Ever wondered how that amazing track you found in a “Bangers to Kill For” playlist on Spotify got there? Or why some musicians released their albums digitally in one bunch lately, instead of doing the old and tried “touring/increase of name recognition/record sales” shtick? Do you want to know why Diane Warren’s name is as significant to the music industry as that of Sir Paul McCartney or Elvis? And, most importantly, how do you convert that sudden boost of popularity that your new song just experienced on SoundCloud into solid cash? Or, at the very least, solid numbers on the screen of your banking app (so “non-hipster,” I know).
One of the keys to seeing those numbers is understanding that “being talented” alone is often not enough to translate songs into dollar signs. All the books written by lawyers on the topic of the “music business” exist for a good reason. If you want to make music your livelihood, you need to treat it like any other business. What do I mean by that and how do you go about it? Let me show you.
Imagine: You are extremely talented, the voice of an angel, your mom and all her friends tell you how amazing you are. Seems probable so far, right? So, you go to your friend’s apartment (let’s call her Amy) and chill out. You listen to some music with a couple of friends, partake in a round or two of drinking adult beverages, and do some freestyle. You already had some ideas in your head, so you start a verse. You sing. It’s beautiful. Everyone is ecstatic. Now Amy has some recording equipment, and she thinks you guys can make a hit out of that verse. Amy’s friends throw a couple of lines into the mix. One of them sits around and thinks of the concepts. You sing and Amy records the music. At the end of the day, you’re sure that you have a hit. You can actually feel that, with the right dose of mastering and a little bit of auto-tuning this could be the next “Insert Popular Track Here.” You go home, put the track up on SoundCloud or YouTube and – who knew?! – It really IS a hit. There are hundreds of thousands of views and downloads. People are calling you the next Justin Bieber. You get a Direct Message from an A&R representative (“Artist and Repertoire” representatives source new artists to sign) of a major record label. They would like for you to come in for an interview.
Of course, this is a pipe dream. A best-case scenario. But do you know what you missed? Let me show you that same situation again, but from a lawyer’s perspective. Instant replay in “(s)law-mo,” so to say.
That recording equipment that was used by Amy to produce your hit – you didn’t happen to have Amy sign a “Work-For-Hire” agreement before allowing her to record you, did you? It looks like Amy now owns the Copyright to the sound recording of your new hit and will be the one reaping the majority of the benefits if the track is downloaded from iTunes/Amazon/Google Play. As the composer, you would get 9.1 cents per download out of her 99 cents. But doesn’t getting the whole 99 cents (less the platform’s percentage) sound better?
What about her friends that chimed in with their lines or general concept ideas? I would guess there was no Songwriter “Split Agreement” involved, and now you need to negotiate with some of them retrospectively. Some of them are even going to go after you with their own lawyers. Yes, believe me, once you’ve reached any kind of success, you will get sued. It might be some producer who helped you with a track, a (former) buddy who was in the room when you came up with the idea, a person who helped you with mastering in exchange for helping them with their taxes, or all of the above. Yes, all of them will sue you. And once they do, since you didn’t protect yourself by setting up a company that would take the brunt of the blame, they can sue you not only for your music-related income, but for any other personal assets, property, and even real estate that you own.
So, what do we have as a result here? You came up with the track. Your voice is amazing. Your mom was right this one time, it seems. You recorded a hit, a real wonder, once in a lifetime song. And now Amy gets all the profits and her friends are trying to freeze your bank accounts. You will have to sell your apartment in the city to pay them off because it’s money that you don’t really have.
The lesson? Amy is a horrible friend. Aside from that? Get yourself a good music attorney. I might not be much help with the former, but I will try to give you a tip or two about the intricacies of dealing with the latter and with what agreements a music lawyer should provide you. In this article, I will go over (1) the basics of the rights that musicians obtain from the moment that they create their music and (2) what additional steps they need to take to protect themselves under current legislation.
Buckle up, folks. Let’s see how the sausage is made.
The two types of Music Copyright
The most important thing that any music attorney must relay to a prospective client (if you already have somebody as your client and still didn’t tell them about this little tidbit, you might well be breaking one of the professional ethics rules on keeping the client informed, in my opinion) is the difference between the two existing types of music copyright under the Copyright Act of 1976. The act provides that for a work to be protectable, it must be an “original work of authorship fixed in any tangible medium of expression” and, furthermore, lists several categories of works in question.1 The two types that we are interested in are 1) the copyright in the musical composition (Composition Copyright) and; 2) the copyright in the sound recording (Sound Recording Copyright. I know, lawyers are very inventive with jargon). What is the difference between the two?
In the above-mentioned scenario, if, while enjoying your time at Amy’s apartment, you decided to put some of those concepts that were brewing in your head on paper (or any other tangible medium of expression), be it the lyrics of the future hit or its musical notes, then that expression would be covered by the Composition Copyright and you would be considered its author. However, the recording of your song, the actual version of your composition that Amy recorded using her equipment, creates a separate type of copyright, the Sound Recording Copyright. And, since it was Amy who recorded and produced your track, and since there was no agreement between the parties to determine the percentage of ownership in the newly created recording… well, you get the idea.
It is very important to distinguish between the two music-related copyrights in any publishing, demo, recording or other agreement where the transfer of ownership or licensing of the rights mentioned above is present, especially if you’re just starting out and those percentage points might be your only viable source of income for quite some time. Make sure any contracts you sign have a clear distinction between the two copyrights. Don’t forget to ask your music attorney or the counter-party to a contract the correct questions and make them clarify anything that you don’t understand. After all, you want to make sure that the judge, who’s going to be looking at your contract with the shady label that you signed when you were 18 and who knows nothing about the music industry, recognizes what rights to the song you gave away. Also, if you see the word “song” used in a contract without a proper definition as to what type of copyright the parties intend to cover by this term, run (in the direction of an experienced music attorney, preferably).
Now, how do you protect yourself in all of these scenarios and do you need to register your work with the government bodies and pay them some ridiculous fees? I’m glad you asked!
Why do you need to register your work? There is this myth going around that sending yourself a sealed envelope with a flash drive (throughout the years the tape became the CD, the CD became the DVD, and the DVD became a flash drive. O tempora, o mores!) would be good enough. Unfortunately, that might only serve as proof in some rare cases, where someone else is claiming the ownership of your song without having registered the song themselves. But in the real world, you are missing out on significant potential benefits of the registration.
Before I tell you the pros, let me cover some of the cons. The fact that there are not a lot of those cons only makes my duty of candor easier. It’s simple. For every work that you want to register you need to pay a fee: from $35 for a single electronic application to potential increases to up to $55 per application if there are multiple authors or the work in question was made for hire. Additionally, if the musical composition and sound recording are owned by different people, you won’t be able to register them with a single application and might have to pay double. Lastly, if you decide that the internet is the devil’s invention and end up filing your application on paper, you have to pay at least $85 per application. There are also loopholes that allow a musician to register an album (usually consisting of 10+ songs) in one title, for the price of one application. What else is there, aside from the fees? You have to register an account with the Copyright Office’s website or have your music or IP attorney do so (if they’re any good, they already have one). Upload a final, mastered track in the prescribed format onto the Copyright Office website (www.copyright.gov), and you’re good to go.
So, what does this process give you? Let’s look at those pros. Any infringement of your copyright (that is created by your “fixing” (meaning: recording in one way or another) an original work of authorship onto a tangible medium of expression, and not by registration, remember) leads to certain potential consequences for the infringers. Such an infringer could be an Internet pirate, a copycat, or a shady record company not performing its obligations on royalty payments to you as a songwriter. Take that “pirate” for ease of explanation. A person who decides to upload your track onto Apple Music and sells a hundred downloads would potentially steal the price of those downloads (minus all the fees to the administrators of your music and actual distribution platforms, payments to various funds and royalties to the songwriters) from you, correct?
The problem is that if you don’t have your copyright registered, the most you can sue them for is the amount of those damages (including interest and costs). This wouldn’t constitute that much, given the number of downloads. Is it worth it to hire a good IP litigation attorney to collect $40? That’s what the actual damages would amount to. However, if you were a smart and diligent professional, who treats music as livelihood and business, and who went through the hassle of hiring a music attorney (or even doing it yourself) to register a copyright to her music, then it might be worth it after all. The Copyright Act states that if your work was registered2, you could claim statutory damages in the amount of not more than $150,0003 per willful infringement, $750 to $30,000 per non-willful infringement and not less than $200 per innocent infringement, as well as attorney costs. Don’t think that you will get $150,000 for each download, since the copyright owner is usually restricted to one award of statutory damages regardless of the number of acts of infringement, whether they are separate, isolated or occurring over many years.4 However, regardless of whether it is $200, $750, $30,000 or $150,000 plus attorney fees – it all sounds a lot better than approximately $40, doesn’t it? Now, should you register your music with the Copyright Office? I think you know the answer.
Contracting with people along the way
This part is always tricky. Nobody wants to be the person who brings paperwork to a jam session. Nobody likes to ask that friend who is helping you out with radio promotions or DJ-ing gigs to sign a management agreement. We all hate it. It feels like it puts a strain on a relationship; somehow making it dirty and non-creative. But think, what would be more strenuous on your relationship with a friend and collaborator: a transparent agreement outlining responsibilities and percentages, or a lawsuit where both parties are going to try to prove that they were the reason for the song’s success? The latter seems more strenuous to me. These arguments often lead to an impasse. No matter how hard you argue that it was your chorus and not your friend’s verse that made the song a hit, the case law is clear that absent a written agreement between the parties, the courts will split the ownership 50/50. No judge wants to be responsible for the calculation of the worth of a particular note in a song.
So be that annoying person. Bring paperwork to a jam session. Better yet, have your lawyer prepare the paperwork, and send it out to all the parties involved days before the jam session, so that everyone has a chance to voice his objections and take part in negotiations for a song that has not yet been sold. It might sound like too much trouble, but you never know which song is going to be a success and where the lawsuit will come from. Be smart. Treat music as a business, not a hobby. And protect yourself.
Whom else do you need to have a contract with? Basically, everyone that helps you in the creation of the final version of your work along the way. Your producer, the one whose studio you used to record the track, the sound engineer who mixes everything, all of them can potentially claim that their input is entitled to federal copyright protection as well. In ABS Entm’t, Inc. v. CBS Corp5, the court found that a sound engineer’s remastering of a pre-1972 sound recording, through subjectively and artistically altering the work’s timbre, spatial imagery, sound balance, and loudness range, but otherwise leaving the work unedited, was entitled to federal copyright protection as a derivative sound recording, since it “has undergone sufficient changes.” This means that absent a proper agreement in place, all the above-mentioned participants in your success can claim ownership of your work in one way or another. How do you avoid this problem?
One of the possible solutions is making sure that all the people involved in your creative process assign any rights that they might have in the sound recording back to you, either in the form of a “Work For Hire” (WFH) agreement or as a straight-up assignment of rights. What is a WFH? It is an agreement that automatically transfers all the work performed by a producer, mixer, or sound engineer to you. You are the owner of the intellectual property – rights in the music –that comes out as a result. It’s the same document used by large companies to make sure that the work their independent contractors do becomes the property of the company and not that of an individual contractor. It allows such companies to be as secure as if the workers in question were the company’s employees (which would make their work performed in the “normal course of the employment” the company’s property). The second most common scenario outside the employment context is stipulated in paragraph (b) of Section 101 of the Copyright Act, which provides a list of the types of works that could be “specially ordered or commissioned for use”6 and be considered a work made for hire.
It is also important to include the “assignment clause” as an alternative in the WFH agreement in case a judge in a particular jurisdiction will have a problem with your sound recording being subject to the WFH agreement, since the statutory definition of a work made for hire ((Section 101(b) mentioned above) doesn’t mention “sound recordings” per se. However, the legal community has long ago found a loophole that allows the parties to presume either that the album is a “collective work” within the statutory meaning or consider an individual work to be one made for hire if there’s an employment relationship present (under sections 101(b) and 101(a) respectively). Once again, the safe option would be to have the sound engineer or producer in question sign the Work For Hire Agreement prepared by a competent music attorney. You will come out on top, having full ownership of your music.
Let’s look at that completely hypothetical, yet completely possible, scenario that I made up at the beginning of this article, taking into account everything that we have covered. Would you be so naive as to think that Amy’s your friend and there is no need for any written agreements? I don’t think so. I’m pretty confident that you would have her sign one of those “Work for Hire” agreements to make sure you are the owner of anything that comes out of that recording process. Would you enter into agreements with her buddies who pitched in with some lines or melody proposals? Of course, you would, since you want to make sure they do not get more than they contributed to the work in question, as opposed to the blanket 50% (or other equal share distribution if there were more than two collaborators). And would you register your copyright to both the musical composition and the sound recording once you have all of these agreements in place and you have a clear understanding, in black and white, about who owns what portion of which of the two copyrights? I think we both know the answer to that question, and I’m sure you want to know more.
And there are so many questions yet unanswered that I will gladly cover in future installments of this series. How do you protect yourself from creditors, wannabes, ex-team members and pirates? How do you make sure you are protected before problems arise? How do you make sure you get all the potential sources of music income covered? What is “sync” income? What are “mechanical royalties”? What is “ASCAP”? BMI? What do they do? What are distribution deals, administrations deals, and recording deals? Is there a benefit to creating your own label or self-publishing your music? What are the key issues that regularly arise in negotiating a record deal? As we like to say in the entertainment industry – to be continued…
List of Sources
• 17 U.S.C.A. § 102(a)
• 17 U.S.C.A. § 412.
• 17 U.S.C.A. § 504(c)(2).
• ABS Entm’t, Inc. v. CBS Corp., 2016 WL 4259846, at *1 (C.D. Cal. May 30, 2016), judgment entered, 2016 WL 3436443 (C.D. Cal. May 30, 2016).
• 17 U.S.C.A. § 101(b).
- 17 U.S.C.A. § 102(a)
- 17 U.S.C.A. § 412.
- 17 U.S.C.A. § 504(c)(2).
- H.R. Rep. No. 94-1476 at 162 (1976), reprinted in 1976 U.S.C.C.A.N. 5659, 5778: “A single infringer of a single work is liable for a single amount … no matter how many acts of infringement are involved in the action and regardless of whether the acts were separate, isolated, or occurred in a related series.”
- ABS Entm’t, Inc. v. CBS Corp., 2016 WL 4259846, at *1 (C.D. Cal. May 30, 2016), judgment entered, 2016 WL 3436443 (C.D. Cal. May 30, 2016).
- 17 U.S.C.A. § 101(b).