Help Me “Clear” This Song

L4M has been hard at work.  Working so hard that we have neglected the site for a bit.  To make up for it we have enlisted the services of our newest member, Lauren Schulz of Troglia Kaplan LLC.  Lauren helps bring us back to the basics of Copyright law below.  Enjoy!

         Everyone from major movie producers to ad agencies to independent business owners all have the desire to incorporate music into a film, commercial, sampling or other production. Unless you have some serious skills to create your own musical composition, the majority of the time you already have that “perfect song” in mind to use in your new spot.  While it may be tempting to just borrow a song from the internet or your own library, we all know (or should know) that that would be a big no-no.  So how do you go about getting the permission to use that perfect song?

             In music publishing world, this is called ‘clearing a song,’ which basically means that in order to use Queen’s “Bohemian Rhapsody” in your new commercial, you need to get the okay from its copyright holders. But how do you go about doing this and how do you find out who owns the rights to a particular song? The tricky part is that each song has two separate copyrights and you need to get permission from both of the right holders in order to use it.

            The two copyrights are for the rights to the musical composition and the sound recording of the song. The musical composition consists of the actual written music, think notes on a bar staff. It makes sense that this is owned by the writer(s) of the composition, which is then usually assigned to a publisher. Be careful, if there is more than one writer to a song this could mean several publishers might split ownership to the copyright as well. The other copyright is for the sound recording of the song.  This is the performance of the composition. This is often referred to as the master recording and the right holders are referred to as the master owner(s). Think of the master recording as a person in a studio recording a track to put on a CD. Usually the copyright to the master recording is owned by the record label, which generally finances the making of the album.

            Now that you know about both copyrights, how do you find out who owns the rights to those copyrights, and then ask them for permission to use the song? First, start with the copyright for the composition to find out who the publisher(s) and writer(s) are for the song. The best place to look is the performance rights organization’s (“PRO’s”) websites. The most popular PROs in are ASCAP (American Society of Composers, Authors and Publishers), BMI (Broadcast Music Inc.) and SESAC (Society of European Stage Authors and Composers). The majority of artists register with a PRO in order to receive performance royalties. (see the post below for more discussion on PRO’s). So all you have to do is search for the song or artist on one or more of these websites and it should tell you who the publisher(s) are. If the song does not appear, look for songs on the same album. Although the publisher might be different for the song you are looking for, generally that publisher will know who owns the rights and who you should contact.

            The more complicated task is finding out who the master owner is. This becomes difficult because there is no database or website that lists the master owner(s) for each song, so it might involve some trial and error. Remember, the majority of the time the master copyright belongs to the record label, so your first step should be finding out which label produced the album that the song you’re look for is on. A few places to start your search are the U.S. Copyright Office website, Spotify, iTunes, Wikipedia, or any site that includes a biography of the performer.  Often the biographies will include which label the performer was signed to at that particular time the song was recorded.

            The next step is to contact these publishers and master owners and send a request to license the use of the song. Make sure to tell them the purpose of the use, how much of the song you want to use, the type of media you are incorporating the song with, the length of time your production will be available for public view, and an estimated quote. The quote usually depends on the popularity of the song, the term, and the type of media you are using.  For example, an unknown jazz instrumental used for the background of a TV commercial set to air for one year, will be considerably less than Queen’s “Bohemian Rhapsody” used in a commercial distributed on the internet forever. Therefore, pick your battles when you have a strict budget. 

            Although this process can get discouraging, it is something that everyone who uses music has to do. Once you start getting the hang of it, it becomes easier. Know that the process could take from one week to several months, so plan accordingly. Thus, be patient and in the meantime let us know if there are questions we can answer to help you along the way!

Check out this article by our friend, Chris Rucks for the biggest mistakes people make in music clearance.

http://www.musicthinktank.com/blog/the-top-5-biggest-mistakes-to-make-when-clearing-music-for-l.html

Film Tax Credits: Yes They Still Exist

A few years back it appeared as though every state in our fine Union was scrambling to get some sort of tax incentive or tax credit on its books.  The “Runaway Production” (film productions moving to Canada or beyond to save on production budgets) panic that spread across the nation caused state government officials to introduce and fast-track a wide variety of new legislation.  The calm after the storm has left a rather muddied landscape with certain states eliminating their programs while some continue to thrive, albeit under the radar.

Most of the existing state film tax incentives require all aspects of production of a film or television production to take place within the state borders.  Depending on how much is spent, how it is spent and the type of production, certain states provide incentives that can result in tremendous savings or “free” returns on investment (depending on your viewpoint).  

A great chart of the remaining state tax incentives and the applicable requirements can be found HERE.

Coupling the various state tax incentives with the mysterious but enticing Federal Tax Incentive, Section 181 (which still exists) and you can potentially see upward of 50% of your overall investment returned in the form of credits and write-offs.  

If your film or television production qualifies for one of these programs you can use it as a great way to entice investors.  We don’t have to tell you how hard it is to get financing for independent film projects.  Not only do you have to convince people that your film is the one that will succeed, but you have to scare the pants off them by telling them all of the risks and ways they may lose their investment through your investment documents (PPM/Offering).  Throwing a few pages in these documents describing the various tax credits and incentives offered by the federal and state governments can be just the thing to get an investor off the fence and into your film production.  

Pandora at War with Musicians???

So this one keeps getting more and more interesting and worrisome (depending on your viewpoint).  Check out this article from The Verge:  http://www.theverge.com/2013/6/13/4428106/bmi-sues-pandora-calling-radio-station-purchase-a-stunt

We’ll continue to monitor and let musicians and rights holders know what it means for them (other than lower streaming rates).

 

Pandora: More Users. Less Cash?

Pandora recently announced that it has passed 200 Million Users on its streaming music platform.  This reportedly includes over 100,000 artists that compile the Pandora catalog of music.  

Pandora which went public back in June 2011.  Its stock has fluctuated after an inflated IPO.  However, the recent news made public by the SEC, shows that its founders are cashing out as if they were dependent on streaming revenue to pay their bills (sarcasm intended).  The SEC Form 4 report show that Pandora’s top brass has cashed out approximately $87.6 million dollars of their own stock all within less than 2 years of going public.  

So what does this mean?  Well, it means several things: 1. the executives are now rich (assuming they weren’t before they sold their own Pandora stock), 2. the stock will likely slide in value as the market watches the top executives’ behavior as an indication of the health of a company, 3. the streaming music model is not working well.

Point 3 should be the most alarming and obvious to artists.  We’ve reported numerous times of the apparent inadequacies of streaming revenues (e.g. 1,000,000 streams equal some insanely low amount of money).  With this new information it is clear that the streaming financial model in place with Pandora, while inadequate for most artists seems to be inadequate for Pandora itself.  It appears that the royalty rates that Pandora agreed to pay the labels set the bar at too high of a rate to be a sustainable or scalable model. 

For the artists out there, how much have you seen in terms of streaming revenue to date?  Are you sound exchange numbers increasing in a proportional manner?  Curious minds want to know. 

Please write in with your comments.  Stay tuned for more.

Recapture Your (Copy)Rights

An off again on again trend in music news is the story of artists recapturing their copyrights.  As with most music related matters, the law in this area is pretty straight forward but has been made to seem complex and insurmountable to artists.  We wrote about this a few times over the years and have helped a handful of older musicians fight to get back their copyrights in music that was created before a certain time period.  Each day a new set of rights holders has the opportunity to recapture rights that they previously signed away to a label or third party.

Read (or re-read) our post on how to recapture your rights here:  http://lawyer4musicians.com/2011/07/01/does-forever-really-mean-forever-recapture-your-copyrights/  and contact us to see if we can help get back your rights.

Fiscal Cliff Averted and Section 181 Renewed!

The big news of the day is the narrow escape the country had from falling off the Fiscal Cliff.  Buried within the passed legislation is the long-awaited renewal of Section 181.  The film and television production incentive that has been in limbo since December 31, 2011 was officially renewed and extended through December 31, 2013.

For Hollywood and all independent film and television producers, this marks a huge victory.  Those soliciting investments into qualifying projects such as garcinia cambogia growing and export will be able to offer incentives to investors on top of the remaining state tax credits making film and television productions much safer (obviously still risky) investments.

We imagine that productions that began in 2012 will be grandfathered into the new renewal, but will find out and post any info we get here.  In the meantime, if you or your project need help or have questions about how to implement Section 181 when seeking investment into your qualified film or television project, please contact us at josh@lawyer4musicians.

Here is a link to the American Taxpayer Relief Act of 2012, scroll to Section 317 for the renewal of Section 181.

Internet Radio Fairness Act: Oxymoron?

Protesting Royalty Rates (or something similar)

The current hot topic debate in the music industry involves the Internet Radio Fairness Act (“IRFA”).  Recently, the debate is getting louder as the top artists in the music world and successful Internet radio companies clash over the bill.  Supporters of IRFA say it is vital to the survival and success of all digital music streaming companies to end a flawed royalty system, but opponents claim it represents a disproportional cut in pay that musicians have come to and may eventually rely upon.  It’s no surprise this debate revolves around money, but let’s not mute what’s more important: the long-term health of the digital music business itself.

How are the current Internet Radio and Streaming royalty rates set?  Music rights owners (publishers, labels and independent musicians) and the digital radio companies do not negotiate the price of a license for streaming digital music.  Instead, Congress’ Copyright Royalty Board (“CRB”), a three-judge panel, directly sets the price once every five years after SoundExchange (remember SE represents both master owners and performers which can include labels as well as independent musicians) and the digital radio services (online, satellite and cable radio companies) present evidence about the value of recorded music and the technology for delivering it to music listeners.  Then, the CRB determines the royalties each kind of music service will have to pay out for the next five years.   SoundExchange is then charged with distributing out those royalties to its members.  The Performing Rights Organizations have their own equally confusing method for collecting and distributing royalties from internet broadcasts.

The debate or heavy complaining which led to the introduction of IRFA is coming from streaming services like Pandora.  CRB has decided on dramatically different royalty rates: Internet radio companies like Pandora, the IRFA’s most vocal supporter, purportedly pay more than 50% of their revenue in performance royalties; satellite radio companies like Sirius XM pay about 7.5%; cable radio companies like Muzak pay about 15%, and AM/FM radio pays nothing.  The result of these high royalty rates have forced most online streaming services out of the music business; most notably some giants such as AOL, Yahoo, and Microsoft.

With the rise of services like Pandora and Spotify, the labels and publishers went to extraordinary lengths to ensure that they would be paid a “fair” amount and the artists lobbied hard as well.  Any change, however minimal, will be met with angry voices screaming (or singing) on the other side.

IRFA is designed to give Internet radio stations a fairer calculation process for setting the price of their music and lower this difference.  The goal is to put services like Pandora, Spotify, Muzak, SIriusXM, on the same or similar footing.  But 125 major label artists including Rhianna, Ne-Yo, Billy Joel, Maroon 5, and Missy Elliot penned a letter opposing IRFA.  Their unified voice argues that IRFA will cut deeply into current Internet radio royalty earnings by an estimated 85%.

Who is right?  Who is wrong?  Who knows? What we are sure about is that, without a doubt, Internet radio is good for consumers. It allows for more music choices with more control for the listener, pushes songs from both major record labels and the nation’s rising independent musicians, and enables greater exposure and potential compensation for thousands of artists who would otherwise never be heard.  Rights owners see this medium as a meaningful revenue stream that is only going to grow overtime.  And the more listeners and the more plays mean Internet radio companies must pay more in overall licensing and rights fees to stream the music.  Supporters of IRFA say that not only will these lower rates drive more innovation in legal music distribution, but also ensure more artists are fairly compensated for the performance of their recordings.

It is hard for us at L4M to pick sides in this fight.  We have been writing about the changing music industry for almost five years now.  We spotted Spotify as a potential solution and also a potential problem prior to its US launch.  It comes as no surprise to us or our readers that there is a fight over how much streaming radio plays should pay out to artists.  Obviously, we want to see a fair resolution, but that gets us into the existential debate over what is fair and how much is art worth.  We’re not getting into that debate in this entry (save that for a night filled with several glasses of scotch and smoking jackets).

What do you think?  Comment, email or discuss over Thanksgiving dinner (please don’t).

This article was penned in part by aspiring L4Mer Jessica Rzotkiewicz