For decades the industry has struggled with interpreting the pre 1972 copyright laws on recordings. Due to complicated state copyright laws which directly contradict or confuse federal law, the music industry (artists on one side and labels/publishers on the other, naturally) have been battling over the rights in sound recordings. The issue has been coming to the forefront as many extremely popular works recorded prior to 1972 are up for recapture (See our articles on Recapturing here).
In a remarkable act of sanity by Washington, Congressman Jared Polis (NY) has introduced new legislation that aims to simplify, clarify and end speculation as to the true meaning of the US Copyright laws as they relate to sound recordings. The Sound Recording Simplification Act (HR 2933) is not wordy or complicated (yet). Rather it seeks to completely federalize all copyright laws thereby eliminating the existing confusion and contradiction created by conflicting state copyright laws.
The passage of this Act would help to eliminate a hurdle in songwriters recapturing their rights by eliminating the labels/publishers creative arguments of conflicting copyright statutes. Stay tuned to watch the progress of the Act.
We here at L4M had an original goal of making the music industry LESS confusing for musicians by attempting to simplify and decode the mythical “industry standards” that generations of music executives and attorneys had crafted. In our opinion, the standard of the industry was to confuse musicians so that they would willingly give up rights that they needn’t relinquish. The combination of a monumental change in the music industry (with the introduction of the internet) and the easier access to information (such as sites like ours), musicians no longer have an excuse when they enter into horrific label agreements.
If you look over the last several articles posted on L4M, we admittedly have wandered away from the path of simplicity. So, hand in hand with all the kids going back to the classroom this week, we will be returning to the basics. Today’s lesson, what do Performance Rights Organizations or PRO’s actually do and why do you need to register with one?
Most folks in the music industry and many outside of the industry have heard of ASCAP or BMI. However, the numbers decrease signficantly when you ask those individuals what ASCAP or BMI actually do for artists.
ASCAP (American Society of Composers, Authors and Publishers), BMI (Broadcast Music Inc.) and SESAC (Society of European Stage Authors and Composers) are the three performing rights organizations in the US. They have international presence as well, but for this post we’ll just focus on their doings in the US. As their names suggest, PRO’s work with writers who have their music published and broadcast to the masses. They issue licenses to any one or any thing which broadcasts music for more than merely personal enjoyment. As part of those licenses they collect royalties to the composers of music which is broadcast to the public. According to ASCAP itself it:
“protects the rights of its members by licensing and distributing royalties for the non-dramatic public performances of their copyrighted works. ASCAP’s licensees encompass all who want to perform copyrighted music publicly. ASCAP makes giving and obtaining permission to perform music simple for both creators and users of music.” www.ascap.com/about
Think of it this way: You drive your car over to your favorite shopping mall. While en route you jam out to your local rock radio station (if it still exists). After parking, you saunter into the mall which is broadcasting some easy listening jams over its PA system. You wander into Abercrombie & Fitch to see if you can grab that hoodie that The Situation wore on last night’s episode of Jersey Shore and in the darkened perfumed laced store you are accosted by much too loud ska music. Working up a hunger, you then meander into TGIF where you are immediately accosted by 30 flat screen tv’s blasting a Black Keys track over a Cadillac commercial. Exhausted, you get back in your car and switch over to the smooth jazz channel for a relaxing drive home.
Every step of the way during your epic mall journey, songwriters were collecting performance royalties. Let’s take them one at a time.
1. Your car ride to the mall: The local radio station licenses its playlist from the PRO’s and pays a set amount for each song it broadcasts to the appropriate PRO (which is the PRO that the songwriter signed up with and registered its songs). The PRO then allocates the correct portion of that payment amongst the writers of each song which was broadcast. Eventually, the radio’s payment trickles down to the songwriters themselves.
2. The mall itself has a license with the PROs to broadcast its easy listening jams. The same process ensues. PRO’s collect from the mall owners and pay out the appropriate writers.
3. Franchises like Abercrombie and Fitch also have direct licenses with the PRO’s in order to continuously broadcast music to their patrons. So similar to the radio stations and the mall, individual stores will also pay a license fee to the PRO’s to pay for the right to broadcast music.
4. The network which broadcast the Cadillac commercial on television will also pay a license fee to ASCAP. See our article on Licensing to see the other compensation that may be owed for this type of use.
5. See number 1.
The amount of money paid every time a song is broadcast varies. How much does it vary? Well that depends (sorry, but it’s true). The PROs negotiate individual licenses and rates with its licensees. The terms of the licenses depend on a large number of variables including the size of the audience, the time of day of the broadcast, the method of broadcast and even the current financial climate. A song that is featured on a top network drama played at primetime on a Thursday night will surely be worth more in performance royalties as compared to a song that is played over the loudspeaker at Steak and Shake in rural Georgia. However, if you do not register your work with a PRO you will receive the same amount for either broadcast: $0.00.
We are often asked which PRO is better? BMI and ASCAP as the biggest PROs have standard answers as to why they are better than the other. However, as with most things in the music industry, we feel that it comes down to relationships. If you develop a relationship with a representative from a PRO you should stick with him/her. Finding someone to help you through the registration process and explanations as to what royalties are owed is invaluable to any artist. Neither of the organizations have long term contracts, but you have to be pro-active to know when to terminate or they will continuously renew.
This is obviously only a very cursory overview of a much more complicated subject. But, it is a start. If you have more questions, please contact us.
Suppose you are a publisher or a record label and I am a 25 year old writer or artist. You are impressed with my music and we begin talking. After a couple of weeks of proper courting we decide to consummate the relationship. You present me with a contract. The language states you give me money as an advance; in exchange, I give you my music and the copyrights linked to the music for the life of the copyrights. This seems like an awfully long time, no? After all, life of copyright is 70 years after my inevitable death. You, as publisher or label, want me to assign my copyright to you, basically, forever. So, assume I sign the contract in ink (or blood or something). Is that it? Will my work remain with your company for the next 100 years or so? No. Not necessarily.
Despite what many think and despite the language of the contract, you may be able to get your copyrights back. There are strict time lines and certain formalities that must be followed; which, if done timely and correctly, will result in you getting your copyrights back. These guidelines are set forth in a little discussed portion of the 1976 Copyright Act (Section 203 to be precise). Note: This does not apply for works made for hire which we will discuss in a future post.
Section 203 provides a chance for authors to terminate their assignments and recapture their copyrights. For works after January 1, 1978 (the year the 1976 Act went into effect) grants, assignments and licenses can be terminated during a five year window starting 35 years after such grant was made. For the termination to be effective a letter requesting that the copyrights revert must be sent no more than 10 years prior and no less than two years prior to the effective termination date. There are certain other formalities such as recording a termination notice with the Copyright Office.
Here’s how Section 203 works: suppose a song was written and assigned on January 2, 1978; the writer could get his/her copyright back between the years 2013 – 2018 (1978 + 35 years + 5 year window). Termination letters could be sent beginning in 1993 and no later than 2016 (10 years prior to 2013 and less than two years before 2018). If done correctly and timely, publishers cannot deny these termination letters. As an added bonus you cannot waive your rights in advance. Thus, the contract you had me sign granting you my copyrights for life of copyright would not affect my right to recapture my copyrights. In fact, right now, there are writers and artists in this exact position requesting their copyrights revert back to them. However, if you do not send a proper termination letter during the proper time frame, the contract will then go back into effect and the publisher or record label would continue to own your copyrights for life of the copyright.
So what’s the big deal about getting your copyrights back? What do you do if you get your copyrights back? Suppose you don’t have any business experience and have no idea what to do to market and get your material out to the public? Fear not readers. You can use this as a negotiating tool. For example: suppose your contract allowed for a future advance of x dollars and a money split of x%. Well, you could renegotiate all your terms. You could ask for three times x and a money split of x+10%. I will let you fill in the x’s, percentages and numbers until you are happy because that is how you could (and should) handle negotiations of this type. You should see what would make you happy to stay with the same company. Another option would be to take your copyrights and move to another company on more favorable terms. Yet another option would be to recapture your copyrights and start a company to start selling or licensing your copyrights. There are countless options available if you decide to recapture your copyrights.
It is important to remember the value of a label or a publisher is the value of the copyrights it owns and controls. Think of how many albums the Beatles, Stevie Wonder, The Who, Led Zeppelin, Ray Charles, etc. still sell (click here to read about the revenue still generated by Ray Charles). Think of how many times you hear those same artists on the radio or in movies or on television or in video games. (Labels currently do not receive money for terrestrial radio play. Please see the post on the Performance Rights Act). Now, you may not be as well known as the artists just mentioned but think of how much you could do if you had the rights to. A label usually only pushes an album for about 12-18 months; after that the album slowly fades into obscurity. However, they still own the copyrights. If the label does not push it; no one can. Now, if you had your rights back you could go out and try to get your music placed on television shows, movies, video games and commercials and reap 100% of the money. There are several companies out there that pitch and place music in all these areas (for a fee or commission). Another source of income could be repackaging and selling your album yourself. Whether it is on iTunes or at the local indie shop; you could sell your own cds and keep your own money. No one will ever care about your music more than you. If you are back in control of your songs and master recordings, your music may get a new push and find opportunities you never thought possible.
This is an exciting time in the music industry. Every year new writers and artists start entering the termination period for copyrights. New business models, new marketing techniques and new interest in older songs are going to emerge. I, personally, cannot wait to hear a great song that some label or publisher forgot about back in 1978.
This is an extremely interesting and complicated issue. We at L4M will have many more articles about this issue and how it relates to you. Future posts will discuss pre-1978 works, sound recordings, works made for hire, heirs’ rights and the importance of record keeping. Stay tuned…
Recently I was on a panel at Northwestern Law School with another lawyer, a musician (who happens to ba lawyer too) and an ASCAP representative. Our topic was the effect that cloud or subscription based music services will have on performers and songwriters. While I definitely had my own opinions on the topic, it was ear/eye opening to hear from my fellow panelists.
Most music lovers seem to have their own private way to listen and enjoy their music. While there is a lot of overlap amongst listeners (iPods, satellite radio, pandora, car radios, home stereos) everyone has their own unique method to purchase, stream, listen and (now most importantly )travel with their collection. In the past we would break out our record collection and play records in the family room. Then came the cassette and the walkman. Our record collections became somewhat mobile and we could grab our favorite tapes and walk around or drive while listening to our collection of music. Technology allowed for better sounding recordings to travel along with us with the invention of the CD. However, like one of my panel compatriots aptly pointed out, a music fan was a prisoner to his cd collection; still rather bulky and highly scratchable, you would have to lug a box/book of cds with you on each road trip and hope that they did not fall between the seats or get scratched on the dashboard.
Enter the MP3. A computer file that is quickly dowloaded and containes cd quality sound. The digital album revolutionized the way we consume music. As with most revolutions, the infrastructure that existed prior to the revolution (the big music label system) fell. Brilliant entrepreneurs and crafty opportunists from Apple to Napster entered the fray and came out making billions of dollars from the shift. For the everyday consumer of music, it became easier to listen to music wherever you wanted to do so. Your entire record collection can now fit into the palm of your hand, be programmed to your car’s stereo or be shared with people in your office with a click of a button.
Now that the digital age of music is over a decade old, there is yet another shift occurring. Technology again is making it easier for people to listen to their music collection regardless of where they are. The clouds have come rolling in.
Pandora has already helped put the cloud on the map with approximately 80 million users (1 new user every second per the www.digitalmusicnews.com). But services such as Spotify, Sony’s Qriocity and Google’s delayed cloud service will take it one step further. While Pandora allows you to listen to music based on bands or songs you tell it you like, the cloud subscription services allow you to pick all of your music. Essentially, you will no longer have to actually purchase a song, let alone an album. Rather, you will pay a monthly fee that will allow you to pick your favorite songs, categorize them, rank them, etc. and, most importantly, take them with you. Whether you are listening on your hand-held device (smart phone or iPod type device), on your computer, in your car or listening to your home stereo system, your music will be there waiting for you. As long as you keep paying the monthly fee, that music will be with you.
As a consumer, I think cloud based systems are the bees knees. Technology should make things easier and better. Allowing me to go from my office to my car without missing a beat of the song I was just listening to (I’m very fast) and without plugging anything in, is amazing. As a lawyer who represents musicians and songwriters, I’m worried. For interactive internet based music providers (where the user gets to select the songs he/she wants to listen to) the royalty rates are negotiated between the labels/publishers and the cloud provider. This means that the labels and big publishers negotiate pre-determined revenue shares for each stream of a song; typically a teeny tiny fraction of a dollar (in England the rate is thought to be around 0.00085 pound). A famous example of how potentially horrible these rates can be is the report that Lady Gaga who had over one million streams of Poker Face on Spotify in the UK earned $167.00 (click here for more on that).
The labels and publishers in the US are fighting for more per stream. But don’t go rooting for them quite yet. They are negotiating deals so that they actually get an equity or ownership stake in the cloud based service. So while it appears as though they are fighting for the artists (which some of them might actually be doing), they are also positioning themselves to make as much money as they can in the process. If the clouds make it unnecessary to ever download and actually own a song, how are the songwriters and artists going to recapture that lost income? As of now, the songwriter lobbyists are doing a good job of asking that question and fighting to establish fair payments for musicians.
The laws in place that cover interactive internet radio and subscription services did not imagine the day when streaming would eclipse downloads. That day has clearly arrived: “Streams of music are eclipsing everything,” Universal Music Group UK chief David Joseph recently told the Guardian. “It’s a different digital currency to downloading. You’re dealing with 175 million single tracks bought a year compared to 7 billion streams of music.” (from The Digital Music News). Just as technology has adjusted, the laws dealing with fair payments to the providers of content need to be modified.
The bottom line is that just as the cassette replaced the record, the cd replaced the tape and the mp3 replaced the cd, the cloud is going to replace the downloaded mp3. The clouds are rolling in and the artists may be left in the impending dark.