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Clearing Samples FAQ

Sampling is a form of copying someone else’s music (sound recording and the underlying composition). It happens when you deliberately take parts of someone else’s work and include it your own song. Sampling is considered an infringement of copyright, unless an adequate license is obtained for the use of the sampled materials.

Key Principles

Sampling will infringe copyright in the music and/or the sound recording, if a ‘substantial part’ of the original and used without permission. Sample considered ‘substantial’ by reference to quality rather than length.

– When you approach copyright owners for a license they will consider the licensing use and decide whether to grant said license or not (copyright owner is entitled to refuse permission).

– You will be required to pay a fee and/or royalties and to credit the original writers/ copyright owner from which the sample is taken as a condition of any license.

– Music which was made or released within the last 90 years (length of copyright in the UK) is still protected by copyright and can only be sampled with permission from the copyright owner of the recording.

– In addition, a license must be obtained from the copyright owner of the underlying composition. A license for the composition will not be needed if you re-record the composition.

– Under the Moral Rights legislation, sampling is also a potential breach of the moral rights of the composers whose work is sampled.

How not to clear a sample

You cannot fully clear a sample by re-recording it. If you choose to re-create the use, you still need the publishing clearance.

– Altering the sample (even to the point of making it unrecognisable)  does not relieve you from the responsibility of clearing it.

– Sampling a track which already cleared its samples doesn’t get you out of clearing them.

How much of a song can I use before I need clearance?

It does not matter how long the sample is.  A clearance is needed even if the sample is the sample is as longs as half a second. A case illustrating the following below:

[info_box]Westbound Records and Bridgeport Music v No Limit Films (2004)

The case centred on the song 100 Miles and Runnin, which samples a three-note guitar riff from Get Off Your Ass and Jam by George Clinton and Funkadelic. The song was included in the 1998 movie I Got the Hook Up by No Limit Films In the two-second sample, the guitar pitch has been lowered, and the copied piece was “looped” and extended to 16 beats. The sample appears five times in the new song.

The court ruled that recording artists should licence every musical sample included in their work even minor, edited, unrecognisable snippets of music. The court posed the question “If you cannot pirate the whole sound recording, can you ‘lift’ or ‘sample’ something less than the whole?” The Court’s answer to this was NO; and the court added “Get a license or do not sample – we do not see this as stifling creativity in any significant way.”[/info_box]

What difference does it make if the of the sample is used little or a lot?

If the sample is extensive and underpins the song to such an extent that the track won’t really work without it, you’re in a weak bargaining position. In such case, a Record company can demand a  high royalty -as much as 50%.

How do I approach a Record label or Publisher in regards to obtain a clearance?

Provide information about the planned releases (name of the label the song will be released on and how many copies will be pressed). Depending on the contract between the label and the artist, sometimes the artist will have reserved the right to approve sample licenses in which case it is ultimately their decision to allow for the sample to be used or not.

– Sampling from a small label artist: a small record company may want a flat fee, known as a ‘buy-out’. If you’ve sampled a relatively unknown tune and it’s quite a short release you might end up paying just around £500 but they may build in a condition that another fee is payable if you want to press more records.

– Sampling from a large label artist: a larger label or bigger artist may want a royalty – usually 1 to 3 per cent. They’ll probably want an advance against that which may be several thousand pounds. You may be able to reduce the royalty by paying a larger advance or reduce the advance by offering a larger royalty.

Getting clearance for published samples.

Publishing companies will typically want a royalty but not an advance. For light usage of a minor artist this can be less than 10%. For a larger artist it may be 50% or more.

How does sampling affect my royalties?

The royalties for samples will be deducted from artist share of record and publishing royalties. Artist may also have to give up some of their performer’s royalties to the people who performed on the sampled record.

What if I cannot find the copyright owner?            

Do not proceed with use until you have obtained clearance in writing from all copyright owners concerned and all clearance terms and conditions agreed. To proceed without all necessary clearances in place will equal breach of copyright. 

Can I approach the band/writers directly?

Clearance must be sought and obtained from the copyright owners.  In most cases this is the record label and publisher.

How long will it take to get an answer to my request?

 Publisher will often discuss the clearance request with writers of the composition that has been used. If writers are recording, touring or working on other projects the clearance can be delayed.

 If the composition that you wish to use is not UK copyright, the publisher may need to liaise with a foreign publisher who in turn may need to liaise with the writers.

What can I do if my request is denied?

You must remove the sampled from your work. To proceed without all necessary clearances in place may well result in action being taken against you for breach of copyright.  

by Juan Lopez, Legal Consultant

Image source: Mike Licht

[notice_box]For top quality sample clearance contract templates please visit MusicianLawContracts.com [/notice_box]

Collection Societies – Why do we need them?

Collection Societies are needed to protect the rights of musicians and songwriters, to monitor the performance of musical works and to make sure musicians get paid!

A publisher will grant a license for a song to be performed or recorded and radio stations must make a record of what songs have been played. Larger stations purchase a blanket license so that all material played is paid for in advance. This money is then distributed amongst the members of the appropriate collection societies. Every venue or public area in which music is performed must have a license to do so.

Overview

There are two rights in every recorded track, (copyright in the musical and lyrical composition and a separate copyright in the actual sound recording) so every time a track is played in public, there are two license fees to be paid – one goes to PRS who pass the money on to the person or people who wrote the composition and the other goes to PPL who pass the money onto the people who performed on the track. If you have done both, then you can receive two royalty streams.

PRS

The Performing Right Society is an organization for songwriters and composers. It collects royalties for the performance of music and distributes to its members. All venues and internet streaming services must have a PRS license.

MCPS

The Mechanical Copyright Protection Society collects money for songwriters and composers for the use of their material in recordings. The ‘mechanical right’, as administered by MCPS, consists of two of these rights:

  • the right to copy the work;
  • the right to issue copies of the work in public;

Mechanicals refer to the use of music in CDs, Computer games, Records Feature films, Audio tapes Websites, Music DVDs, Telephone ringtones, TV and Radio Novelty products and Videos Commercials. Money is collected from the sale of these items and distributed to the members.

 PPL

The Phonographic Performance Limited collects royalties on behalf of performers for the broadcast of their work. The royalties are distributed to record companies, session musicians and performers. PPL licenses are required by venues to pay a fee to its members for the public performance of their music on CD or radio.

Other Societies

ASCAP and BMI are US societies which have agreements with the PRS to pay songwriters and composers for the public performance of works

 Important Point

Song-writing royalties are split between the publisher and the songwriter, usually 50/50. If you do not have a publisher, but you are registered with the relevant societies, you can claim 100% of the royalties. However, a large publisher can get your songs placed more effectively.

By Juan Lopez, Legal Consultant

Image source: Mike Licht

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Does your “intellectual property” qualify for copyright protection?

The following Four Stage Test will help you determine whether copyright subsists in your work.

1. Your work must belong to a protected category of works[1].
  • Primary Works: original literary (lyrics), musical (compositions), dramatic (dance capable of being performed) or artistic works (photographs, sculptures)
  • Secondary or Derivative Works (usually carrying primary works): sound recordings, films, broadcasts, printed materials.

Not protected categories of works or types of work for which copyright might be difficult to establish:

  • Ideas, procedures, methods (including business methods), systems, processes, concepts, principles, discoveries, descriptions or explanations.
  • Familiar symbols or designs; mere variations of typographic ornamentation, lettering, or colouring; mere listings of ingredients or contents.
  • Works consisting entirely of information that is common property and containing no original authorship (for example: standard calendars, height and weight charts, tape measures and rulers, and lists or tables taken from public documents or other common sources)

[info_box] Metallica could not have a monopoly in metal music. Anyone else is free to write a metal song since the concept of metal music is not protected by copyright[/info_box]

2. You idea must have been worked into a material form.
  • No copyright in an “idea” unfixed into any material form.
  • Importance of keeping mere ideas un-privatised and in the public domain.

Not protected:

  • Works that have not been fixed in a tangible form of expression (for example, musical performances that have not been written down or recorded, improvisational speeches, choreographic works that have not been notated or recorded)

[info_box]A musician may perform a song while playing the guitar without recording in some way. Copyright does not subsist in such work unless they are recorded, in writing or otherwise. [/info_box]

3. The work is original to you.
  • Originality rests on whether or not the work embodies skill, talent, work and effort.
  • A work may embody some elements not original to the author (provided such elements are not themselves entitled to copyright protection) but must embody some significant overall original expression or embellishment.

[info_box]The work does not have to be unique, or even particularly meritorious. Rather, originality is taken to require that the work in question originated from the author and that it was not copied from another work.[/info_box]

4. The author of the work must be a qualifying person.
  • British Nationals residing overseas.
  • Persons residing in the UK, UK overseas territories or the European Economic Community.
  • Company incorporated under the laws of any Part of the UK.
  • Persons residing in any of the ‘Convention Countries’ (of which the UK is part of).

[1] Section 1(1) of Copyright, Designs and Patents Act 1998 – CDPA

by Juan Lopez, Legal Consultant 

[notice_box]For trusted copyright infringement letters and various copyright related contracts templates please visit The Music Law Contracts page[/notice_box]

The Role of Sanctuary Management in Iron Maiden’s career 1978-1980 Pt3.

 Key business decisions made at Iron Maiden’s early career.

The self-released demo ‘The Soundhouse Tapes’ sold 3000 copies on the first week by mail-order only, and the remaining 2000 the following few weeks. Both Virgin and HMV stores phoned the management requesting for copies of the demo but the demo had been released for the die-hard fans only and, according to Steve Harris, it would have destroyed the magic of the original 5000 copies if more had been pressed. They decided to wait until they could do a release with EMI (Wall, 2004:104)

From the EMI £50,000 advance they decided to spend large portion of it (£35,000) on the first album, paying debts and buying new equipment. £15,000 would be set apart for the second album and nothing for the third (Wall, 2004:107). It was expected that money would be raised during this period for general running of the band and for recording of the third album.

One of the ways the band managed to survive with such tight budget for the early years was Rod’s careful monitoring of royalties from foreign record sales. Because of this type of sales take a few months be paid to the artist, Rod would convince the financial department in EMI to give him advances on money waiting to be paid from overseas.

Who signed the act’s publishing rights, why, when, & for how much.

Even before a record deal was obtained, Rod Smallwood managed to get a publishing deal with Zomba Music from which they received a cash advance of £40,000 (Wall, 2004:111).

Again, not a large amount of money upfront was pursued but getting the company to commit in the long term was. Ralph Simon and Clive Calder, head of Zomba at the time were intelligent enough to see the huge potential of the band based on their integrity, their loyal fanbase and the fact that their career was one that would ‘outlast most pop careers by an enormous ratio’ (Wall, 2004: 111)

The role of live performances in Iron Maiden’s career

Touring has always been very important for Iron Maiden and they claim to really enjoy playing live.

The band performances are very energetic andincorporated elements such as lights, fireworks and blood-dripping masks from the very beginning. Prior to securing a record deal, the band would tour up and down the country in a truck.

Iron Maiden live performances were always one of their strengths and they used it as a powerful marketing tool because it triggered fans to tell their friends thus making Iron Maiden more and more popular.

Soon after securing their record deal Rod Smallwood would appoint John Jackson as the band personal booking agent. He would put Maiden forward for any choice support slots in Britain and abroad. In 1980 Iron Maiden would embark on tours supporting Judas Priest and KISS.

New media in 1979 -80

During the late seventies, early eighties, Punk music fans started writing their own fanzines. Metal fans borrowed from the idea and by 1981 titles like Metal Fury, Metal Mania and others started to spring out revitalizing the UK rock scene (Wall, 2004:91).

Iron Maiden constantly feature in these magazines which helped them reach notoriety.

References

WALL, Mick (2004) Iron Maiden, Run to the Hills: The Authorized Biography. 3rd Edition, London: Sanctuary Publishing.

STENNING, Paul (2006) 30 Years of the Beast – The Complete Biography 1976 – 2006, New Malden UK: 2006

By Juan David Lopez, Legal Consultant

[notice_box]For a trusted Artist Management Contract template please visit The Music Law Contracts website.[/notice_box]

The Role of Sanctuary Management in Iron Maiden’s career 1978-1980 Pt2.

Demographic for Iron Maiden in 1978-1980

In the period concerning this article which is Iron Maiden early years, the audience was of a similar age to the musicians: late teens, early twenties. Musically the band appealed to rock audiences who did not or had stopped relating to old heavy metal acts such as Led Zeppelin, Black Sabbath and to those who did not like Punk music which was at its peak at the time.

Iron Maiden went against-the-grain for its time, they stuck to what they wanted to do and this earned them respect from a very loyal fanbase up until today.

What other artists Iron Maiden toured with

In the early days Iron Maiden often toured with other bands from the so called movement ‘NWOBHM’ such as Praying Mantis, Urchin, Samson, Tygers of Pan Tang. In 1980 they were asked by Motorhead to support a charity benefit gig at the Music Machine in Camden (Wall, 2004:97). For later European/US tours the band share the stage with, at the time, bigger bands like KISS and Judas Priest.

Iron Maiden Management Company

Rod Smallwood – Iron Maiden Manager and co-counder of Sanctuary Group

The management company was called (and it still is) Sanctuary Management and it was started by Rod Smallwood and Andy Taylor to exclusively deal with Iron Maiden affairs. Rod would work on the music business side with is vast music industry knowledge and Andy would deal with the legal and financial aspects (Wall, 2004:74).

Signing of Iron Maiden.

Rod Smallwood (Iron Maiden’s manager) didn’t approach any major London record companies until the band had reached enough of a buzz around themselves as to be taken seriously by A&R representatives. The turning point was the October issue of ‘Sound’ magazine which featured Iron Maiden on the cover and a full interview inside. Rod seized the opportunity and organised a gig at the Marquee (Wardour Street) to which he invited A&R reps from EMI CBS, A&M and Warner Bros. An incredible effort was made to ensure this would be the best Iron Maiden gig to date. The venue was postered with black and white pictures of the band, the back of the stage was decorated with Maiden’s own backdrop and T-shirts were sold at the venue foyer. Also the venue window was adorned with a death head mask

While CBS and Warner turned down the band’s request for a record deal, EMI representative John Darley was said to be very impressed by the band and wrote an enthusiastic report to his boss Brian Shepherd (EMI head of A&R) , who was persuaded to go and check the band personally ten days later. That very same night (in September 1979), at the Neal Kay’s Bandwagon Soundhouse, Brian Shepherd of EMI offered the band a deal based on their performance, the fact that they had their own fanbase and the atmosphere they generated. (Rod Smallwood had previously made contacts with EMI when managing Cockney Rebel who was signed to the label).

However, the deal negotiations would last for two months, Rod Smallwood wanted to make sure that the deal with EMI was, in his own words: ‘a long term one and not just one where they can opt out if the first album isn’t an immediate hit’ (Wall, 2004:101)

Instead of resting on their laurels, Rod would keep the band on a busy schedule to ‘keep the name of Iron Maiden as much in the public eye as possible’. They decided to release 5000 vinyl copies with three of the four tracks demo as an EP called ‘The Soundhouse Tapes’ under their own label called Rock Hard Records. This release and the band being featured in the ‘Sound’ magazine made the band’s commercial potential evident to EMI.

The deal that Rod Smallwood reached with EMI was according to Mick Wall (2004:105) ‘a very clever an unusual for the time’ and it was one driven by creativity rather than by cash. The deal itself was for five-albums, plus a £50,000 advance on recording costs, to be spread over three albums. A big advance was not something Rod was looking for but a long-term commitment from the record company (Wall, 2004:105). Rod looked to protect the integrity of his act rather than pursue a big advance from EMI. Also, creative control was and has always been in Iron Maiden’s hands.

An important clause that Rod managed to insert in the contract stated that EMI did not have an option to drop the band until after the third album had been released (Wall, 2004: 105)

By Juan David Lopez, Legal Consultant

[notice_box]For a trusted Artist Management Contract template please visit The Music Law Contracts website.[/notice_box]

Images source: Adels

The Role of Sanctuary Management in Iron Maiden’s career 1978-1980 Pt1.

Iron Maiden career has lasted for over thirty years, spans across four decades and has reached sales of over sixty million records worldwide of its twenty four releases. This article compiles and analyses the business decisions from the years from 1978 until 1980. This period of time was decided on because it was then when first contact with their management was made and important decisions about deals and touring were taken.

Whether the same business models and decisions would work for a band wanting to achieve success today is very much arguable. In retrospective, this snapshot in Maiden’s career is a great example of a band’s self-believe, perseverance and hard-work and the skill of the management who capitalised on the band’s momentum, realised their potential and send their career rocketing in a matter of months; even at a time when the music climate wasn’t necessarily conductive to Heavy Metal as Iron Maiden played it.

Most of the biographical information was taken from the band’s authorised biography by Mick Wall. Music business books were used to analyse and put into perspective the business decisions taken at the time by the band and its management.

First management involvement in Iron Maiden’s career and its role in the act’s early days

In the new year’s eve of 1978 Iron Maiden recorded their first demo at Spaceward studios in Cambridge in a 24 hour session at a cost of £200. In the following months they handed out the demo to various venues and djs in a bid to get gigs and exposure outside of the east-end of London where they were already well known by then.

One of the copies reached Rod Smallwood by late 1979. He liked the songs so much he decided to contact the band and come down to some of their gigs, at first, to informally give them some advice. Rod had previously worked as a booking agent and artist manager but was planning at that time to go back to university to become a lawyer (Wall, 2004:71).

Rod would work with the band without actually signing a contract for the next few months and as described by Steve Harris (bassist and band leader): “It was all down to trust”. The first management agreement was put down on paper after Rod had actually arranged their signing to EMI and publishers Zomba (Wall, 2004:86).

Until the end of 1979, Steve Harris (band’s bassist) had organised the band’s work and taken all the important decisions. He had found the members, written the songs, made posters, booked gigs, etc (Wall, 2004:71).

How was the Iron Maiden fanbase built.

Their fanbase was initially built locally in the east end of London by playing the live circuit in venues  such as the The Harrow (Barking), Plough (Leytonstone) Bridgehouse (Canning Town) and the Ruskin Arms (New Cross).

With the help of  DJ Neal Kay, they would play venues in Camden, Kinsbury and the Marquee in Wardour Street. Iron Maiden would become notorious for they live performances and word of mouth would help them attract more and more fans to their live shows.

What media outlets were the key supporters of the Iron Maiden.

Around the time, Neal Kay was a notorious heavy metal London DJ who organised gigs at the ‘Bandwagon Heavy Metal Soundhouse’ in Kingsbury, north-west London (Wall, 2004:66). Neal also compiled a heavy metal chart that was featured in a magazine called ‘Sounds’ and in which Iron Maiden ranked well, reaching number 1 and 7th positions with their four-tracks demo. There were only 4 major Music magazines: NME, Music Melody, Record Mirror and Sounds at that time in 1979.

In the summer of 1979, Neal Kay decided to book the three better charting bands of the his chart for a gig at the Music Machine in Camden Town (later to be called Camden Palace and now called KOKO). Iron Maiden performance was favourably reviewed by Sounds journalist Geoff Barton and the magazine started to feature more and more about the underground music movement called NWOBHM (New Wave of British Heavy Metal) of which Iron Maiden was ‘riding the crest’ (Wall, 2004:87)

Barton pursued the idea of compiling articles and reviews of these new up and coming bands on a new coloured magazine called KERRANG! but the idea was rejected at first by the Sound publishers who did not want to risk expending money on a magazine entirely devoted to heavy metal (Wall, 2004:89). They agreed to include and one-off shot with all the articles and reviews as a gift inside the usual Sounds issue. Another issue came afterwards which sold out within days and it became evident KERRANG! needed to be monthly magazine in its own right. (Wall, 2004:89).

At the Record Mirror magazine, Malcolm Dome wrote articles about Iron Maiden which he considered top of the NWOBHM pile (Wall, 2004:92).

By Juan David Lopez, Legal Consultant

[notice_box]For a trusted Artist Management Contract template please visit The Music Law Contracts website.[/notice_box]

Images source: Adels

Why You Need a Band Agreement

Most people who decide to go into business together (be them plumbers, dentists, accountants, bakers) will have a lawyer to write a partnership agreement for them. However, it is common to find bands that are earning millions that never got around formalising their relationship.

Band members either fail to see the need to make an agreement or just don’t want to come across as ‘uncool’ for raising the issue; after all, who likes to hear about anything negative (like breakups) when everything is working well. However, it is when everything is going well exactly the best time to discuss a band agreement, simply because you can do it in a friendly way. Obviously, it is hard to reach an agreement when band members find themselves fighting with each other, specially if there is money in question and chances are the band will end up ‘killing the goose that lays the golden eggs’ (read as breaking up).

Corporation or Partnership

The main difference between Corporation and Partnership is the liability limitation. Corporations limit the liability of the shareholders to the capital they invested in the setting up of the corporation. In a partnership, by default legislation, the partnership’s assets as well as the partner’s personal assets can be taken away to pay for debts, compensations and legal fees. Legal fees should be the main concern for bands simply because they traditionally do not to incur heavily in debt and advances from labels are customarily not repayable if the band break ups or get dropped. Good news is, the partnership default arrangement (regulated by the Partnership Act 1890) can be overruled by the partners writing a new set of rules in a partnership agreement in regards to liabilities, control of the assets during and after termination, voting, division of income, etc.

As an example, when dealing with the most important asset of the band (the Name) the band can decide on one of this different provisions (although there are many different combinations possible):

  • No one can use the name if the band breaks up or
  • Any majority of the band members performing together can use the name or
  • Only the lead singer can use the name or
  • Only the song writer who founded the band can use the name or
  • Only the lead singer and song writer can use the name as long as they perform together.

Percentages

The next important thing is to decide what everybody is going to be earning. Hiring people isn’t usually an option for new artists as there won’t be money to pay salaries. Therefore everyone will be working for a percentage of future earnings. There are no rules on how this income shall be divided and it’s all down to bargaining between the members. If a member works harder and in general contributes more than the others it may be fair that he/she earns an overall higher percentage. It may also make sense that, for example, the split is done evenly on tour money but proportionally for publishing income depending on who writes the music.

Control and voting.

With varying percentages of earnings it may also make sense to have one or two key members controlling the vote or whose votes are worthier that those of other members. Voting is important when hiring and firing members, entering into other agreements, capping expenses, amending the band agreement, etc. It is important to avoid having an even number of votes to prevent an equally divided vote where nothing can be done (a deadlock).

Ex-members

In a band agreement it is also important to define what happens when a member is ousted from or quits the band. Does he/she keep the same percentage of earnings and for how long? How is he/she going to be bought out of their share assets of the group (buyouts), at what price and over what period or time are important aspects to consider.

All in all a band agreements deal with very tricky and emotive issues which is why the band should deal with them at the beginning of the relationship before money starts being earned. A Band Agreement is a vital document that will work as a blue print that artists can refer to when taking important decisions and can help settle disputes easily.

by Juan Lopez, Legal Consultant 

[notice_box]To have a band agreement written by us, please visit our Write a Band Agreement page.

For a trusted Band Agreement template please visit The Music Law & Contracts website[/notice_box]

Images source: Yale Law Library, Mike Licht

360 deals – Getting the Best Out of Them

Overview

360 deals have come around as the recording labels response to three major trends in the music industry in recent years: (1) the steady decline of revenue from record sales, (2) the increase in prices of tickets to live events and fan expenditure on merchandise and (3) the strengthening of the capabilities of the collecting societies and publishers getting better at their roles which translates in income from public performance and synchronisation becoming more and more significant.

Getting the best out of 360 dealsIt is becoming common for labels looking sign a new deal with an artist, or extend an existing deal, that they do so only if they can acquire a share of the income from other activities such as song-writing, tickets, merchandise and sponsorship deals. In the label own words: ‘we are not making enough just from selling records to justify the level of advances, royalties and recording costs’

360 deals and Indie Labels.

360 deals are very appealing to independent labels which use them as a way of acquiring more rights thus expanding their income streams and improving their bargaining power when negotiating major partners involvement. The main concerns for artists are: first, that the label could hold to the rights that a major company may want to acquire when negotiating a new deal; and second, that independent labels often do not have the capabilities to realise the full potential of the rights assigned, i.e., monetize them.

Contract provisions

If a label is looking to have different rights assigned to them (copyright, merchandise, live work agency rights) they need to pay different values of commission depending on the type of rights assigned. Having a 360 deal in which the label set an across the board 25% remuneration for all of the rights assigned it just not fair on the artist. Broadly speaking, an artist should not accept less that 50% for publishing, net income for record sales and merchandise. Ideally artist should be allowed to shop around for other deals and give the company a chance to make a new deal on the same terms as the best offer (i.e. give the company a matching right).

Ethical Perspective

With every right comes responsibility. For labels having different rights assigned should mean they ougth to work really hard to make it worth for artists giving away these rights and to make up for the lack of capabilities, expertise and contacts in the areas in which the label has not been traditionally working on.

Cross-collateralisation

‘Cross-collateralisation’ means using income for certain type of activity to cover costs from another, e.g. merchandise income to cover recording costs. Although is tempting for the labels to do so it must be avoided in the interest of the artist getting a remuneration sooner or in fact ever getting paid at all. The risk of having less/not profitable activities (money holes) should be borne entirely by the label and not alleviated by taking money from a profit making activities that would otherwise be payable to the artist.

Labels are advised to keep and maintain separate, distinct and non-cross-collateralised sets of accounts, in respect of:

  • Services in relation to activities as recording artists;
  • Services as songwriters and composers; and
  • Services in relation to other activities.

by Daniel Ward & Juan Lopez, Legal Consultant

[notice_box]For a trusted 360-type contract please visit The Music Law Contracts website.[/notice_box]

Image Source: Paulo Brandão

Five Myths about Music Law

The purpose of this article is to clarify several common misconceptions about music industry law that are often discussed amongst musicians on the internet.

1. ”Songs must be registered for the copyright to be protected”

Copyright is an automatic right of the author…  meaning that as soon as you make a tangible copy of a work (i.e a recording of your song or a transcript of some lyrics)  – then you own the copyright.

Five Myths about Music LawAlthough the common practice of posting a copy of your material to yourself has nothing to do with securing copyright, it does however establish the date of when you created the work. This is very important, because should anyone later decide to use your material without permission, then you are protected, as this process is regarded as proof of when the work was written and by whom.

In the US, registering the Copyright grants you certain legal advantages (which you would be missing out on if you don’t register) – including the following:

1. Being able to collect compulsory license royalties
2. Being able to file infringement action for damages and injunctions; you are also able to recover attorney fees (if you win).
3. In the event of an infringement dispute in court the burden of proof is put on the party allegedly infringing your copyright.

2. “If I write the lyrics or the music in a song I can later on take those lyrics or music and use them again”

This is actually true in the UK – but only when the portion of the work written is sufficiently distinct and identifiable from the other parts of the co-written work with someone else.

In the event that a co-written portion of the work is not distinct from that of the other(s) all of the owners would have to agree to a request if someone wants to copy or use the work or a portion of the work of joint ownership, including the very same authors.

In the US this is not the case. According to US copyright law even if two people create separate, distinct parts of a work, they each own an interest in the whole copyright, not just their contribution. For example: if two collaborators get together and one writes the lyrics and the other writes the music, either author can grant non-exclusive licenses for the entire composition (provided they pay each other their share of income) BUT neither is allowed to just pick their bit in the composition and leave the other without continuing to pay their percentage of income from the song.

3. “You don’t need to clear a sample if it’s very short”

As ruled in Bridgeport Music v Dimension Films (2004) “any sampling of a master, even if it’s unrecognisable is an infringement of copyright”. The sample in question in this case was a two-second guitar chord with the pitch lowered and looped five times. This was all done without the owner’s permission or compensation paid. The court ruled the owner of the copyright on a work had exclusive right to duplicate the work and therefore usage of any section of a work, regardless of length, would be in violation of copyright.

4. A group’s name belongs to whoever started using it first

This is only true for unregistered marks for which considerable goodwill and reputation in the market has been built in respect of the brand itself.

If someone is using your unregistered brand name you will have to show that they are trading on your reputation by passing off as you – thus causing confusion in the mind of the public AND diverting custom. This last part is very important because if there is no loss of income attributable to the unauthorised use the claim is likely to collapse.

Registering a trademark has, on the other hand, clear advantages as it allows you to stop any and all uses considerably quicker and cost-effectively.

5. “Being offered a five album deal by a record company means the company is committing to record and promote your next five albums”

Recording agreement terms are traditionally structured in options periods. A five album deal may in reality be a five options deal (in favour of the label) in which the label gets to decide at their sole discretion whether or not to extend the Term after the end of each period for a further (option) period.

If the label does not extend the Term for a further option period then the agreement can be terminated and then you, the Artist, can be ‘dropped’.

In general, recording agreements impose the smallest obligation on the label in terms of releasing albums, while keeping the option to get as much content as possible.

By Juan David Lopez, Legal Consultant

Image source: Mike Licht