This is a guide to help first time songwriters and recording artists wrap their heads around the myriad issues they can encounter when striking out for the first time into the music industry.
Most songwriters generally understand that when they write a song they’ve got some rights to it, but not everyone comprehends precisely what it is they own or how they can leverage those rights to generate revenue. Additional levels of complexity arise when new parties are introduced, such as a publishing company or record label, or even a fellow musician or studio tech.
- First things first: Musical Compositions vs. Sound Recordings
- What kind of rights does the Copyright owner of a song have?
- Who owns what then?
- What’s the difference between a publishing company and a record label?
- How do I make money on my song?
- Summing it all up
Keep in mind this guide is for informational purposes only and isn’t a substitute for legal advice. Remember that all matters are unique and you should contact an experienced entertainment attorney with any particular questions you may have.
If you’re familiar with what a Copyright is, proceed. If not, check this out. That link at least gives you some of the basics (i.e., why registration is important, and thus and so).
Before we get into what rights we have, how we own our song, or what we can do to amass rock star wages with our smash new single, you need to understand the difference between an “underlying musical composition” and a “sound recording”. The good news is, the reasons it’s imperative for you to get your mind wrapped around this are fairly straightforward: (1) these are two different Copyrighted works; (2) our rights and earning potential are different depending on which kind of Copyright we own or are attempting to profit from; and, (3) the owners of the composition and sound recording can be (and very often are) different people.
A “musical composition” is the music and any accompanying words (“lyrics”). It’s all the ideas that make the song what it is. It’s the thing that can be written on a sheet or recorded in a studio at a later date. A “sound recording”, by contrast, is the recording of the performance of that musical composition (the “master”, if you will). This is what happens when you lay down a track in the studio.
It’s the song itself versus the recording of that song.
One of the easiest ways to distinguish the musical composition from the sound recording is to think about who the author of the work is. With musical compositions, the authors are typically lyricists and composers (“songwriters”). With sound recordings, the authors could be the songwriters if they’re doing the actual performance (e.g., as with a “singer-songwriter”), but they could also be the record producer who edits and masters the recording, or the band for whom the songwriter wrote their tune, or any combination thereof.
The U.S. Copyright Office provides this circular as further guidance.
Section 106 of the Copyright Act lists six exclusive rights Copyright owners receive.
Exclusive Right of Reproduction
Ladies and gentlemen, this is the one that says, “only you, the owner, get to copy this artistic masterpiece of yours”.
This is the most important right given to the owner of a Copyright. As far as we’re concerned for the purposes of this guide, this means no one can reproduce (“copy”) your musical composition or sound recording without your permission.
Think about the distinction between musical composition and sound recordings as you consider the following scenarios (and how they may apply for you and your song):
Question 1: Does it matter that he hasn’t recorded “SexyBack”? Can someone else record “SexyBack” since Justin hasn’t?
Answer 1: No. Justin obtained a Copyright to the musical composition the moment he fixed it into a tangible medium of expression (when he put the lyrics and chords on paper). Without Justin’s permission, no one else can go record “SexyBack” even though he has yet to do so himself (because to copy the song in any way infringes his Copyright).
The ball is in the songwriter’s court to license as s/he pleases when s/he writes a song. As in the above hypothetical, it did not matter that the prince of pop had yet to produce the song with Timbaland or finalize all the various instruments and vocals. At this point he still had a valid Copyright to the underlying musical composition of “SexyBack”, and the composition is where song rights begin.
Question 2: Did Justin lose his right to reproduce “SexyBack” when he gave permission for DefJam and Rihanna to record it?
Answer 2: Not without an agreement stating as much. Nothing in the fact scenario above contemplates licensing “SexyBack” to DefJam/Rihanna for anything other than sound recording rights. This means, DefJam and their artist, Rihanna, can master it, but Justin’s rights haven’t gone anywhere.
In the above scenario, because Justin still has the right to reproduce the underlying musical composition of “SexyBack”, he’s owed royalties any time DefJam reproduces (note I’m not saying “sells”) a CD, cassette or digital copy of Rihanna’s “SexyBack”. Why? It’s still his musical composition to reproduce, he just gave DefJam and Rihanna permission to record it. See how important the right of reproduction is? Keep this in mind for our discussion of making money from your music, which will be discussed below.
Question 3: What reproduction rights does DefJam have with the Copyright to the sound recording?
Answer 3: DefJam has the right to reproduce the Rihanna version of “SexyBack” onto CDs, cassettes, vinyl, etc. without having to ask Justin every time they do so. DefJam still controls an exclusive right to reproduction that is protected by Copyright law, it just so happens that every time the particular recording is reproduced, so too is Justin’s musical composition (meaning Justin will still benefit from a reproduction of the sound recording absent agreeing otherwise).
Exclusive Right to Make Derivatives
Think about the exclusive right to make derivative works like this: if you own the Copyright for a song, only you can give permission to make something “derived” from that song. Adaptations, transformations, translations and new works “based on” your song are (for the most part) entirely within your control as the Copyright owner.
So, if you write a song and let’s say someone wants to sing it in German (a “translation”), they would have to seek your permission because a translation is a derivative work of your song.
“Sampling” is perhaps the biggest issue that falls into a discussion of derivatives. Sampling is when you take a piece of an existing Copyrighted work and combine it with a new work (i.e., you take a portion of an existing song/track and want it to be part of your new, different song). This is especially common in genres like Hip-Hop and R&B music.
Recall that Copyright protection applies to both the composition and the sound recording itself.
Question 4: If the version of “SexyBack” AGL wishes to sample is solely from the DefJam/Rihanna master, does AGL still need Justin’s permission to sample a portion of “SexyBack”?
Answer 4: Yes. Rights to the underlying musical composition belong to Justin and those are powerful rights. Both Justin (song owner) and DefJam (owner of the Rihanna-master) have separate rights to create derivatives. AGL will need permission from both.
Question 5: Does the result change if AGL decides to use only a very small portion of Rihanna’s recording of “SexyBack”?
Answer 5: No. There’s no clear rule to determine how much sampling is “too much” and AGL risks Copyright infringement if he does not seek the proper permission from both Justin and DefJam.
Warning: Do not infringe someone’s Copyright because your friends told you that you were able to “sample a small amount”! I hear “can’t I sample up to six seconds without an issue?” quite a bit. The answer is no, one thousand times, unless you want to take this one to court.
Question 6: What can AGL do to reduce the number of licenses he’ll need to negotiate to sample “SexyBack”?
Answer 6: If AGL decides he doesn’t have to have the Rihanna version of “SexyBack” on “This One Is For The Ladies”, he can seek Justin’s permission (and need not seek DefJam’s) if he or one of his musicians wishes to perform the portion of the song he wanted to sample.
It would be prudent here to mention that artists who are attempting to raise “fair use” or “parody” defenses study the following case: Campbell v. Acuff-Rose, Inc., 510 U.S. 569 (1994).
Exclusive Right to Distribute
Copyright owners have the exclusive right to distribute a song. This protection means no one can distribute copies (sell, lease, etc., either in the physical or digital marketplace) of your song without negotiating a license with you.
This sounds pretty simple, but there’s a number of particular rules that add to the level of complexity based on whether we’re dealing with a physical (like a CD or cassette) copy or digital (like an .MP3 or .wav file) copy. The “First Sale Doctrine” allows someone who purchases a physical copy of a Copyrighted song (i.e., someone who buys a CD) to resell that particular copy. That’s why it’s perfectly fine for someone to sell an old CD or record on a website like eBay or Amazon. What they can’t do is, for example, copy that CD (burn it with third party software and redistribute new copies). For the same reasons, if the copy of a particular album is entirely digital (files on a hard drive), the First Sale Doctrine doesn’t allow any kind of transfer without permission from the Copyright holder.
The right to distribute a song can also raise issues that apply to television and film which refer to a special kind of license called a “synchronization license” (or, “synch license”). We will discuss these in the section below on making money from your song.
Exclusive Right of Public Performance
The exclusive right to perform the song publicly is a big protection for songwriters. Without the Copyright holder’s permission, no one can perform the song in a club, or broadcast it over the radio or TV.
At this point you may be asking, “How can I possibly police this sort of right?” The good news is that there’s something called “Performance Rights Organizations” (“PRO’s”) out there. These organizations represent millions of songwriters and their job is to essentially monitor what’s being played. The big ones you should be aware of (and register your songs with as a songwriter) are: ASCAP, BMI, and SESAC. These are the people that work with songwriters to issue performance licenses to all the clubs, radio stations, etc. that wish to publicly perform the songwriter’s Copyrighted music.
Note also that there is some special context that needs to be addressed when it comes to digital transmissions and online streaming services, as anticipated in the Digital Millennium Copyright Act (the “DMCA”). We will discuss this in further detail below.
Exclusive Right to Display in Public
A Copyright holder has the exclusive right to display the Copyrighted work in public. This is different than “performance”. This right protects, for example, someone from putting your song lyrics on their website without your permission.
Digital Transmission Performance Rights for Sound Recordings
Section 106(6) of the Copyright Act affords the owner of a Copyright in the sound recording the following protection: “to perform the copyrighted work publicly by means of a digital audio transmission.”
Note that 106(6) only applies to “sound recordings” via digital performance. This is because this right is already bestowed on the owner of the composition in 106(4)’s protection for “public performance”.
Essentially what happened was this: Performing artists (if different than the songwriter) and their record labels weren’t receiving any money on the digital transmission of the Copyrighted performance, even though songwriters were. Congress decided this was unfair and enacted the “Digital Performance Right in Sound Recordings Act of 1995” (the “DPRA”). This and the “Digital Millennium Copyright Act of 1998” (“DMCA”) made it so songs played by digital transmission would require royalty payments at a rate set by federal law.
A company called SoundExchange collects royalties on recordings from online music streaming services (going back as far as 1996). This is a free service appointed by the Library of Congress and should be taken advantage of by all artists.
The answer to this isn’t as simple as you may think, but the short version is: “Depends on who is involved.”
Longer version: You need to carefully evaluate the landscape of your situation and ask yourself a few questions to accurately nail this down. For example, did you write the song with someone else? Did anyone else contribute in any way to the song (this could be as simple as a guitar riff or lyric)? Where did you record your song (i.e., with your own equipment or did you use the resources of a studio)? Is a publishing company or record label involved? Have you signed any contracts with any of these potential parties? Did you write the song working in your capacity for someone else?
If you’ve answered “yes” to any of the above questions, then you may not own all (or any) of the copyrighted work, regardless of whether it’s a musical composition or a sound recording. Let’s tackle these one at a time so you can see what I mean.
Co-Authorship and Collaboration
Be wary when you collaborate with others on your song, no matter how insignificant their contribution may seem.
The Copyright Act (17 U.S.C. § 101) anticipates that when two or more people are collaborating on a song, a “joint work” is authored. The practical result here is that, absent evidence the parties contributed unequally or that the parties’ intent was for royalties to be divided a certain way, Copyright protection (and consequent revenue) is going to be awarded to each co-author equally. This is fine if that’s your objective (maybe you want to share profits equally with all of your bandmates that genuinely did assist with the songwriting or recording process). Yet, if that’s not your intent, it can be very problematic to later prove the existence of some other understanding between the parties.
Do yourself a favor and preempt any disputes which could arise after the song becomes a tremendous success. Discuss the matter, in advance, with those who will be collaborating with you on your song, and assent to bind yourselves to a clear agreement which spells out how ownership of the Copyright and various royalties will be managed.
Contracts, Publishing Companies and Record Labels
Obviously, contracts shouldn’t be signed without understanding what you’re agreeing to. However, the hard reality of the music industry is that artists who are approached for the first time by major publishing companies or record labels generally can bet they won’t have a lot of negotiating power–a fact the publishers and labels are well aware of. Before you let your excitement to be a part of the music industry walk you into an unfavorable albeit binding scenario, know the following types of things can and do occur.
It’s common to see clauses in music agreements that assign the publishing company the rights to the musical composition, or the record label the rights to a sound recording. Some clauses are negotiable, and some generally aren’t, but you should consult a knowledgeable attorney before signing your first music contract. The reason is simple: you need to be aware of who is about to potentially stake a claim in your songs.
Another issue that frequently pops up is the term (the “duration”) you’re locked into a particular deal with a publisher or label. In a typical contract for a new artist you’ll be given a one year “trial” term. After the trial term concludes, the publisher or label has the option to evaluate your success and thereafter invoke an option to continue the deal another year. These options generally can go on for the next three to five years after, assuming you’re a keeper.
Consider what this may mean for you in the event you are approached by a different publisher or label who offers better terms: (1) Do you still own the Copyright to your musical compositions or sound recordings, or have you sold these to the publisher or label you’re currently signed with?; (2) Did your document have a clause allowing you to renegotiate the terms with the original publisher or label if they invoke their option?; or even, (3) Is this publisher or label a place you see as a “fit” for you?
For more information on potential contract dangers, take a look at this article by Robert Carter.
The time to engage an entertainment attorney is before you sign, not after.
Works for Hire
Let’s say someone hires you to write a song for them. If you’re a new songwriter in the industry with little bargaining power (as is frequently the case), you may think that sounds like a pretty good gig. However, the consequence of writing a song for an employer in this type of situation could very well give rise to what’s called a “work made for hire”. The bottom line with works made for hire is that the employer (which can be a company or individual), rather than the employee (in this hypothetical, you), will be deemed the author and hold the Copyright protections.
Remember those contract dangers we were discussing above? Here’s another: a common clause that comes up in a songwriter’s contract with a publishing company is one that declares the things you author are “works made for hire” for the company.
If you’d like more information on this subject, check out this circular. For more information on the factors courts use to determine if something is a “work made for hire”, See Community for Creative Non-Violence v. Reid, 490 U.S. 790 (1989).
Let’s very briefly touch on the differences between publishing companies and record labels, as generally these aren’t interchangeable entities (note, however: sometimes a publisher has a preferred label for its authors and a label has a preferred publisher for its performers, and sometimes a single company wears both hats).
One way to distinguish the two is to think about the differences in rights created by either a “musical composition” or a “sound recording” (discussed above).
A publisher deals with the aspects of songwriting and management of the composition. The role of the publisher is essentially to connect people with your song in order to generate revenue. Publishing companies assist songwriters with licensing, distribution, accounting, collecting royalties, and the like (this is called “administration”). In exchange for the administration of the songwriter’s Copyrighted work, a publisher will generally receive a percentage or all of the Copyright ownership, thereby receiving a share of the royalties. I would recommend taking a look around on the The Harry Fox Agency’s website if you’re interested in learning more about publishers.
By contrast, a record label handles aspects of performance and sound recording. In some cases, a record label will also serve as its own publishing company, such as with the “big three” (which identifies, Universal Music Group, Sony Music Entertainment, and Warner Music Group). Basically, these are companies that find performers for the composition (assuming the songwriter is not also a performer, or perhaps if the label desires one of their performers to cover the song), record or master the songs, own Copyrights to the sound recordings, and market those recordings.
There’s a few major ways you can leverage your song for revenue and they all involve a straightforward concept: issuing licenses to your Copyrighted work in exchange for fees (“royalties”). Some of these royalties operate pursuant to law, others can be negotiated.
A mechanical license applies to the Copyright holder’s “right to reproduce” and can be the most significant source of income. Remember that if you write a song no one else can reproduce that song without your permission (permission is given in the form of what’s called a “mechanical license”). So, when a record label wants to reproduce a song in “devices serving to reproduce the composition mechanically,” and pays money for that right, the resulting payment is what’s called a “mechanical royalty”. Absent an agreement to the contrary, these royalties are paid every time a song is reproduced, not just when it is sold!
The government sets a maximum amount for mechanical royalties, which is currently $0.091 cents for songs under five minutes. The rate goes up when the song is over 5 minutes. It also applies whenever your song is covered by other people.
So, I understand that roughly a dime doesn’t sound like that much money. Think about it a bit differently. Let’s say your song which you have the composition rights to appears on a CD that a label manufactures 100,000 copies of. Assuming you have assigned away nothing to a publisher, you receive (100,000 x $0.091) $9100.00. Now consider if that CD was produced just as many times, only it had two of your songs on it ($9100.00 x 2). That’s $18,200 for two songs, on a CD that wasn’t even manufactured an unreasonable amount.
Mechanical royalties are the primary source of income for publishers, and will often be a hotly negotiated part of your music contract. A good deal with a publisher will ensure songwriters receive a fair return on mechanicals in exchange for the Copyright to the work.
Public Performance Royalties
This is likely the second most important source of revenue for a Copyright owner. Almost every time a song is performed publicly, minus a few exceptions, the holder of a Copyright is entitled to public performance royalties. This is a broad source of revenue because public performance means, speaking practically: live in concert, on a record, or broadcast over radio or television.
In order to monitor public performance royalties, you should engage a Performance Rights Organization (“PROs”) such as ASCAP, BMI, and SESAC. PROs are in the business of issuing blanket licenses to those who wish to broadcast (or “publicly perform”) the songs of their affiliates (the songwriters or publishers). PROs assist artists in generating revenue by keeping track of air play and subsequently collecting and distributing monies owed to the Copyright owner (minus a commission fee).
A “synchronization license” is an agreement the Copyright owner of the song negotiates with someone (usually a producer) who wants to use the song in film or television (including advertisements). This is tied with the Copyright owner’s exclusive rights to reproduction and distribution. Generally, a one-time fee is paid by the producer in exchange for the right to distribute and reproduce the Copyrighted song in their movie, show or advertisement. A similar permission for the sound recording is given in what’s called a “master usage license”, which is negotiated with the sound recording’s Copyright holder.
Keep in mind that synchronization licenses are different from public performance licenses and operate as a separate, distinct source of revenue. For example, every time a movie is rerun on television, a PRO still monitors the performance and royalties are incurred in that manner as well.
Although not as important as it once was, be aware that music contracts also anticipate royalties for the sale of any sheet music. Think: sales of guitar tabs and lyrics for your Copyrighted song.
The music business can be a sexy, fun and exciting industry to get into, but be smart about your rights.
Know the difference between a song and a recording of the song. Know there’s different protections given to both the song and the recording, and what they are. Learn about who you’re going into business with and consult an attorney to review your contract for you. Know your role and value as the author of a song or studio tech. Sign up with a PRO of your choice as well as SoundExchange. Know the sources of revenue for your song and which generate the most money for you and those around you. Have fun, and proceed with caution.
I encourage you to study this guide, come up with questions, and contact me with any you have.