting to. Patterns in the data are looked for and tracked, which makes for a safer bet when a label wants to work with a new artist (then just relying on a gut reaction). This is how the new music business looks, and developing artists are wise to heed the warning that they need to utilize social media if they want to get on the radar of a record company or other media partner. Ben McLane Esq Benmclane.com

Music Business/Law Tips - "360 Record Deal"

In today's record business the "360 Record Deal" is becoming a common arrangement - especially with a new artist - since the label will probably feel that its only worth the effort to spend marketing and promotion dollars to launch an act if they can share in revenues above and beyond simply record sales (e.g., merchandising, publishing, touring). Some of the key areas that need to be considered in a 360 deal negotiation are as follows: 1. Ownership of masters (work for hire vs. license) 2. Term of deal (how many options) 3. Territory (worldwide vs. certain countries) 4. Royalties (records, licensing, streaming, mechanicals) 5. Recording Budgets (advances vs. funds) 6. Marketing/Promotion (radio, video, tour support) 7. Creative Control (approvals) 8. Record label ancillary participation (“360” rights) 9. Out clauses (early termination - guaranteed release, distribution, key man) 10. Side agreements (producers, musicians) Ben McLane Esq benmclane.com

Music Business/Law Tips - Leaving Member

When a band signs an exclusive multi-album record deal it's important to know that the members are typically signing as a group as well as individually. This means that if a member quits, is fired, or the band breaks up during the term of the deal, then the label will still have the first right to put out solo records and side projects of the individual members for the remainder of the term of the group deal. This issue recently came to light with Zyan Malik leaving the popular band One Direction. Malik is signed to Syco (via Sony) both as a group member and individually by way of a "Leaving Member Clause" in the deal. Hence, the label has the option to pick up Malik's contract as a solo artist, and probably for a lower future royalty and fees since the original terms were contingent on him being part of a 5 member group. Based on the success of One Direction and since Malik is a good singer with a fan base, almost certainly the label will want to release his solo product instead of letting him go with no strings. Ben McLane Esq benmclane.com

Music Business/Law Tips - "Avoid Infringements"

In the wake of the recent Marvin Gaye/Blurred Lines court decision, many songwriters are concerned about possibly getting sued for similarities in their works with others. In reality, copyright lawsuits are actually rare and hard/expensive to win, and are all based on the test of "substantial similarity". However, if a writer is going to borrow or be inspired by an existing work without a license, try and stay clean of any potential issues by keeping the following guidelines in mind: (1) make sure any sample is very short (like a few seconds or notes); (2) make sure the sample is obscure and/or distorted; (3) try to find a sample that is covered by a creative commons license (permission already granted); (4) try and use a public domain work (e.g., anything more than 70 years old is normally fair use). Ben McLane Esq benmclane.com

Music Business/Law Tips - "Synch Deal Points"

Placing music in film, TV and commercials is big business and it’s open to artists of all levels of fame. A few points to make sure are considered before signing a synch license agreement are: 1. Try to get some kind of fee or consideration. 2. Make sure it’s clear how the music will be used in the program. 3. Make sure it’s a non-exclusive “license” (not a transfer of copyright). 4. If the song is a co-write/co-production, make sure that one person can sign for all. 5. Ensure that the song title, name of the performer and name of the writer(s) are properly credited in the program. 6. Try to get a copy of the cue sheet so you can make sure that BMI, ASCAP or SESAC are aware of the usage so they can collect back-end performance income. Ben McLane Esq Benmclane.com

Music Business/Law Tips - "Copyright Changes Coming?"

With the advent of new media, there is pressure for the Copyright Office to update certain laws that affect songwriters, record labels and music publishers. The 4 key areas currently under review for potential reform in the United States are the following: 1. Higher digital performance royalties for publishers (as right now the record label’s share is 10-12 times more). 2. Create one stop shop global music rights organizations that would administer performance, mechanical and digital rights all in one place for easy licensing (as opposed to having many different organizations handle each individual right). 3. Pay record labels and recording artists for airplay on AM/FM radio (as right now only songwriters get paid). 4. Recognize a copyright in pre-1972 sound recordings so that royalties can be paid for those (as right now only post-1972 recordings have federal copyright protection so Sirius/XM and Pandora do not have to pay SoundExchange royalties for those). Note that Congress has no obligation to change the existing laws, and if any changes are forthcoming they might take years and be watered down. It’s all about politics and who has the most influence. Stay tuned. Ben McLane Esq Benmclane.com

Music Business/Law Tips - "Synch License Key Points"

If an artist’s music is placed in a TV show, film, or advertisement, that is called a “Synch License” (i.e., the music is played in synchronization with a visual image). Contract terms vary depending on the artist, song and program, but the following key points should always be addressed: 1. Fee. Anything is better than 0. 2. Scope of use. Be specific on how the music will be used. 3. Non-exclusive license. Make sure the usage is not an exclusive license. 4. Credit. Make sure the name of the song, performer, songwriter, publisher and performance rights society (i.e., BMI, ASCAP or SESAC) are clarified so that back-end performance income once the spot airs can be properly tracked/paid. 5. Cue sheet. Make sure that the producer of the content sends a cue sheet to the applicable performance rights society so it can track the play and pay the songwriters. 6. Permission. Make sure all the performers on the master and songwriters of the song are OK with the usage, and that the person signing the deal has authority to speak for all. Ben McLane Esq Benmclane.com

Music Business/Law Tips - "Digital Frontier"

Mass media has gone primarily digital which means new opportunities for artists, songwriters, producers and performers to make money. One of the biggest factors is that in faraway lands with huge populations like China, India, Russia and Mexico, cellphones have proliferated so almost everyone in the world one day will be able access music and discover talent which should lead to new income on multiple levels, where before that was not the case (i.e., streaming, downloading, licensing, internet radio, etc.). Another cause is Internet sites like YouTube which can create viral exposure worldwide for almost no cost. Of course talent needs to make sure they are in a position to collect by joining organizations in advance like BMI/ASCAP/SESAC and Sound Exchange. Ben McLane Esq Benmclane.com

Music Business/Law Tips - Chart Changes

From 2015 onward, Billboard has changed their tally system as to the types of data that will be included in deciphering what records deserve to be on the Top 200 Album Chart. At least for the last 15 years or so, the Album Chart just included actual sales that could be verified by Sound Scan (i.e., bar code reads). Now, streaming (e.g., Spotify) and other digital metric data will also be included in the calculations. In particular, 1500 song streams will now equate to one album sale, and 10 digital single track tales will now equate to one album sale. It is anticipated that this modern system may skew the Chart toward new and younger acts like Ariana Grande who have a very active online audience. Ben McLane Esq Benmclane.com

Music Business/Law Tips - "Nightclub Performance Royalties"

For years when an artist or DJ performed his/her original songs in a nightclub/bar it was probably never logged as a “play” by the performance rights organizations such as BMI, ASCAP or SESAC (“PRO”), and thus no credit or royalties were earned since there was no accurate tracking system covering that space (like there is for radio and TV). That has now changed. There is a new product called “KUVO” (by Pioneer) that tracks each song played in a club via cloud-based/streaming technology. The data that KUCO collects can then be shared with the respective PRO. Since last year alone it is estimated that over $160 million was lost due to poor tracking methods in clubs, so this new technology is a ray of hope for songwriters to always get paid for their work. Of course, writers have to make their PRO aware of all their songs so that they are in the database to be matched/credited. Ben McLane Esq Benmclane.com

Music Business/Law Tips - "Music Libraries"

Having your songs in a music library can lead to placements in film, TV, advertisement and other media. Music libraries normally contain tons of music, either full songs (vocal and/or instrumental) and shorter “cues”. The library will need the ability to license both the master and the publishing for the titles it works. The library will license a piece of music to a user for a fee (which varies based on the license type). These days library music is organized digitally online by themes/streaming to make it easy for searching by a potential client (e.g., a music supervisor for a TV show or film) that wants to quickly listen to a piece to see if it fits the purpose. Cues are tagged with meta-data to narrow down searches. Common meta-data tags are: mood, sounds like, beats per minute, genre, instrumental, etc. The issues to consider when placing music into a library are: non-exclusive vs. exclusive, term, how many songs, income split, etc.). Ben McLane Esq. Benmclane.com