Foreign licensing deals are becoming quite common today as the appetite for American acts grows internationally. Further, they are an excellent avenue for an artist to sell product worldwide without having an actual record contract. Although such an agreement is similar to a domestic recording contract, the essence of the foreign licensing deal is that the artist is licensing the master to a foreign company ("company") to manufacture and distribute the music. This article will briefly discuss some of the main deal points which are incorporated into a foreign licensing agreement.
Territory. The territory is defined to be only specific continents or countries. It is important that the territory not be stated as being for the "entire world". It is best to limit the territory to the areas that the artist feels the company can sell music. The licensed territory should be spelled out (e.g., UK, Japan, etc.)
Product. The licensed music should be defined by title(s) so that the company does not infer that it is being granted the right to release the artist's entire catalogue.
Rights. The artist will normally grant to the company the right to (1) manufacture and sell the music in CD and digital form; (2) use of the name and likeness of the artist in connection with advertising and sales; and (3) the right to publicly perform and broadcast.
[part 2 next week]
Ben McLane Esq
benmclane.com
Tuesday, October 19, 2010
Monday, October 11, 2010
Music Business/Law Tips - "Flow Through" (Part 2)
There are various ways to handle this inconsistency so that the playing field is level. First, and most popular, is what is known as the "flow through" provision. This means that no matter what the agreement between the artist and production company, the artist will receive the benefit of any more favorable royalty computation in the production company's contract with the record company.
Second, the production company and artist agree that the artist's royalties will be a set percentage of what the production company receives from its agreement with the record company. For example, 50% of the money received by the production company from the record company will belong to the artist.
Third, and least definite, is for the artist to attempt to negotiate the highest royalty percentage it can get from the production company.
The "flow through" model can be applied to other main provisions of the artist's contract with the production company (e.g. term). The key is to make sure that the provisions offered by the production company will match the provisions the production company receives from the record company.
Ben McLane Esq
benmclane.com
Second, the production company and artist agree that the artist's royalties will be a set percentage of what the production company receives from its agreement with the record company. For example, 50% of the money received by the production company from the record company will belong to the artist.
Third, and least definite, is for the artist to attempt to negotiate the highest royalty percentage it can get from the production company.
The "flow through" model can be applied to other main provisions of the artist's contract with the production company (e.g. term). The key is to make sure that the provisions offered by the production company will match the provisions the production company receives from the record company.
Ben McLane Esq
benmclane.com
Monday, October 4, 2010
Music Business/Law Tips - "Flow Through" (Part 1)
In the music industry today, producers and production companies are signing a large number of artists to production deals, which are essentially record contracts. Then, the production company will enter into a recording agreement with a record company in order to obtain distribution and marketing for the production company's releases. Hence, the artist is actually released by a label with which it has no direct contact or contract. This situation presents a unique problem both to the artist and the production company with respect to royalty computations in particular. I will explain.
The artist fears that the production company will receive a higher royalty percentage from the record company than the artist receives from the production company. Oppositely, the production company fears that it has given the artist a higher royalty percentage than it will receive from the record company. For example, the artist's agreement with the production company reduces royalties paid on foreign sales by 50%. Yet, the production company's contract with the record company only provides for a 25% reduction in royalties on foreign sales. In this instance, the production company potentially gets a windfall because it gets seventy five cents on the dollar, while the artist only gets fifty cents. In another example, the artist's agreement with the production company caps free goods at 20%. Yet, the production company's contract with the record company limits free goods at 30%. Here, the artist receives the windfall because the production company must potentially pay the artist on the basis of one extra record for every ten records sold.
[part 2 next week]
Ben McLane Esq
benmclane.com
The artist fears that the production company will receive a higher royalty percentage from the record company than the artist receives from the production company. Oppositely, the production company fears that it has given the artist a higher royalty percentage than it will receive from the record company. For example, the artist's agreement with the production company reduces royalties paid on foreign sales by 50%. Yet, the production company's contract with the record company only provides for a 25% reduction in royalties on foreign sales. In this instance, the production company potentially gets a windfall because it gets seventy five cents on the dollar, while the artist only gets fifty cents. In another example, the artist's agreement with the production company caps free goods at 20%. Yet, the production company's contract with the record company limits free goods at 30%. Here, the artist receives the windfall because the production company must potentially pay the artist on the basis of one extra record for every ten records sold.
[part 2 next week]
Ben McLane Esq
benmclane.com
Monday, September 27, 2010
Music Business/Law Tips - "Synch License" (Part 2)
If the song is used in a television program, the amount of money made depends upon the way in which the song is used and when it is aired. If a song is performed in prime time, ASCAP, BMI and SESAC will pay more money because supposedly more people are watching. Synchronization fees for television are modest compared to film for mainly two reasons: (1) the synch fee takes away from the producer's bottom line profit; and (2) the songwriter and publisher stand to make money from the exposure.
If the song is used in a major film, the fees paid for the synch license can be much higher than television for mainly two reasons: (1) films are generally produced on a much higher budget than television programs; and (2) the rights to exhibit the song in all media (i.e., film, television, video) for the duration of the copyright are usually obtained by the producer.
Now, more than ever, there is an abundant need for songs in major and independent films, network and cable television, and other media. Hence, there are chances out there for songwriters to generate revenues and gain exposure for their music; these opportunities should not be overlooked or scoffed at.
Ben McLane Esq
benmclane.com
If the song is used in a major film, the fees paid for the synch license can be much higher than television for mainly two reasons: (1) films are generally produced on a much higher budget than television programs; and (2) the rights to exhibit the song in all media (i.e., film, television, video) for the duration of the copyright are usually obtained by the producer.
Now, more than ever, there is an abundant need for songs in major and independent films, network and cable television, and other media. Hence, there are chances out there for songwriters to generate revenues and gain exposure for their music; these opportunities should not be overlooked or scoffed at.
Ben McLane Esq
benmclane.com
Monday, September 20, 2010
Music Business/Law Tips ""Synch License" (Part 1)
There is a major source of income that many songwriters overlook: the use of music in television or film. Television and film producers need material for their projects. Not only is there money involved in licensing music for television and film, the use of a song in either of these mediums can mean widespread exposure. However, a producer will require the songwriter to sign a contract so that the producer can "license the rights". This allows the producer to utilize the material in whatever way the producer wishes.
In the world of film and television, decisions are made quickly and the producer will generally license the song which is the easiest to obtain at the cheapest price. The producer will not use a song until there is satisfaction that all of the rights are "cleared" (i.e., the copyright owner has granted the producer the right to use the song). If there are several songwriters, clearance must be obtained from each. Thus, songwriters need to make sure that the rights are easily obtainable.
The earnings generated from the use of a song in television or film normally come from performing and synchronization rights. A significant portion of ASCAP, BMI and SESAC (performance rights societies) revenues are collected from television broadcasters (in the United States, motion pictures currently do not generate performance royalties payable by ASCAP, BMI or SESAC). These monies are divided up amongst ASCAP, BMI and SESAC writers and publishers. Therefore, songwriters are advised to become members of one of these societies, and register with them all songs written. A producer will not usually take a chance on using unregistered material because of the likelihood that the rights may not be available. Further, in the television and film business, music is reproduced when it is recorded on the soundtrack for the production. The right for the producer to make such a reproduction is called a synchronization right and the producer must negotiate a synchronization ("synch") license for each composition to be used.
[part 2 next week]
Ben McLane Esq
benmclane.com
In the world of film and television, decisions are made quickly and the producer will generally license the song which is the easiest to obtain at the cheapest price. The producer will not use a song until there is satisfaction that all of the rights are "cleared" (i.e., the copyright owner has granted the producer the right to use the song). If there are several songwriters, clearance must be obtained from each. Thus, songwriters need to make sure that the rights are easily obtainable.
The earnings generated from the use of a song in television or film normally come from performing and synchronization rights. A significant portion of ASCAP, BMI and SESAC (performance rights societies) revenues are collected from television broadcasters (in the United States, motion pictures currently do not generate performance royalties payable by ASCAP, BMI or SESAC). These monies are divided up amongst ASCAP, BMI and SESAC writers and publishers. Therefore, songwriters are advised to become members of one of these societies, and register with them all songs written. A producer will not usually take a chance on using unregistered material because of the likelihood that the rights may not be available. Further, in the television and film business, music is reproduced when it is recorded on the soundtrack for the production. The right for the producer to make such a reproduction is called a synchronization right and the producer must negotiate a synchronization ("synch") license for each composition to be used.
[part 2 next week]
Ben McLane Esq
benmclane.com
Monday, September 13, 2010
Music Business/Law Tips - "Endorsements" (Part 2)
Although endorsements tend to go to the established players, it possible for a local or new artist to enter into an endorsement deal. The key is whether the manufacturer thinks that someone will be attracted to the product if they see the artist endorsing it. For example, a local artist that is playing a guitar in his shows could have the ability to draw buyers into the guitar store.
Obviously, a more established player is generally approached by the manufacturers because there is name recognition and respect already in place. However, if you are not yet a recognized player, the first step to becoming an endorsee is to contact the manufacturer of the product you would like to endorse (i.e., the instrument you play) and let them know you are interested in endorsing the product. Then, send a press kit with a list of the gigs you have/will play. The gig schedule is very important because then the manufacturer will know that your playing is being exposed to the public. Finally, follow up and see if there is any interest.
If there is interest from the manufacturer, you will enter into an endorsement deal. Generally, in exchange for endorsing the product for a period of time, the artist will either get gear at a reduced price, get free gear, or be paid a fee. Fees are rare and are usually paid to an artist with great notoriety.
In conclusion, an endorsement deal is a way for an artist to gain some exposure and pick up some first rate equipment for little or no money. However, it is advisable from a philosophical standpoint that the player really believe in the product being endorsed.
Ben McLane Esq
benmclane.com
Obviously, a more established player is generally approached by the manufacturers because there is name recognition and respect already in place. However, if you are not yet a recognized player, the first step to becoming an endorsee is to contact the manufacturer of the product you would like to endorse (i.e., the instrument you play) and let them know you are interested in endorsing the product. Then, send a press kit with a list of the gigs you have/will play. The gig schedule is very important because then the manufacturer will know that your playing is being exposed to the public. Finally, follow up and see if there is any interest.
If there is interest from the manufacturer, you will enter into an endorsement deal. Generally, in exchange for endorsing the product for a period of time, the artist will either get gear at a reduced price, get free gear, or be paid a fee. Fees are rare and are usually paid to an artist with great notoriety.
In conclusion, an endorsement deal is a way for an artist to gain some exposure and pick up some first rate equipment for little or no money. However, it is advisable from a philosophical standpoint that the player really believe in the product being endorsed.
Ben McLane Esq
benmclane.com
Monday, September 6, 2010
Music Business/Law Tips - "Endorsements" (Part 1)
An important sales tool for musical product manufacturers is to have musicians endorsing their products. Hence, an endorsement deal is something serious players should investigate.
Product endorsements generally involve endorsing musical gear such as guitars, strings, drum sticks, pedals, etc. Product endorsements can include any/all of the following: (1) mentioning the product in liner notes on albums, (2) mentioning product in interviews, (3) endorsing the product at trade shows, (4) giving clinics, and (5) appearing in ads.
Both the artist and the manufacturer extract a benefit from such a deal. For the manufacturer, an endorsement by an artist is an opportunity for a player to be seen using their product. By mentioning/playing the product, or appearing in ads, the player is essentially saying that he or she recommends the product. To the manufacturer, they hope the endorsement will be a magnet to draw people into the stores to purchase the product. The benefit to the artist is free or reduced cost gear, and possibly a fee.
[part 2 next week]
Ben McLane Esq
benmclane.com
Product endorsements generally involve endorsing musical gear such as guitars, strings, drum sticks, pedals, etc. Product endorsements can include any/all of the following: (1) mentioning the product in liner notes on albums, (2) mentioning product in interviews, (3) endorsing the product at trade shows, (4) giving clinics, and (5) appearing in ads.
Both the artist and the manufacturer extract a benefit from such a deal. For the manufacturer, an endorsement by an artist is an opportunity for a player to be seen using their product. By mentioning/playing the product, or appearing in ads, the player is essentially saying that he or she recommends the product. To the manufacturer, they hope the endorsement will be a magnet to draw people into the stores to purchase the product. The benefit to the artist is free or reduced cost gear, and possibly a fee.
[part 2 next week]
Ben McLane Esq
benmclane.com
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