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LegaL guide for Musicians Author – Matthew Gorman, LL.B.” Layout/Illustrations – Chris Tucker

This guide is intended for legal information purposes only. if you need legal advice, please seek assistance from a lawyer. LEGAL GUIDE FOR MUSICIANS MATTHEW GORMAN, LL.B.

PArT I: COPyrIGhT In The MuSIC InduSTry P. 1 PArT II: PuBLIShInG yOur MuSIC P. 9 PArT III: reCOrdInG P. 15 PArT IV: BuILdInG A MuSIC BuSIneSS – The BASICS P. 20 PArT V: LeGAL COnSIderATIOnS fOr LIVe PerfOrMAnCeS And TOurS P.29 ACknowledgements Music from Canada’s east coast has inspired me my entire musical life, beginning with the amazing indie scene in yarmouth, nova Scotia more than 15 years ago. Since then, I am continuously blown away by the world-class talent that has and continues to come from the Atlantic Provinces. This Guide is dedicated to all the east coast musicians out there trying to make their mark, whether on the Atlantic Canadian, national, or inter - national stage. Thanks very much to Marty Glogier and the Artist Legal Information Society for the opportunity and forum to make this project a reality. Also, a big thanks to Chris Tucker for his amazing images and layout work. Several lawyers and musicians provided either feedback on sections of the Legal Guide for Musicians or practical information you don’t get while sitting behind a desk, and I’d like to acknowledge them: Bob Tarantino, Stewart hayne, Ben Caplan, Peter Lamey, Christian hogan, John Mullane and Sean farmer.

for all those in the music industry reading this Guide , I hope this information provides clarity on some issues and assists your career in some way.

-Matt Gorman, LL.B.

COPyrIGhT In The

PArT I: MuSIC InduSTry

1.IntroduCtIon Although copyright protects creators by or sheet music with lyrics. The need to to CopyrIght preventing others from copying a sub - ‘fix’ a work stems from the fact that copy - stantial part of a work (such as a piece of right does not protect ideas, only the ex - Let’s start with the basics: Copyright law can music), the purpose of copyright is to pression of ideas. Legend has it that Paul be described as a subgroup of a broader area find a balance between (1) ensuring the McCartney composed the melody for of the law known as intellectual property . un - creator obtains a just reward for their “yesterday” in a dream back in the 60s. like real property (e.g. your house) and per - work and (2) promoting the sharing and As awesome as that is, this iconic song sonal property (e.g. your lawn mower or distribution of art and music. In other would not have received copyright pro - car), intellectual property deals with intan - words, although the rights of creators tection until it found its way from Paul’s gible forms of property such as copyrights, and authors need to be protected, the subconscious to a napkin or the record - trademarks, and patents. Copyrights refer to copyright system shouldn’t be so rigid ing studio. artistic and literary works, such as musical that you get sued for whistling a Beatles compositions and recorded music. Trade - tune. Courts and lawmakers have been Generally speaking, copyright lasts for the marks are designs, logos, sounds, or words fine-tuning this balance for decades, life of the author plus 50 years. 5 for sound used to distinguish products or services in which has been particularly challenging recordings, the term of copyright has re - the marketplace, which can include your in the information age where copyright cently been extended to the earlier of (1) 70 band name (discussed further in Part IV). protected work is being created and years from publication (i.e. release to the Patents refer to new and useful inventions shared online at lightning speed. public) of the song and (2) 100 years from (outside the scope of this Legal Guide for Mu - recording 6. for example, if you recorded sicians , but contact a lawyer or patent agent your song in 2000, but waited until 2035 if you think you have invented the next mil - 2.how do I get A before publishing, copyright protection in lion dollar idea or product). CopyrIght? the sound recording would accrue until 2100 (100 years from the recording date) Technically, copyright means the sole right If your work is ‘original’, ‘fixed’, and you are not 2105 (70 years from publication). See to produce or reproduce (i.e. copy) your a Canadian citizen, the work will automati - work or any substantial part thereof 1. This cally attract copyright protection. you don’t right prevents others from copying a sub - need to do anything else - it’s that simple. 1 See section 3(1), Copyright Act , RSC 1985, c C-42 stantial part of your work without your 2 Recording studio located in Halifax, Nova Scotia consent. The holder(s) of copyright have, Original means that the work is not copied 3 Ditto. subject to some exceptions discussed below, from someone else and shows the exercise 4 CCH Canadian Ltd. v. Law Society of Upper exclusive control over a work. for songwrit - of skill and judgment. 4 This does not mean Canada , [2004] 1 S.C.R. 339, 2004 SCC 13 ers, this means that you, the songwriter, that the work needs to be particularly good 5 Technically, it is for the life of the author, the re - have the right to control what happens with or even creative. mainder of the calendar year in which the author dies, the song you just recorded at echo Cham - and 50 years following the end of the calendar year ber 2 , Sonic Temple 3 , or on your Mac using Fixation means that the work is fixed in (see Section 6, Copyright Act , RSC 1985, c C-42). GarageBand. some tangible form such as a recording 6 Ibid, Section 23(1.1)

1 Bob Tarantino’s article for a much better first copyright owner: ers listed for his hit “Sorry” (which is the explanation. subject of a lawsuit at the time of writing (1) for sound recordings, the this Legal Guide for Musicians – see below for maker of a sound recording owns the juicy deets). 3. do I need to regIster the copyright in the sound record - my CopyrIght? ing. 9Although there is not tons of If you are thinking about co-authoring a guidance from the courts on what song or if you regularly collaborate with It is unnecessary to register your song with “maker” means under the law, it is other musicians or producers, retaining a the Canadian Intellectual Property Office . As defined as the person who makes lawyer to draft a Co-Author or Collabora - discussed above, once your song is fixed, as - the “arrangements” for the sound tion Agreement is highly recommended, suming it meets the threshold of originality, recording, which could include a which would confirm the co-authors, you automatically have your copyright. label that books the studio time, ownership of copyrights, potential rev - however, registering your copyright has contracts with the session musi - enue split, and any rights and restrictions some added benefits in an infringement cians, and pays for the recording, that might apply. The music ‘biz’ was built case and is good evidence that your copy - for example. Musicians will be on handshake deals, but confirming your right exists (in case you have to prove it in “makers” of their own record if rights in a written agreement is always court). you can register your songs with they make the arrangements recommended. SOCAn (discussed further in Part II, section themselves (e.g. funding, booking 4, although SOCAn registration is not studio time, etc.). ‘proof’ of coypyright) or even email a copy 5. If you Are the of the digital file to yourself, which could (2) Where a work is made in the CopyrIght owner, corroborate the date copyright subsists. course of an artist’s employment, the whAt rIghts do you hAve? first owner of the copyright is the employer. 10 for example, if you 4. ownershIp Copyright is sometimes referred to as a signed a record deal that effectively of CopyrIght “bundle” of rights. That is, once you own a makes you an employee of the copyright, there are several rights that flow record company, anything you write under copyright law, the author and the from this ownership. Generally speaking, during the term of your employ - owner of the work are two different concepts, we can break these rights into “economic but the author of a work is the first owner of the ment would be owned by the label. rights” and “moral rights”. copyright 7, subject to some exceptions dis - If there is more than one author (that is, if the cussed below. The author is the person who song is co-written by two or more people), created the work, while the owner is the per - Economic Rights: things can get a bit complicated. A joint owner son who holds the economic rights in the needs to establish that they made some sig - work (the copyright holder). Since the au - nificant original expression/contribution to Economic rights are the rights you are going thor of a work is the first owner, the author the work, keeping in mind that the contribu - to hang your hat on when trying to make and the owner will normally be the same tion need not be equal to that of the other co- money. Some of these economic rights in - person until copyright is assigned by written authors. One court case involving a dispute clude the following: 8 agreement . for example, copyrights may be over Sarah McLachlan songs held that, in ad - transferred from the author (e.g. the song - dition to significant expression, there needs (i) The sole right to produce or re - writer) to a music publisher, who is then to be an intention among co-authors of the produce the work or any substan - tasked with commercializing the song (more joint authorship. 11 Although each case will on publishing in Part II). The songwriter con - be decided based on its unique set of facts, it tinues to be the author of the work, but once is fair to say that minor suggestions like, “hey 7 Copyright Act , RSC 1985, c C-42, section 13(1) the publishing deal is completed, the music man, you should put a capo on the first fret 8 As per section 13(4) of the Copyright Act , RSC publisher becomes the owner (or part of the guitar”, probably won’t attract co-au - 1985, c C-42, an assignment of copyright is not valid owner) of the copyright in the musical com - thorship status. unless it is in writing and signed by the owner. position. 9 Section 18(1), Copyright Act , RSC 1985, c C-42 for modern pop hits, it isn’t unusual to see 10 Section 13(3), Copyright Act , RSC 1985, c C-42 There are two notable exceptions to the many registered authors of a song. for ex - 11 Neudorf v. Nettwerk Productions Ltd ., 1999 CanLii general rule that an author of a work is the ample, Justin Bieber is one of five songwrit - 7014 (BC SC) 2 tial part in any material form 12 - the author’s work is not unlawfully “dis - and the sound recording copyright for use this includes recording it, making torted, mutilated or otherwise modified.” 18 of the master recording (usually owned by sheet music, featuring the song on The paternity right is the right to be named the record label). Once I find out that the a TV show or movie, or making a as an author of the work, to be named cost to secure the master recording for song available for download 13 ; under a pseudonym, and the right to be “firework” is my entire movie budget, I de - anonymous. Moral rights can be waived by cide to pay my friend, Jim, $200 to record (ii) The sole right to perform the an author, but they cannot be assigned. 19 the “firework” melody on his Korg organ. work or any substantial part in In other words, an author may assign their In that situation, I still need to secure rights public 14 - this includes a live per - copyright in a musical work to a publisher, for use of the musical composition copy - formance or playing the recording but the author always maintains their right as I am still reproducing the song’s in public (these ‘public perform - moral rights, which can only be waived by melodic structure, but not the sound ance rights’ are assigned to contract. Moral rights might become an recording copyright as I am using Jim’s ver - SOCAn if you are a member); issue if a publisher places your song in an sion of “firework”, not Capital records’ ver - advertisement for cigarettes or Cialis. sion. Since the song is being paired with (iii) The sole right to make a visual images, I may also need to secure a sound recording of the work synchronization license, but more on that which may be mechanically re - 6. musICAl ComposItIon in Part II. produced or performed 15 - this in - CopyrIght vs. sound cludes reproducing the work on reCordIng CopyrIght If you are serious about your music, you Cd, vinyl, cassette, and the right to need to control the ownership of your mu - approve the recording of a cover sical composition copyrights and sound version of the work; and If you remember anything about this Legal recording copyrights well before publishers Guide for Musicians , this should probably be it: and record labels come into the picture. If (iv) The sole right to communi - Whenever you are dealing with a piece of you play in a band or frequently collaborate cate the musical work to the pub - recorded music, there are two distinct copy - with other musicians, for example, a writ - lic by telecommunication 16 - this rights at play: (1) the musical work copyright , ten contract is a good way to establish who includes broadcasting the work on which is the musical composition comprising owns what with respect to the musical television or radio or streaming of notes, instrumentation, melodies, etc. and compositions (Band Agreements are dis - the work online (these rights are (2) the sound recording copyright , which is the cussed in Part IV). furthermore, when also assigned to SOCAn if you are master recording of the musical composition. working with the person/people involved a member). in the recording process (e.g. producer or Subject to an assignment of copyright to a sound engineer), ensure you determine furthermore, a performer has a copyright publisher or record label, the author/creator from the outset who will own the musical in their performance (i.e. live or recorded per - of the musical composition would gener - work and sound recording copyrights and formance), which consists of, for example, ally retain copyright in the musical work whether the producer, for example, will ex - the sole right to communicate the perform - copyright while the performer of the song pect any royalties associated with the mu - ance to the public and record it. 17 This on the record and/or producer would retain sical composition or sound recording means that a performer has the right to pre - copyright in the sound recording. If you are copyrights. vent others from recording their perform - the songwriter and performer on the ance and broadcasting the performance record, you would be granted rights to both without permission. More on live perform - the musical work copyright and sound ances in Part V. recording copyright. 12 Section 3(1), Copyright Act , RSC 1985, c C-42 13 Entertainment Software Association v. Society of Any of these economic rights are the The following example illustrates the differ - Composers, Authors and Music Publishers of owner’s to assign or license as they please. ence between the two copyrights: if I’m Canada, 2012 SCC Moral Rights: making a film about the history of fire - 14 Ibid, section 3(1) works and think it would be appropriate to 15 Ibid, section 3(1)(d) Moral rights comprise of two main rights: have Katy Perry’s “firework” play during the 16 Ibid, section 3(1)(f) (i) the integrity right and (ii) the paternity opening credits, I would need to secure a li - 17 Section 15(1), Copyright Act , RSC 1985, c C-42 right. The integrity right protects the hon - cense for both the musical composition 18 Ibid, section 28.2(1) our or reputation of the author and ensures copyright (usually owned by the publisher) 19 Ibid, section 14.1(2)

3 7. whAt’s the deAl 8. users’ rIghts - • fair dealing 24 – This right al - wIth Cover songs? exCeptIons to lows a user to reproduce copy - CopyrIght right protected work if: As discussed, only the copyright owner has the right to reproduce, make a sound As previously discussed, the goal of copy - (a) it falls within one of the follow - recording, perform, etc. their copyright right law is to strike an appropriate balance ing categories (i) criticism or review protected material. Therefore, if someone between owners’ rights (the artist or who - (e.g. reproduce snippets of music wants to cover a song (i.e. reproduce it) ever they assigned their rights to) and users’ and lyrics for an online record re - they have to get permission to do so, rights (the music consumer). for that rea - view), (ii) news reporting , (iii) research which usually takes the form of a license . son, the Copyright Act creates some excep - (e.g. reproducing 30-second clips of A license is essentially permission to use tions to copyright and authorizes users to songs in a record store for cus - copyright protected material based on use copyright protected material that might tomers), (iv) private study and educa - terms set out in the license. 20 To repro - otherwise constitute infringement. The fol - tion (e.g. burning a copy of essential duce a work on a physical medium such lowing is a non-exclusive list: neil Peart songs for my drum stu - as vinyl, Cd or tape, you would require dents), or (v) parody and satire (yes – mechanical license what is called a (more • non-commercial user-gener - Weird Al yankovic falls within this on that in Part II, Section 4). Assuming ated content 21 – This is some - category, but he obtains permission you secure the mechanical license with times referred to as the “mash-up” from songwriters before recording the rights holders (typically through the exception. This right allows a con - the parodies. Parodying more than a CMrrA – see Part II), anytime you sell a sumer to use copyright protected few lines/phrases is likely not excus - record with the cover song on it, you works to create a new work, so long able as fair dealing); and must pay the original songwriter (or the as (i) the original author is identi - (b) the dealing is “ fair ” based on publisher, depending on who holds the fied, (ii) using the work does not musical copyright) 8.3 cents per copy factors such as (i) the amount of the have an adverse effect on the origi - dealing (for example, are you repro - manufactured where the playing time is nal work, and (iii) the new work is 5 minutes or less. An additional 1.66 ducing 4 seconds of the song or 4 for non-commercial purposes. for minutes); (ii) the economic effects cents is added for each extra minute. The example, this might include a fan rate is a bit higher in the u.S. for the re - on the author (might apply to my video of me playing drums to a rush drum video if no one is buy - production of musical works by online medley of my favorite rush songs. music services, see the CSI Music Canada ing rush records anymore because website , which has a different royalty rate they prefer listening to my neil structure. If you are doing a video of the • reproduction for private Peart collage), and (iii) the purpose cover (like youTube), you also technically purposes 22 - This is sometimes of the dealing (for example, this fac - require a synchronization license (again, referred to as the “format-shift - tor may not be an issue if I give the more on that in Part II). This is required ing” exception. This right allows a track away for free but may be an when the song is paired with visual im - consumer to reproduce copyright issue if I am using the reproduction ages. Presently, youTube has a deal with protected work for private pur - for commercial purposes). certain songwriters/publishers of origi - poses. for example, I could copy As you can see, lawmakers and courts have nal material where the songwriter/pub - songs purchased from iTunes a difficult job when trying to balance the lisher can either request that a video that onto my iPod or other device. rights of authors to control and commer - incorporates copyright protected mate - rial (like a cover version of a song) be • Backup copies 23 – This right taken down or earn royalties off the cover allows users to create “backup” 20 For example, the license may dictate how long the through ads. See youTube’s take-down copies, so the user is not infring - song may be used, fees payable to the copyright policy and Content Id program for more ing copyright by transferring a owner, limitations on use of the song, how the license information. Strangely enough, many music library from a laptop to an may be terminated, etc. artists have achieved stardom through external hard drive, even though 21 Ibid, section 29.21 youTube by posting covers, most of such an act is technically a repro - 22 Ibid, section 29.22 which were done illegally. duction of the works. 23 Ibid, Section 29.24 24 Ibid, Section 29

4 cially exploit their work with the rights of the new work. If you use a sample for non- if you plan to use your recording for com - users to access and share copyright pro - commercial purposes, you might get away mercial purposes, the sample should be tected work as freely as possible. with it if the copying satisfies the require - cleared before you use it. This includes ob - ments for non-commercial user-generated taining a license that covers use of the mu - content (see section 8, above). All other sical composition, the sound recording, or 9. derIvAtIve works sampling for commercial purposes is con - both. Clearing samples could be a time- sidered infringement if it is deemed to be consuming process, so be prepared. To se - The concept of ‘ derivative work’ is an Amer - substantial (further discussion on infringe - cure a license for the song you could try ican concept, but it gets talked about collo - ment in section 11, below). As of the writ - contacting the song’s publisher, which quially in Canada. A derivative work is a ing of this Legal Guide for Musicians , a you can find through the SOCAn, work that is based on one or more works Canadian court has yet to consider the ASCAP, or BMI websites. The license for that already exist. for example, if I take a practice of music sampling 26 , but we can the sound recording is a bit more compli - previously composed piece of music and always look to our neighbors to the south cated as the record company usually holds rearrange it, alter the melodic phrasing, and for guidance: the copyright. you can also try contacting change the instrumentation, this new the artist directly. arrangement would be considered a deriva - The Beastie Boys were sued for using a six- tive work. A movie adaptation of a book or second, three-note flute sample in “Pass a translation would also be considered de - The Mic”, which was held to be too short in 11. InfrIngement of rivative works. duration to be considered infringement 27 . CopyrIght: enforCIng note that at issue here was copying of the your rIghts In Canada, a derivative work, such as a re - musical composition, not the sound arranged piece of music, can attract copyright It is an infringement of copyright for any recording. nWA was sued for using a two- so long as it is original. The tricky question, person, without the consent of the owner of second guitar sample from funkadelic’s of course, is whether the derivative work can the copyright, to do anything that only the “Get Off your Ass And Jam” in “100 Miles 29 meet the originality test when it is based on a 28 owner of the copyright has the right to do. pre-existing work! If a musical arranger de - And runnin.” use of the sample was Section 5, above, discusses rights that only veloped and significantly altered the original found to be copyright infringement, even the owner of a work has, such as the sole composition of a piece by using great orches - though it was pitch-shifted and virtually right to produce or reproduce the work. tral skill and judgement, courts have recog - unrecognizable. Although the sample used This means, for example, that if you record nized that the new work could attract in the Beastie Boys case was considered to a song that you’ve written, you have the sole copyright protection in its own right, despite be de minimus (under u.S. law meaning that right to reproduce and make copies of that the fact that it is based on an existing compo - the copying was so small that the court work. If, 6 months after the release of your sition. 25 having said that, authors of deriva - permits it), the court in the nWA case held eP, you hear a song on the radio that closely tive works should be careful as derivative that even using small segments of recorded resembles your tune, you may have an in - works inherently require the reproduction of music is not permitted, and that using any - fringement claim. all or a substantial part of the underlying orig - thing less than the full recorded song could inal work. As a result, any reproduction of be infringement. In another case, the In the music business there is a blurry line be - that derivative work would constitute copy - Verve’s “Bitter Sweet Symphony” sampled tween copying and inspiration. If two songs right infringement. In other words, don’t appear to sound alike on the surface, it an orchestral version of the rolling Stones’ think you can simply alter a hook from a “The Last Time”. The Verve negotiated a li - popular song and make it your own without cense to use the orchestral sample, but ap - 25 permission from the author or publisher. Redwood Music Ltd. v. Chappell & Co. parently exceeded the portion they were [1981] 3 EIPR 91. entitled to use under contract. All royalties 26 Musicians and the Law in Canada , 10.sAmplIng to the song were relinquished to ABKCO Sanderson, Paul 4 th ED, 2014 (page 132) records, and Mick Jagger and Keith 27 Newton v. Diamond , 388 F. 3d 1189 (9 th Sampling is the process of using a segment richards were given songwriting credits to Cir. 2004) from a master recording or musical com - the track. Ouch. 28 Bridgeport Music, Inc. v. Dimension position and placing it within another Films , 410 F. 3d 792 (6 th Cir. 2005) composition, which is generally very short Given the uncertainty under Canadian law 29 Section 27(1), Copyright Act , RSC in duration and likely looped throughout regarding the practice of music sampling, 1985, c C-42 5 doesn’t mean that one artist copied the other. (1) The infringer had access to the copying. The Led Zeppelin and Taurus case Some songs have similarities based purely on infringing work and; is a good example of that. coincidence, subconscious inspiration, or generic musical patterns. Artists, publishers, (2) The infringer’s work is damages for copyright infringement when and record labels have been fighting for substantially similar to the original. the use is for non-commercial purposes (for decades over this “blurred line” (pun in - example, posting a Beach Boys cover song tended) between inspiration and outright on Bandcamp for free) have been reduced theft of a verse, chorus, or unique chord pro - With respect to access, the plaintiff (i.e. you to a maximum of $5,000. Infringement for gression. Let’s look at a few examples: – the person who feels ripped off) would commercial purposes can range from $500 need to establish that the infringer had “ac - to $20,000. • Marvin Gaye’s estate was awarded cess” or could reasonably be presumed to approximately $7.4 million after a have had access to your song. In other words, If you are concerned that your work is being court determined that robin it must be proven that the infringer either unlawfully used without your consent, con - Thicke’s and Pharrell Williams’ knew your song existed (such as establishing tact a lawyer. At least initially, the lawyer “Blurred Lines” copied Gaye’s “Got he/she purchased a record containing the may draft a letter to the alleged infringer set - to Give it up.” copied song) or should have known it existed ting out the reasons for the letter and de - (for example, if the single that was copied mand that the other artist and/or publisher • Sam Smith’s “Stay with Me” was went viral online and the infringer doesn’t stop using your work. under scrutiny when similarities live under a rock). If the alleged infringer were discovered between Smith’s never had direct access to the original work, A relatively new development in Canadian song and Tom Petty’s “I won’t Back nor could reasonably be presumed to have copyright law is the notice-and-notice down.” The dispute was settled by had access, there is no infringement. regime. In short, if a copyright owner (such giving Petty and co-writer Jeff as the owner of a musical work) sees evi - Lynne writing credit for “Stay with If access is established, the next step is de - dence of infringement online (such as an il - Me” and 12.5% royalties from the termining whether the copied track is “sub - legal download), the copyright owner can song, which generated significant stantially similar” to the original. With send notice of such infringement to the in - revenue in 2014. respect to substantial similarity, the plaintiff ternet service provider (ISP) or website host, would need to establish that the copying known as ‘internet intermediary’. upon re - • Led Zeppelin was accused of steal - was “substantial”, which is fact dependent. ceipt, the intermediary is then required to ing Spirit’s 1968 instrumental track Although there is not a great deal of cer - forward the infringement notice to the user “Taurus” to write the iconic “Stair - tainty with respect to what will and will not (identified by their IP address) who is alleged way to heaven”, which was dis - constitute “substantial”, we know that to have committed the infringement. The missed by a Los Angeles federal jury courts will generally look at the quality of internet intermediary must confirm with (in other words, Zeppelin was not the copying rather than the quantity. This the copyright owner once the notice has found to have plagiarized Spirit). means that copying an iconic riff like the been sent to the alleged infringer. The notice intro to Stairway might be deemed substan - sent from the copyright owner to the inter - • As of the writing of this Legal Guide tial even if only a small portion is taken. mediary must identify the owner’s name, for Musicians , a claim was filed against Casey dienel is obviously taking her address, material the owner believes is being Justin Bieber by Casey dienel (aka chances by claiming that a 4-note vocal copied, and a summary of the owner’s claim White hinterland) in relation to the loop is capable of constituting infringe - to that copyright protected material (such Biebs’ 2015 hit (and ironically titled) ment. Other factors that might be relevant as a song). “Sorry”. dienel is claiming that the in an infringement case include whether the Biebs and co-producer Skrillex taking was intentional and whether the in - Although notice and notice is certainly not fringer’s use adversely affects the copyright a bad thing for copyright owners (such as ripped off the female vocal riff from 30 her 2014 track “ring the Bell.” owner. At trial, it is often necessary to owners of musical works), the internet in - The list goes on… have expert “musicologists” testify as to the termediary is not required to do anything similarities of the songs, both from a quan - more than forward along the infringement how does the law draw a distinction be - titative and qualitative standpoint. One tween inspiration and infringement? In song could resemble another due to com - order to prove infringement under Cana - monly used chord progressions and pat - 30 Musicians and the Law in Canada , dian law, you need to establish two things: terns, but it doesn’t always mean there is Sanderson, Paul 4 th ED, 2014 (page 131) 6 notice to the unidentified alleged infringer. Once the infringer receives the notice, they may say, ‘oh crap…they are onto me. I’m gonna take that down before I get sued!’ The alleged infringer may also say, ‘pfftt. Go pound sand.’ If the latter, the copyright owner has no choice but to either let it go or proceed down the expensive route of going to court to (1) obtain an order for the intermediary to disclose the alleged in - fringer’s identity; and (2) pursue legal action against them. for an interesting viewpoint on the notice-and-notice regime, see this Michael Geist article .

7

PuBLIShInG PArT II: yOur MuSIC

1. IntroduCtIon tinued to rack up publishing royalties as the who act as their own publisher do not re - to musIC publIshIng author of the musical composition. ceive services from a specialized company, they do, however, (1) control their musical There are a lot of musicians out there who As previously discussed, the author and the work copyrights and (2) receive 100% of any love playing music for the sake of playing, owner of copyrights are two different con - earned publishing revenue. If you decide to and I consider myself one of them. how - cepts. Generally, most artists are both au - sign a publishing contract, like any other ever, if you are serious about playing music thor and owner of their musical work contract in the music biz, always ensure you for a living, sooner or later you need to fig - copyrights at the early stages of their career. retain experienced legal counsel to review ure out how to tap into the various revenue Music publishing is where ownership of the the contract (see section 3, below, for infor - streams available in the music biz. Music musical work copyright may be partially or mation on specific contract terms). publishing continues to be a vital source of entirely assigned to a music publisher, who income for professional musicians, which is is responsible for the commercialization 2. the vArIous essentially the business of causing musical and administration of the musical work types of publIshIng work copyrights to earn money. copyrights. for example, suppose I play in ContrACts a band called ‘Isolated’. After recording our The first thing to note is that earning royalties first record, Warner/Chappell’s A&r de - There are various types of publishing con - from publishing is different than earning partment miraculously scouts out our band tracts that artists should be aware of. Keep royalties from record sales (discussed in Part and offers us a publishing deal. In exchange in mind that the terms of the contract will III). Generally, the performer on the record for assigning the band’s musical work copy - dictate whether the publisher’s right to ad - would receive royalties from record sales rights to the company, Warner/Chappell minister (and share in the profit) is associ - whereas the songwriter would receive royal - will hit the pavement and ensure our songs ated with a single song or group of songs ties from music publishing. This is because, are played on national radio, featured on during a term. In other words, a songwriter as noted in Part I, section 6 of this Legal Guide Spotify and Apple Music, covered by other could give a publisher the right to earn rev - for Musicians , the copyright in the record and artists, played on TV and in films, featured enue on and administer one single, or a col - the copyright in the musical work are two in the coolest video games, etc. Aside from lection of the songwriter’s songs (including different things. for example, Bob dylan commercializing Isolated’s songs, songs not yet written!). The following are wrote and recorded “All Along the Watch - Warner/Chappell will also administer the the main types of publishing contracts seen tower” in 1967. Bob dylan would have re - musical work copyrights by attending to in the music biz: ceived record royalties as the performer on registration of the copyrights and collecting the record and publishing royalties as the au - and distributing royalties. (i) Full Publishing Agreemen t thor of the musical composition. Six months later, Jimi hendrix recorded a pretty decent Of course, in this example, Warner/Chappell cover of “All Along the Watchtower” on Elec - will take a cut of the royalties earned as pay - Publishing revenue associated with every song tric Ladyland . Although Jimi would have re - ment for their publishing services. This sce - is split 50/50 between the publisher’s share and ceived record royalties as the performer on nario is in contrast to artists who act as their the writer’s share . With a full publishing agree - the record, he would not have received pub - own music publisher and keep 100% of their ment, 100% of the publisher’s share goes to the lishing royalties. Bob dylan would have con - musical work copyrights. Although artists publisher and 100% of the writer’s share goes 9 to the writer, amounting to a 50/50 revenue writer does not transfer any portion of its • Assign all or a portion of the split between the songwriter and the publisher. copyrights to the administrative publisher. musical work copyrights to the If you imagine a revenue pie, half of the pie In this case the administrative publisher’s publisher so the publisher can deal goes to the publisher and the other half goes to role is limited to collecting money on behalf with and administer the copyright. the songwriter. These types of agreements are of the artist and issuing licenses to third par - This also allows the publisher to not as common as they used to be. ties. The term of the agreement is generally sue another party for infringing shorter than the other agreements, and the your copyright. (ii) Co-Publishing Agreement administrative fee is generally 5% - 15% of 31 the total income generated by a song. If • Set out the term of the contract, you’ve had a popular song for several years which is typically composed of an This is the industry norm nowadays. In order but have only seen minimal publishing rev - initial period where the songwriter to wrap your head around co-publishing enue, an admin deal might be smart. is required to deliver a set number of agreements, in addition to understanding the songs, with the publisher being concepts of the publisher’s share versus the (iv) Sub-Publishing Agreement granted one or more ‘options’ to ex - writer’s share of publishing revenue, you also tend the term. The contract may be need to understand the concept of active pub - a “tied deal” with a recording con - lisher versus nominal publisher . Assuming your publisher has the right to do tract, which means that the term of so under contract, if your publisher grants the publishing contract is “co-termi - After a standard “Co-Pub” deal is signed, and rights to another publisher in a foreign juris - nous” with the record contract. The once revenue starts pouring in, the songwriter diction, this would be called sub-publishing . agreement will also confirm how takes 100% of the writer’s share and the pub - for example, my band may have an excellent long the publisher may commer - lisher’s share is typically split 50/50 between Canadian publisher, but that publisher may cially exploit the songs delivered the active publisher (the corporate publisher not know anything about publishing our during the term of the agreement, the songwriter signed the contract with) and songs in Germany or the u.K. for that reason, which could be the life of copyright the nominal publisher (the songwriter’s pub - it might be more efficient (and lucrative) to or a set number of years. lishing company set up for the purposes of re - ‘sub-publish’ administration rights to a Ger - ceiving money). If you think of the revenue pie man or u.K. publisher, whose office would Identify the territory covered as discussed above, and similar to the full pub - likely be much more familiar with the local • in the agreement, which is gener - lishing deal, half of the pie goes to the song - performing/mechanical rights societies, in - ally the “world”. Keep in mind writer, which represents the writer’s share. dustry players, how to maximize profit, etc. that not all publishers in Canada under a co-pub arrangement, however, the will have contacts in other parts other half of the pie, which represents the Although publishing agreements may often of the world. If they don’t, it publisher’s share, gets split between the song - be presented as “standard form”, keep in might be wise to restrict the pub - writer’s nominal publishing company and the mind that in the legal world there is rarely lisher’s territory to Canada, al - active publisher doing all the work. Practically, ever a “one-size-fits-all” contract. for that rea - lowing you to sign another deal the end result is that 75% of all net revenue son, always ensure you retain experienced with a publisher in the u.S. or goes to the songwriter and 25% goes to the ac - legal counsel to review any contract before europe, for example. tive publisher. from a revenue splitting stand - signing, including publishing agreements. point, the co-publishing split (75%) is Set out the ‘advance’ or ‘draw’ obviously more favorable for the artist than • payable to the songwriter. An ad - the full publishing split (50%). 3. publIshIng vance is a cheque or possibly a ContrACt terms monthly amount paid to the song - under a full or co-publishing deal, all or a writer by the publisher after signing portion of the copyrights in the musical Contract terms can vary dramatically from the contract. Typically, the advance compositions will generally be assigned to contract to contract. Although there is no is “non-returnable but recoupable”, the active publisher. substitute to retaining experienced counsel meaning if no money is made from to review your publishing contract in detail, the songwriter’s songs, the song - (iii) Administration Agreement this section will give you a general overview of some contract provisions you may see in An administration agreement is different a standard publishing contract. The con - 31 Musicians and the Law in Canada , from full and co-publishing in that the song - tract may: Sanderson, Paul 4 th ED, 2014 (page 90)

10 writer does not have to pay back the • restrict the publisher from work in public and the sole right to commu - advance to the publisher. however, using a song/collection of songs nicate the musical work to the public by as money starts rolling in, royalties for certain uses, such as commer - telecommunication. Because public per - go towards paying back the advance cials for alcohol and tobacco. for formance rights belong to the copyright before going into your pockets. Any obvious reasons, you may not nec - owner, no one has the right to publicly per - advance should be thought of as a essarily want your song to be asso - form your songs on radio, television, the in - 32 33 loan. ciated with those products. ternet (streaming services and youTube , for example), dance clubs, live at a bar or 34 • Set out how often you are • dictate certain milestones that concert hall , Chinese food restaurants going to get paid and allow you to must be met by both publisher and (you get the picture), without your permis - audit the publisher every so often the songwriter, failing which, the sion. Purchasing a record gives you the right to ensure they are not short - contract ends and copyrights re - to play that record privately (non-commer - changing you. vert back to the songwriter. The cially). It does not, however, give you the publisher, for example, may be re - right to play that record to the public at • determine whether the relation - quired, by a certain date, to secure large. Such “performance” of the song either ship between artist and publisher a recording contract for the artist, requires a license from the songwriter/pub - is one of employee/employer, or placements on T.V., movies and lisher or from SOCAn if the songwriter has whether the artist is an independ - commercials, etc. for the song - already assigned their public performance ent contractor. This is important writer, they will likely be required rights to SOCAn. because if the artist is deemed to to produce a certain number of be an employee rather than inde - songs that don’t suck (i.e. are ‘com - SOCAn is a not-for-profit organization that pendent contractor, the first mercially viable’). administers the public performance rights of owner of any copyright created its member songwriters, composers, and under the contract is likely the This is a very high-level summary of some music publishers. Technically, if you wanted publisher, not the artist (refer to of the contract terms you may see in a pub - to publicly perform a song, you would need Part I, section 4). lishing agreement. The terms of any pub - to get a license from all songwriters, lyrists, lishing contract will vary depending on the and publishers of the music, which could be • determine whether the contract type of publishing deal, the publisher in - a daunting task. Alternatively, a SOCAn li - can be assigned and by who. Gen - volved, and the bargaining power of the cense would allow you to legally play that erally, the artist will not be permit - songwriter. Again, always ensure you get an music in public. fees that are paid for SOCAn ted to assign the publishing experienced lawyer to review before you licenses by restaurant owners, radio broad - contract without consent, but the sign anything! casters, bar owners, dental offices, etc. are col - publisher can. If the publisher is lected by SOCAn and then distributed to able to assign the contract, ensure songwriters and publishers as fairly as possi - they are limited to assigning only 4. revenue streAms ble. See the SOCAn website for more info. to a reputable publisher or one as - from musIC publIshIng sociated/affiliated with the current publisher. you could attempt to If you are planning to take music seriously, 32 SOCAN reported that copyright revenues from In - work in a right to consult with the understanding how money ends up in your ternet streaming in 2015 hit $21.3 million, a 525% publisher prior to any assignment pockets as a songwriter is crucial. An expe - increase over the $3.4 million generated in 2013. 33 of the contract. rienced entertainment lawyer or business SOCAN and YouTube reached an agreement for manager can certainly help you understand the payment of performing rights fees to SOCAN • determine whether the pub - the various forms of revenue streams, but covering the period 2007 - 2015. An agreement for lisher has the right to authorize al - having a basic understanding empowers 2016 is currently being negotiated. 34 A songwriter should be paid royalties for the live tering your music or lyrics. If the you as an artist. What follows is a high level performance of its songs if the venue/promotor is li - publisher is given the right to do overview of the basics. this, the songwriter should have censed by SOCAN and a minimum of $6.00 is charged as cover to the show. Songwriters have up to the right to approve material (i) Public Performance Royalties changes. The right to alter should 1 year to submit a Notification of Live Music Per - also not infringe moral rights (see One of your economic rights as copyright formance to SOCAN to claim their live performance Part 1, section 5). owner is the sole right to perform your royalties. 11 Let’s say that I, “MC Gorman”, wrote and the owner of the musical work being re - will be required from the owner of the recorded my first record Mic Check, 1 2 3 . Be - produced is 8.3 cents per song if the song sound recording copyright (usually the fore releasing the record, I register my songs is less than 5 minutes, plus 1.66 cents for record label). The particular song that a with SOCAn and assign all public perform - every minute beyond 5 minutes. 36 There film/T.V. producer wants to use could be re- ance rights in the songs. After my Cd re - is a separate royalty rate for musical repro - recorded, avoiding the need to obtain a lease party at Gus’ Pub, my single, “Lemon ductions online. See the CSI Music Serv - master use license. however, the producer Squeezy”, starts getting modest play on ices website for further information. would still need to obtain a synch license as CBC radio 3. Several months later I receive the musical work itself is still being used in a direct deposit in my bank account from Similar to obtaining a performing rights li - synchronicity with visual images. SOCAn for $0.50. Just when I’m about to cense, obtaining a mechanical license from throw in the towel, I notice that my single all of the necessary rights holder(s) could be starts getting a lot of attention. The song is a daunting task. for that reason, the one-stop (iv) Digital music sales getting regular play on national radio, it re - shop for obtaining a mechanical license is the ceived one million youTube plays, it’s blow - Canadian Musical reproduction rights 37 Songwriters should get paid for various ing up on Spotify/Apple Music, and it Agency (CMrrA) and the Society for forms of digital music sales, such as digital becomes the opening jingle on “degrassi: reproduction rights of Authors, Composers 38 downloads, on-demand streaming, and non- The next (next) Generation”. Given the and Publishers in Canada (SOdrAC) , interactive webcasting (see Part III, section 6 wide-scale public performances of my which are tasked with issuing and adminis - for further info). Since digital downloads, music, I begin to see my quarterly SOCAn tering reproduction rights licenses on behalf such as iTunes Store or Amazon, are treated direct deposits significantly increase. of its member publishers. note that it is not the same as traditional Cd sales, the artist compulsory to sign up with either CMrrA would receive the appropriate mechanical Keep in mind that public performance or SOdrAC, and that some publishers elect royalty rate (see Mechanical Licensing , above). rights are triggered by online performances, to administer their mechanicals on their own. including on-demand streaming services like youTube and Spotify, but not for digital (iii) Synchronization Licensing 35 downloads. 35 SOCAn has the right to seek Rogers Communications Inc v Society of Com - license fees from any internet service that posers, Authors and Music Publishers of Canada communicates a musical work in the terri - A synchronization license (often called 2012 SCC 35 36 tory of Canada. Given the vast amount of “synch” license) is needed to synchronize a Sanderson 49 37 online content being processed, you may musical work with visual images in film, T.V. CMRRA represents some 5000 music publishers and only begin to see SOCAn internet royalties shows, commercials, websites, youTube assists users in obtaining licenses for the reproduction for works which receive 500 or more ‘per - videos, etc. If a producer of a T.V. show or of musical works and administers royalties to the own - formances’. film wanted to use a particular song for their ers of those musical works. Keep in mind that SOCAN project, they would need to obtain a synch li - issues licenses and administers the public performance (ii) Mechanical Licensing cense from the owner of the musical work. rights of artists (i.e. songs played on the radio, TV, live There is no set fee to obtain a sync license performances, restaurants, etc.) whereas CMRRA is - (unlike the mechanical license rate), so it will sues licenses and administers the reproduction rights A mechanical license gives the license largely depend on the artist’s bargaining of publishers (i.e. physical reproduction of songs on holder the right to reproduce the musical power. An unsigned artist may be willing to vinyl, cassettes, or CDs or the recording a cover song work in a mechanical form. for example, sign a synch license for a few hundred dol - for your upcoming record). if I want to reproduce a song by recording lars; however, Arcade fire’s or father John 38 SODRAC is an author’s society that, like CMRRA, a cover version either physically (Cd Misty’s publisher would likely be looking for licenses the reproduction right in musical works to and/or vinyl) or digitally (available for dig - the big bucks depending on the project. users and is primarily used in Quebec. The main dif - ital downloads and streams), I would need Keep in mind that when syncing the musi - ferences are (i) reproduction rights are assigned to a mechanical license from the owner(s) of cal work to visual images (like in a movie or SODRAC but not CMRRA; (ii) SODRAC issues the musical work copyright. record com - T.V. show) a master use license (see Part III) sync licenses (see below) but CMRRA does not; and panies and indie labels would need to do will also be required if the master recording (3) CMRRA acts in an agency role for its artists/pub - the same when they manufacture and dis - is being used. Again, always remember that lishers, but SODRAC does not. You can visit both tribute records since the musical work is the musical work copyright is different than the CMRRA and SODRAC websites to get more de - being reproduced in this case as well. The the sound recording copyright. If the master tails on what kind of licenses they issue and the roy - current mechanical royalty rate payable to recording is being used, a master use license alties payable for each license

12 A digital download is not, however, consid - film producers; is true when it comes to develop - ered a “performance”, so no SOCAn fees are ing the artist creatively. At some payable. 39 SOCAn performance royalties do • Assist you with developing your points during your contract you come into play, however, with non-interac - music creatively; and/or may feel like you are the priority, tive streaming such as Pandora and on-de - but not always. mand streaming, such as Spotify and Apple • help you network by inviting Music. SOCAn has even reached an agree - you to the coolest parties in hali - • All or a portion of your musical ment with youTube for the payment of per - fax, Toronto, Calgary or Vancou - work copyrights are typically forming rights fees to SOCAn covering the ver to meet the industry players. given up to the publisher, unless period 2007 – 2015, which will ensure you are signing an admin deal (see SOCAn members receive public perform - having said that, signing a publishing deal section 2, above). furthermore, ance royalties from youTube hits in addition isn’t always going to be sunshine and rain - and depending on the terns of the to plays via digital streaming services. bows. Some things to note: contract, copyright ownership and payment of royalties to the (v) Miscellaneous Revenue • The advance payable from a pub - publisher could last for the re - lisher is less of a signing bonus and mainder of your natural life (re - more of a loan. As noted earlier, the Other sources of publishing revenue member, copyright lasts for the advance will almost always be re - might include sales from sheet-music, life of the author plus 50 years). coupable against future royalties. placing songs in video games, toys or This means that, as money starts other commercial products, ringtone sales, The above discussion is not meant to sway etc. Lastly, publishers may be able to bring coming in from publishing revenue, songwriters one way or the other on the in revenue from the “black tape levy”, it goes to the publisher until they are merits of signing a publishing deal, but is which compensates artists for the private paid in full for the advance. What is meant to empower songwriters and assist (and unauthorized) reproduction of their given with one hand is taken away by with making an informed decision. music on Cds, digital media, cassette the other. The same concept is likely Publishing contracts can certainly be a tapes, etc. for example, when you buy a applied when cash is given to you for game-changer for an artist’s career. As - package of blank Cds, a portion of the recording a demo, for example. signing a portion of your copyrights and price is collected by the Canadian Private splitting a huge revenue stream with a Copying Collective and ultimately distrib - • depending on the terms in the publisher is probably better than fully uted to rights holders. contract, the recordings that the owning copyrights that aren’t making you publisher paid for may belong to any money. On the other hand, if you are the publisher. This means you will a motivated songwriter, are a master net - 5. should I sIgn A not earn revenue from the com - worker, and have the cash flow to finance publIshIng deAl? mercialization of the master your creative development and recording, recording. A master use license is then maybe hitting the pavement as your The big question in whether a music pub - required, for example, if the mas - own publisher is right for you. Online plat - lisher will increase the Artist’s chances of ter recording is being used in T.V., forms such as facebook, Twitter, Insta - earning publishing revenue. Some publish - film, commercials, etc. This could gram, youTube and Bandcamp make it ers have a lot to offer for the songwriter’s be the loss of significant revenue easier for artists to network and share their career. for example, the publisher may: for the artist (more on record - music to the masses instantaneously. A ing/masters in Part III). good publisher, however, will assist with • Give you a juicy advance so you cutting through the digital noise and the can quit your day job for good and • Publishers, especially the ma - mountainous musical content floating out work exclusively on your writing; jors, are comprised of busy people in the interwebs. who are far outnumbered by their • Give you a budget to record songwriting clients. This means demos; that the person making the pitch • Shop your demos around to on your behalf has hundreds (if 39 Rogers Communications Inc v Society of Com - various labels and pitch/plug your not thousands) of songs to con - posers, Authors and Music Publishers of Canada songs to hot-shot T.V. and sider aside from yours. The same 2012 SCC 35

13

PArT III: reCOrdInG

1. IntroduCtIon Although artists certainly have more tools at rectly, or hired by the artist’s label. Their their disposal in 2019 to economically produce services may include (i) booking a sound There’s no doubt about it – the music busi - recordings, distribute their music to the masses engineer and recording sessions at a stu - ness has and continues to evolve. In partic - (via a digital distributor or otherwise), and mar - dio; (ii) assisting artists/bands with musical ular, the rise of on-demand steaming has ket and promote their records (facebook, arrangements, writing, harmonies, etc.; changed the musical landscape and the way Insta, Twitter, youTube, etc.), doing all of those (iii) assist the artist with managing costs of in which people listen to and consume things well, while at the same time developing the recording; (iv) assist with the selection music. Although there is more music than as an artist and worrying about making great of songs/content to be recorded; (v) super - ever before, physical record sales and digital music, is a difficult task. In addition, con - vise recording sessions, including the mix - downloads continue to decline. This para - sumers have access to more music than ever ing and mastering stages of the recording digm shift continues to fundamentally before given the world of digital streaming, so process; etc. The producer’s payment can change the nature and business of record la - cutting through all the digital noise is challeng - vary, but it is likely a lumpsum payment or bels, which traditionally sought to commer - ing for any artist. Therefore, securing a deal producer ‘points’, which is simply a per - cialize recorded music by selling as many with a record label to perform some or all of centage of net revenue generated records as possible. the traditional label functions might still make perfect sense depending on the deal, the label, In Part I, section 6 of this Legal Guide for Mu - and the artist’s unique circumstances 4. 360 reCord deAls sicians , the difference between copyright in the musical work is distinguished from the copyright in the sound recording. Part II 3. role of the produCer 360 record deals (also called multi-rights cusses the exploitation of the musical dis deals) can take a number of shapes, sizes copyright through publishing and the work and permutations. Generally speaking, 360 ous available revenue streams. This sec v-ari As previously discussed in Part I, section deals are deals where the label, in addition focuses on record labels and the com -tion 4, the maker of a sound recording owns the to royalties from record sales, takes royalties cialization of the copyright in the mer copyright in the sound recording. The from non-record revenue streams such as recording . master “maker” is defined as the person who live performances, merchandise, and pub - makes the “arrangements” for the sound lishing. The justification for labels tapping recording, which could include a into these additional revenue streams is that 2. role of the producer or label that books the studio the label will function as a pseudo-manager reCord lAbel time, organizes the session musicians, and and look after the artist’s entire career and finances the recording, for example. It’s development rather than only focusing on very important that if you or your label selling records, which was the case with tra - Generally speaking, record labels assist engages the services of a producer, their ditional record deals in the past. Although artists with producing master recordings, role is clearly laid out in an agreement. these kinds of deals have been around for manufacturing and distributing records years in the indie world, the majority of (vinyl, Cd or other recorded medium), not every artist is going to use a producer, major labels are only now adopting this as artist development, tour support and but more serious artists may. The pro - standard practice. The move towards 360 artist promotion. Smaller indie labels may ducer’s role is to manage all aspects of the record deals is a natural shift for record la - perform some but not necessarily all of production of a master recording. The bels that are badly bruised from declining these functions. producer may be hired by musicians di - record sales over the years.

15 Before signing a 360 deal (or any recording the contract. Since labels are re - termine whether the label has ex - agreement), it is important that you retain couping their investment at a faster pertise beyond selling records. an experienced entertainment lawyer to re - pace with multiple revenue streams, for example, it’s one thing for the view the contract and provide advice on the they should be more willing to let label to have a publishing arm, pros and cons. What follows are some con - the artist retain an increased share but does this publishing arm have siderations to keep in mind: of its master recordings. Increased a track record of making artists copyright ownership in the artist’s money in the publishing world? • Labels thinking long-term – masters gives the artist more cre - does the label know anything Since 360 deals allow labels to tap ative (and legal) freedom to control about the t-shirt and merchandise into revenue streams like touring their catalogue. world? Is your label the best bet and publishing, the label may not for booking tours and promoting be as focused on recouping their • consolidation of business your concerts? If so, great. If not, investment from record sales. affairs – depending on the 360 you may want to try to negotiate Some may say this allows the label deal, it may allow an artist to con - the 360 deal into a 270 or 180 to commit to the artist long-term solidate their business affairs with deal, so-to-speak. and focus on their continued de - the label, who becomes a one-stop velopment, rather than telling the shop for the artist’s live perform - • conflicts of interest – Beware artist to take-a-hike if their record ances, general management, that with the label wearing so many hats, it’s easy for the line to blur be - doesn’t sell 100,000 units or digital publishing, merchandise, endorse - tween creating efficiencies and cre - equivalents. does the contract re - ments, etc. This could create busi - ating a breeding ground for flect this increased commitment ness efficiencies and ensure there conflicts of interest. for example, if by the label? are no overlapping functions the label functions as a label and among parties who represent the pseudo manager of the artist, it may • advance – Similar to publish - artist. In the contract, take note of owe a fiduciary duty to the artist as ing contracts, discussed in Part II, the specific aspects of your career manager, but as a label it owes du - recording agreements (including that the label is proposing to take ties to its shareholders (owners). In the 360 contract) may set out the control of. other words, it might be tough for a ‘advance’ or ‘draw’ payable to the label to always have your back as a artist. Again, this is a cheque or • The same, but more – In tra - manager while at the same time try - possibly a monthly amount paid ditional record contracts, the ing to maximize shareholder prof - to the artist after signing the con - label would take copyright in the its. These types of situations should tract. Like publishing contracts, artist’s masters, split revenue on a obviously be avoided and addressed these advances are “non-return - a net receipt basis, and had op - at the outset. able but recoupable”, meaning if tions to extend the term of the no money is made from the artists’ artist’s contract (typically tied to • negotiate, negotiate, negotiate musical career, the artist does not album cycles). 360 contracts will – The point here is that you should have to pay back the advance to generally contain those same pro - negotiate. In the legal world, it’s the label. Conversely, as money visions, but in addition, the label rare for a contract of any kind to go starts rolling in, royalties from rev - will seek royalties from all aspects from one lawyer to another with - enue get applied to paying back of an artist’s career (live perform - out at least a few tweaks/changes; the advance before going into the ances, merchandise, publishing, however, you and your lawyer’s artist’s pocket. Any advance endorsements – even movie, ability to negotiate will depend on should be thought of as a loan and commercial, and T.V. gigs!). The your bargaining power and how not free money. question artists have to ask them - badly the label wants you. Some la - selves is whether these increased bels, for example, may start the ne - • copyright ownership in mas - royalties to the label can be justi - gotiating process by wanting ters – Standard recording contracts fied. Is it simply a money-grab, or anywhere from 5-25% of all artist would typically have the artist as - will the label actually show in - revenue streams. Can you negoti - sign to the label all copyright in any creased commitment to the artist. ate a smaller split for the label? Can masters recorded during the term of Artists need to also carefully de - you retain a larger share of your

16 master recordings? Will your label example, a synchronization and mechan - SiriusXM and webcasters). royalties are al - take a smaller cut of publishing ical license will be required to reproduce located based on how often a song was and/or live performance revenue? the musical work (see Part II, section 4(ii) played. Soundexchange is a major player, Can you get away with granting the and (iii)). however, if the actual master which has distributed more than $4.5 bil - label fewer options to extend the recording is being used in T.V. or film, a lion in royalties since it began.” contract? Are you fine with the master use license will also be required label running the full suite of music from the rights holders. As discussed in services, or would you prefer that Part II, the music publisher would typi - (iv) CONNECT your dad still handle t-shirt de - cally need to grant rights to the musical work copyright through a mechanical sign/sales at your shows? your abil - Connect Music Licensing Services Inc. and/or synchronization license, while the ity to negotiate these deal points (“ connecT ”) is an agency that issues li - record label would typically be required to will depend on your bargaining censes on behalf of its member record grant rights to the sound recording copy - power as an artist. companies, producers and artists for the right through a master use license. Always reproduction of master sound recordings note that the copyright in the musical work and the copyright in the record are and music videos. re:Sound and COn - 5. revenue streAms two different things. neCT are similar in that both represent from reCords rights holders of sound recordings (as op - posed to musical compositions). each, (iii) Re:Sound however, represents different rights asso - Part II, section 4 outlines the various rev - ciated with those sound recordings. While enue streams with respect to music publish - re:Sound collects revenue on behalf of its re:sound is a Canadian collective rights ing and the exploitation of the musical work members for the public performance of organization (like SOCAn or CMrrA). copyright. This section briefly touches on sound recordings, COnneCT collects rev - While SOCAn pays its member songwrit - the main revenue streams associated with enue on behalf of its members for the re - ers/publishers for the public performance the sound recording copyright. production of sound recordings and music of their musical works, re:Sound pays its videos. If you hire a dJ to perform at your member record companies and performers (i) Record Sales/Revenue wedding who makes copies of sound (including background musicians) for the recordings by using Cd-r, iPod, laptop, public performance of the record . These uSB, etc., you will likely have to pay for a rights are known as “neighbouring rights”, Artists can make money by selling records COnneCT license in addition to and the appropriate tariffs are set by the either on their own or through a record re:Sound and SOCAn licenses, all of Copyright Board of Canada. Like SOCAn, label. This includes both physical records which represent different rights. radio you are not required to pay a re:Sound li - (Cd, vinyl, cassettes) or digital downloads. stations, retail establishments playing cense fee if you purchase music and use it Artists also generate revenue when their background music, and non-interactive privately. however, as soon as you use the sound recordings are streamed via on-de - webcasting services may also require a recording in your dentist office, barber - mand services (such as Spotify and Apple COnneCT license. shop, or music venue, the appropriate Music). The artist’s revenue from records re:Sound tariff is required so the perform - will be dependent on (a) how many records 6. downloAds ers on the record (as opposed to the song - are sold and how often their masters are And streAmIng writers/publishers) receive “equitable streamed and (b) the royalties payable from remuneration” for their work. This includes the record company, if applicable. royalties for non-interactive streaming record labels will seek to collect revenue services, such as Pandora. (ii) Master Use License from all “electronic transmissions”, which includes digital downloads, non-interactive With respect to streaming, re:Sound even streaming, and on-demand streaming: Aside from revenue associated with has a reciprocal agreement with u.S. based 40 record sales, master recordings are often Soundexchange. Soundexchange collects licensed for use in T.V., commercials, or and pays royalties to its member recording film. This could be a significant revenue artists and labels for the digital perform - 40 SoundExchange announced its acquisition of the stream for an artist. If the song is recreated ance of records when streamed via non-in - Canadian Musical Reproduction rights Agency or “covered” for use in T.V. and film, for teractive digital sources (such as Pandora, (CMRRA) on May 15, 2017

17 • digital downloads – A digital as, at the time of writing this Legal download is essentially an elec - Guide for Musicians , youTube offers tronic sale of a record, as opposed more audio content than all other to the sale of a physical copy. The streaming websites combined! iTunes download Store and Ama - zon are examples of digital down - While music streaming grows and com - load services. downloads can be prises about 16% of the recorded music in - both permanent and conditional. come, digital downloading is significantly 41 for example, a permanent down - decreasing. The digital music business is load is when you buy a record off tough, and service providers who offer elec - the iTunes store, which you own in tronic transmissions of music to the public the same way as if you bought it at (such as on-demand streaming services) a record store. you can listen to it will pay about 70% of their revenue for anytime you want and even trans - rights to the music in their database, which fer the digital file. Of course, like includes both master use rights (from the regular physical records, it’s for owner of the master recording) and musical your own personal, non-commer - work rights (from the owner of the musical cial use. Conditional downloads composition). would be downloading a record for offline use from Apple Music or Spotify. I can listen anytime I want, but would lose access if I stopped paying subscription fees.

• non-interactive streaming – These music services would allow me to stream music online, but the service provider dictates what I lis - ten to (like traditional radio). examples of non-interactive streaming include Galaxie Mobile, Slacker radio, and CBC Music.”

• on-demand streaming – un - like non-interactive webcasting, these music services are interac - tive streaming services and allow you to listen to any song anytime you want, including the ability to pause and fast-forward. Spotify (if you are a ‘premium’ member) and Apple Music are examples of on- demand streaming. youTube is an example of on-demand video streaming, which is completely free. youTube remains an impor - tant player in the streaming world

41 All You Need to Know about the Music Business , 9th ED, Passman, Donald, 2015 (P. 148) 18

BuILdInG A MuSIC

PArT IV: BuSIneSS-The BASICS

1. IntroduCtIon on business. Performers, songwriters, la - taxed at their personal marginal rate rather bels, etc. could carry on business either as a than at a separate (and possibly lower) cor - sole proprietorship, partnership or limited porate rate. If you want to have a career in the music in - company 42 dustry, you need to start thinking about (ii) Partnership music as your business. If I wanted to start my own restaurant, I would likely sit down with (i) Sole Proprietorship a lawyer and accountant to discuss the most A partnership is the relationship between appropriate structure for my business, poten - two or more people, who carry on a busi - tial liability issues that may arise, branding In a sole proprietorship , the individual run - ness together, with a view to profit. If two and trademark considerations, tax implica - ning the business is the sole owner of the or more people, such as band members, tions, future contracts that I may have to sign business and their personal status is indis - carry on business together and share in the and/or draft, employment considerations, tinguishable from that of the business they profits of the business, chances are the band etc. These are the same issues you want to operate. This means that all of the assets would be considered a partnership at law sort out with your music business, whether and profits of the business belong to the (with each band member being an individ - it’s as a live performer, session musician, or sole proprietor in their personal capacity , as do ual partner). Most bands probably do not running a record label. Legal and business the liabilities. for example, a solo artist who realize that they carry on business as a legal considerations will vary on a case-by-case has never turned their mind to a business partnership. basis. for example, the structure and legal is - structure would be considered a sole pro - sues faced by a solo artist that only tours the Like the sole proprietorship, start-up costs prietor at law. Atlantic Provinces will likely be different than for the partnership are low (subject to costs a 5-piece band that tours in the u.S. and eu - for a partnership band agreement, dis - There are benefits to running a sole propri - rope; as will the structure between an artist cussed below) and each individual partner etorship: start-up costs associated with this scraping by versus an artist or band that is is taxed at their personal marginal rate structure are low, the sole proprietor retains generating significant revenue. Whether you rather than the partnership as a whole. Also all profits, and decision making/control are a solo performing artist, songwriter, or in like the sole proprietorship, the main disad - rests with the sole proprietor. The main dis - a 5-piece band, it is important that you sit vantage is that liability is unlimited among advantage with this structure is that the sole down with advisors to discuss the most effec - the individual partners, and personal assets proprietor faces unlimited personal liability, tive way to carry on business and identify po - of the partners could be used to satisfy part - which means that creditors (i.e. banks or tential legal, tax, and business strategy issues. nership debts. Subject to an agreement to other people/companies that you owe money to) could go after your personal, non-music related assets to satisfy debts 42 There are other business structures that can be uti - 2. whAt busIness that are outstanding (your house and car, lized, such as a Limited Partnership, Limited Liabil - struCture should I use? for example). Because the individual run - ity Partnership, and Unlimited Company. However, Just like restauranteurs, musicians will need ning the business is indistinguishable from the structures discussed in this Legal Guide for Musi - to determine the structure in which to carry the business itself, the sole proprietor is cians are more commonly used in the music biz. 20 the contrary, partners share equally in all pany is more costly compared to carrying • Clearly identify the purpose of the profits of a partnership and also jointly on business as a sole proprietorship or the partnership, such as record - share all of the liabilities, even if the partner - partnership (typically around $1000 - ing, songwriting, touring, selling ship was sued based on the actions of one $1500), corporate record keeping can be a merchandise, etc. partner. If a band finds itself in a partner - pain in the ass, company decisions and cor - ship, it is highly recommended that the porate actions are subject to legislation • determine whether members of band members (i.e. partners) negotiate and (which requires specialized legal advice), the group have brought assets into execute a partnership band agreement. and a separate tax filing is required for the the partnership, such as gear, cash, Signing this agreement ensures that all band corporation itself (remember, it is a sepa - tour van, etc. If so, the agreement members are on the same page with respect rate legal person!). Similar to the partners should clearly set out how this un - to key issues on a go-forward basis, such as in a partnership, shareholders of a com - equal investment in the partnership copyrights and royalty split, ownership of pany should negotiate and execute a share - will play out. for example, the part - equipment/assets, procedure for dealing holders’ agreement, which will govern the ner who brought significant assets with a departing bandmate, death of a rights and responsibilities of each share - into the partnership may be bandmate, etc. holder of the company. awarded a higher royalty split, or it may simply be established that the (iii) Limited Company you should discuss these structures with individual partner (and not the part - legal counsel and an accountant to deter - nership) owns the equipment mine what works best for you or your band. brought in by that partner. unlike a sole proprietorship and partnership, A good rule of thumb is that incorporating a limited company is a legal entity separate and a company is probably unnecessary until determine who is authorized to apart from its owners (known as sharehold - • you start generating decent revenue (i.e. use the band name if the band ers), directors (responsible for overseeing $30,000 or more, which is typically when breaks up. 46 If the band has one key general management) or you need to obtain an hST number. songwriter, it might make sense to officers (responsible for the day-to-day allow him or her to continue using operations). Also unlike the sole proprietor - the name if the group disbands. Al - ship and partnership, the individual share - 3. whAt Is A bAnd or ternatively, the agreement may dic - holders of a company are generally not liable group pArtnershIp tate that only the entire group may for the debts and liabilities of the company. Agreement? use the name. Keep in mind that if In the eyes of the law, the company itself is the partnership is also a party to a treated as a separate person. Once a com - recording or publishing contract, pany is incorporated, it is ‘the company’ that This is a very important agreement for executes contracts and legal documents, not anyone who plays in a band. If the band the shareholders or directors of the company carries on business as a partnership, 43 For example, “Dude, if you give me $1,000 to - (although typically the director(s)/officer(s) which is most common, the agreement wards a new record and equipment, I’ll give you 100 with signing authority will sign contracts on will take the form of a Band Partnership shares. I promise they’ll be worth something some behalf of the company). Agreement . If the band carries on business day!” You must ensure all share issuances are in as a limited company, the agreement will compliance with securities law. Liability protection for band members (i.e. take the form of a Shareholders’ Agreement . 44 For example, some or all of the company’s shares shareholders) is certainly one of the more The reality is, most musicians never enter could be sold down the road. attractive features of the incorporated into an agreement of any kind, which will 45 A dividend is essentially a cash transfer from the company (even if the company and its di - create issues if a dispute arises. Band company to a shareholder. The dividend will need to rectors obtain liability insurance). Other members can save themselves a lot of be declared as income on the personal tax beneficial features include using share cap - headache (and money) by entering into an 46 Disputes can arise over band names. For example, ital to raise money 43 , transferability of agreement from the outset. Mike Love from the Beach Boys acquired sole li - ownership 44 , and potential tax advantages censing rights to the ‘Beach Boys’ name in 1998 and of having a lower corporate income tax rate The major terms you may want to address sued Al Jardine and Brian Wilson for unauthorized and using the company to issue dividends in the agreement are as follows (assuming a use. Stone Temple Pilots also sued Scott Weiland for to shareholders 45 . partnership agreement among trying to use the band name after getting kicked out partners/bandmates): of the group (the band name belonged to the partner - On the other hand, incorporating a com - ship pursuant to the STP band agreement).

21 the terms contained in those agree - ship agreement set out how partner - ister that business name. The purpose of ments must be considered as well. ship property will be dealt with and registration is to ensure business names are how existing debts/ not confusingly similar to other business • The agreement may outline who liabilities will be paid. The applicable or company names in the marketplace. I owns existing copyrights and provincial legislation should be would not need to register a business name copyrights on a go-forward basis reviewed for more information. if I decide to carry on business as “Matthew (both musical work and sound C. Gorman”, but all bank accounts, con - recording copyrights). The Part - The above is not an exhaustive list of things tracts, and any other documentation must nership may want to leave these to consider when drafting a band partner - reflect my personal name only. each assets out of the agreement alto - ship agreement, but is a good start. It is province has its own set of laws regarding gether if copyrights have already highly recommended that you reach out to registration of business names. As such, if been assigned to a record com - legal counsel to discuss and assist with you are operating a record label, publishing pany and/or publisher. drafting an agreement. Keep in mind that if business, recording studio, or any other one lawyer is retained to draft the agree - music service business, your business • determine how ‘major decisions’ ment, each partner should confirm that name must be registered if it’s different will be made, which could be de - they have received (or have been given the from your personal name. fined to include assigning the band’s opportunity and declined) their own inde - copyrights, long-term obligations, pendent legal advice prior to signing. If you decide to carry on business as an in - and expenditures above $1000, for corporated company, your corporate name example. Will major decisions be must first be approved by the applicable made by majority vote or will all 4. brAndIng - provincial corporate office. Similar to the partners need to agree unani - busIness nAmes, business name, a search must be done to en - mously? The agreement could dic - CorporAte nAmes sure it is not identical or confusingly similar tate that day-to-day decisions related And trAdemArks to another company name or business name to the Partnership be made on a ma - in the marketplace. Once incorporated, the jority basis, while major decisions company must sign documents, open bank require unanimity. your business name, band or stage name accounts, and transact day-to-day business and any associated logos or designs could under the corporate name, not under the • determine how members will potentially be one of your or your band’s name of the individual shareholders or direc - leave or join the band. for example, most valuable assets. for that reason, you tors. An incorporated company can carry on what happens if (i) a current mem - should never underestimate the importance business using a name different than its in - ber leaves the band; (ii) a new mem - and economic value of the brand you are corporated name provided the company reg - ber joins; or (iii) a current member creating as an artist. isters the new business name. for example, dies or suffers a disability rendering my company, Gorman Publishing Services them unable to contribute to the In my experience, there is often a lot of con - Limited, may only carry on business as “Gor - band in the same way? fusion surrounding the differences between man Pub Co.” or “MG Publishing” if the com - business names, corporate names and pany successfully registers those additional • determine the circumstances in trademarks. This is the case with all busi - business names. Otherwise, it must only do which the partnership could break nesses, not just businesses in the music in - business and sign contracts under the regis - up or dissolve. Keep in mind that dustry. The following is a summary of each: tered corporate name, ‘Gorman Publishing under some provincial legislation, Services Limited.’ Artists and businesses unless there is an agreement to the Business and Corporate Names: should review their applicable provincial contrary, a partnership automati - corporate legislation to ensure compliance. cally dissolves if a partner dies, de - If I were to carry on business as a sole pro - clares bankruptcy, or becomes prietor or partnership (see section 2, above) Trademarks: insolvent. Also, unless the term of using a name other than my own personal the partnership is set out in an agree - name, I would need to register a business Trademarks are something different from ment, any partner might be able to name with the appropriate provincial cor - business and corporate names. They are dissolve the partnership by notice to porate office. for example, if I operate a words, designs, sounds or a combination the others. upon any such dissolu - shoe store and want to call the store “Gor - that distinguish goods and services in tion, it is important that the partner - man’s Shoes & More”, I would need to reg - the marketplace. Trademarks have the 22 potential to become very valuable intel - trademark with the Canadian Intellectual rights , which is a fancy way of saying that the lectual property. Consider the cash gen - Property Office is highly recommended. By artist may have a trademark without regis - erated in merchandise from the registering with CIPO, your trademark is tering with CIPO by simply using the trade - following trademarks: given national protection for 15 years, which mark in the marketplace. for example, if my can be renewed for another 15 years. By virtue band name is not registered with CIPO but A trademark could consist of purely a design, of registering a trademark, it is evidence that we are playing lots of shows, selling posters, like the iconic rush and rolling Stones logos. the trademark is yours, and any challenger Cds/vinyl, stickers, bottle openers, getting It could be a simple wordmark with no de - would have to disprove that the mark is yours, radio play, etc., our band name may auto - sign, like “The Tragically hip”. It could also rather than you having to prove that the mark matically attract trademark status. The more be a combination of words and design, like is yours. Trademarks is a very specific and in - you promote your brand in the marketplace, the iconic nirvana happy face and Pink floyd tricate area of the law, so you will need to sit the stronger your common law trademark

THe TragicaLLY HiP

font. A business name or corporate name, down with a lawyer or trademark agent to de - protection becomes. One catch is that, while discussed above, could also be registered as termine whether your proposed mark is “reg - registering your trademark with CIPO pro - a wordmark if you use the mark to identify istrable”. 47 you can start the process by vides automatic national protection, com - your goods or services. for example, my reg - conducting as many online searches as pos - mon law trademark rights may only afford istered business name “Gorman Pub Co.” sible to ensure your proposed name is not al - you with protection in the specific geo - could only be registered as a trademark if I ready being used by another act. In some graphical area in which you do business (i.e. was using that exact name in connection notable examples, “Pezz” had to change its where your band regularly plays, locations with my publishing services. name to “Billy Talent” and the British band in which you have regular radio play, etc.). “Bush” had to change its name to “Bush X” Therefore, it is possible for two bands with One thing to note is that if you hire a when touring in Canada, both due to trade - common law trademarks to perform under graphic designer to design a trademark for mark issues. Keep in mind that trademarks the same name if one band is based in hali - your band, you should ensure that the are registered on a country to country basis, fax and the other in Vancouver. Given the copyright is assigned from the designer to so if you plan to tour internationally, you fact that social media, on-demand streaming the band (and moral rights are waived). should ideally arrange registrations in each and webcasting have made music instanta - This is because, as noted in Part 1, the au - country in which you plan to tour. So long as neously accessible to virtually everyone thor of a work is the first owner of the copy - no problems arise during the registration around the world, the line is blurry as to how right. Copyright assignments need to be in process, it will cost you approximately $1000 far an artist’s geographical reach might be writing and signed by the owner, which - $1500 a pop. when their trademark is based solely on would be the graphic designer, their com - common law rights, but this is still the law. pany or both. Although registering a trademark is highly If you are serious about your music and you recommended for the above reasons, you unlike the registration of copyrights (dis - can still obtain a trademark even if you don’t 47 For example, the mark cannot be confusingly similar cussed in Part 1, section 2), which is often be - register with CIPO. An artist or band can es - to another trademark and it cannot simply be a sur - lieved to be unnecessary, registration of a tablish that they have common law trademark name (e.g. ‘Gorman’). 23 have the budget, trademark registration is performing. If your gross sales of goods and both in and out of town; highly recommended. services are more than $30,000 in any given year, you likely have to register for a •The cost of recording demos or Whether you decide to formally register GST/hST number and collect the tax from masters; your trademark or not, never underestimate your customers. notably, though, music the importance and value of your band lessons are exempt from GST/hST, so you •Cell phone expenses; name and overall brand, and the potential don’t need to collect tax on any fees you re - consequences of having to rebrand if you ceive from providing lessons. •General office expenses; don’t do your due diligence from the outset. The vast majority of musicians are self-em - •The costs to maintain the ployed, so it is important to understand portion of your residence used for 5. tAx bAsICs what you can and cannot claim as a busi - professional purposes; ness expense. As a performing artist or songwriter, so long as you are carrying on •Studio rentals; and Tax is a very specialized area, so an enter - your business with a “reasonable expecta - tainment accountant should be a member of tion” that you will profit from music, you •Professional development. 48 your musical team. A good accountant, in may be able to deduct several expenses as conjunction with a lawyer, will assist with business expenses for the purposes of your As noted in the discussion on business structuring your business in the most tax ef - income tax filing. These are reasonable ex - structures, one benefit of conducting fective way and ensure your tax filings are penses you incur while earning income business as an incorporated company is on time and correct. from music, which may include: flexible corporate tax planning options. for example, incorporated companies Musicians should be aware of the fact that all •Insurance premiums on musical may be able to claim the small business world-wide income must be reported on your instruments and equipment; deduction on active business income Canadian income tax filing, which includes earned in Canada. So long as the company royalties earned from exploiting copyrights, •Instrument and equipment is a “Canadian-controlled private corpora - records sold both in Canada and abroad, dig - maintenance and repairs; tion” and meets the criteria set out in the ital downloads, live performances both in Income Tax Act , the small business deduc - Canada and abroad, merchandise sales, etc.. •depreciation (i.e. wear and tear) tion applies an 11% federal tax rate on in - Any type of grant or prize money should also on instruments, recording equip - comes below $500,000. remember that as be claimed as income, but only in the year ment, and office equipment; a sole proprietorship and partnership, the that you actually spend it. With respect to sole proprietor/partners are taxed at their performances in the u.S., ensure you seek ac - •Interest expense on loans taken personal marginal rate, which could be counting advice before you tour south of the out to purchase business equipment; quite higher than 11%. you may also be border as you will want to get a handle on the able to set up a structure whereby all cash correct tax Id numbers required to accurately •The cost of leasing or renting earned goes to your company, which then report income earned in the u.S. unless cer - equipment; issues dividends to its shareholders (i.e. tain exemptions apply, keep in mind that owners). The company may be taxed at a withholding tax will typically apply to in - •Legal and accounting fees; lower corporate rate on all income it re - come earned in the u.S., which means that up ceives, and the shareholder would only be to 30% of money earned from shows may be •union dues and professional taxed on the dividends it receives from withheld from the performer for a certain pe - membership dues; the company. riod of time. Speak to your immigration lawyer or accountant about whether you are •Agent and management This is complicated stuff, so you are en - eligible for withholding tax exemptions. commissions; couraged to sit down with an entertain - ment accountant or tax lawyer to review In addition to income tax, you may be re - •remuneration paid to a substitute quired to register for and collect GST/hST or assistant; 48 See Tax Tips for Canadian Songwriters, Lorne on certain transactions. Ticket, album, and •Publicity and marketing expenses; Sprackman, March 10, 2014 ( https://www.socan - merchandise sales are all subject to magazine.ca/sound-advice/tax-tips-for-canadian- GST/hST, as are fees that you receive for •Travel expenses related to work, songwriters/ ) 24 tax planning options that suit your individ - of contract terms you may want to think the manager, which could be for - ual needs as an artist. no matter what, al - about before signing: ever for revenue streams associ - ways maintain accurate records, hold onto ated with contracts that the receipts, keep track of your business deduc - •Will they bust their ass for manager secured. If the tions, and complete all income tax filings you? – The first thing all artists artist/manager relationship is ter - on time. should consider is whether their minated, it’s common to see a sun - manager is going to work for them set clause , which means that and further their career. Securing commissions to the manager de - 6. mAnAgers And a hot-shot manager doesn’t mean crease over 3-5 years until the ArtIst mAnAgement much if he/she ignores you and is commission is 0%. ContrACts preoccupied with other clients. The artist could try to work a ‘trial •Term – The contract should period’ into the contract to ensure clearly set out how long the con - If you are going to build a business in the the manager is a good fit before tract lasts, which is typically an music industry, an essential person to have rushing off to get married. Such a initial term with the manager on your team is a manager . An artist may provision should allow either given the right to exercise renewal have a hot-shot manager from a reputable party to get out of the contract options. The artist might want to halifax, Toronto, or Vancouver manage - after, for example, 6 months, no add performance objectives asso - ment firm, or the artist’s manager may questions asked. ciated with each contract period. simply be one of their friends who started for example, the artist may try to driving the tour van. either way, the man - exclusivity – An artist is typi - • seek language in the contract that ager is generally viewed as someone who cally expected to be exclusive to prevents manager from exercising helps the artist further all aspects of their the manager, but the manager is an option unless artist earns $X career, including securing/negotiating not typically exclusive to the annually, secures a record deal, se - contracts (with the lawyer’s assistance), artist. In other words, artists will cures publishing a contract, etc. providing general counseling on music-re - not be able to retain another lated matters, providing creative manager after signing the con - advice/guidance, assisting the artist with tract, but managers could (and •duties of manager – This building a ‘team’ comprising of a lawyer, likely will) manage multiple might seem like an obvious one, accountant, publicist, etc. Managers of this artists. you need to get used to the but the exact duties of the manager kind (generally referred to as ‘personal fact that you are getting married should be set out in the contract. managers’) should be distinguished from to an unfaithful spouse. These may often be very broad- business managers , who assist the artist based, such as “manager shall as - with managing their cash-flow and assets, •Manager compensation – sist with all aspects of the Artist’s and provide general business advisory Managers will typically get a share career”; however, setting out the services such as banking, tax, and invest - of artist’s gross income (and specific duties is preferable. ment strategy. When starting out, the per - sometimes net income), and 10- sonal manager and business manager 20% is standard. how this share is •artist payment – how often is might be the same person; however, once calculated is very important. for artist paid by manager? Ideally it’s cash-flow is decent, ensure your business example, the contract may ex - every 30 days, but no more than manager is a skilled professional that clude from the manager’s share every 90 days. Keep in mind that if knows how to manage your money and monies that flow through the the manager loans the artist make it grow over time. artist, such as record costs, video money, those loans would gener - costs, tour support, etc. The ra - ally get paid back to manager as Although managers and artists often work tionale is that these are necessary soon as money comes in (but after together based on a ’hand-shake deal’, it is expenses that reduce artist’s in - manager takes out his/her man - highly recommended that the artist and come, so they should be deducted agement commission). manager enter into a contract, which from the pot prior to the calcula - binds the parties to certain obligations tion of manager’s commission. •Power of attorney - Manager and clarifies their rights and responsibili - The contract should also set out may often be able to sign contracts ties. The following is a non-exclusive list how long commissions are paid to on behalf of the artist if the con - 25 tract grants them POA. If you “reasonable”; and (2) within a cer - you sign (your ability to redraft a contract grant POA to your manager, you tain dollar threshold. Anything will always depend on your bargaining probably want to grant a limited above that threshold should re - power). Aside from reviewing contracts, power of attorney , which limits au - quire the artist’s approval. your entertainment lawyer will also assist thority to specified activities rather during the initial stages of your career with than a general POA, which would •assignment of contract – Both respect to incorporation, shareholders’/part - allow the manager to do anything manager and artist are typically nership agreements with bandmates, advice under the sun. A limited POA limited in their ability to assign the on liability or ‘risk exposure’ during shows, could include things like cashing management contract. Artists are etc. Lastly, your entertainment lawyer will incoming payments, signing live likely not allowed to assign unless provide you with advice when things go it’s to a company (owned by the performance contracts, approving wrong. for example, if you are getting sued artist) for tax purposes. If the man - expenses below a certain dollar by a promoter, injured fan, or fellow musi - ager is given the right to assign, you amount, etc. These limited rights cian who says they want a bigger slice of the may want to restrict manager’s should be specifically set out in the pie, your entertainment lawyer will work right to assign the contract to an - contract. you should be consulted through the issues with you (subject to con - for everything else, such as signing other company that manager joins. flicts of interest) and attempt to resolve the a long-term contract, decisions/ Ideally, artist would have the right matter. Conversely, if you are looking to sue contracts pertaining to artist’s to terminate the contract if it wasn’t a disgruntled ex-bandmate for stealing your name or likeness, incurring ex - satisfied with the assignment. music, promoter or venue owner who stiffed penses beyond a certain dollar you, or a manager that doesn’t seem to be amount, etc. Get your lawyer to 7. entertAInment distributing royalties as per your artist man - ensure the POA granted to your lAwyers manager won’t conflict with any agement agreement, you should pick up the POA granted to others for estate phone and book a meeting with your lawyer to discuss. planning purposes. Aside from a manager, an essential person to have on your music team is an entertain - Some lawyers may take a commission on •Key person clause – you may ment lawyer. Saying that any lawyer is suited revenues. In Canada, it is more common for have developed a personal rela - to be your entertainment lawyer is like say - your entertainment lawyer to bill you at an tionship with your manager dur - ing that a linebacker is suited to be a quar - hourly rate for the specific services they are ing the ‘getting to know you terback simply because he/she is a football providing. A commission may be appropri - phase’. Keep in mind that you player. The linebacker may know a thing or ate if your lawyer, for example, either acts as may not get along with other two about throwing the football, but is likely your manager or performs management managers who work for the man - not the person you want to make the clutch type services. Before you proceed with your agement company you are sign - pass in the final moments of the game. lawyer, clarify, in writing, (1) exactly what ing with. As such, you might want services you need and exactly what your the right to terminate the contract As previously stated, your manager will try lawyer will be doing; and (2) fees/commis - if your manager leaves the man - to further all aspects of your career by lining sions payable for the services the lawyer will agement company you con - up deals with publishers and labels, provide be providing, including applicable disburse - tracted with. The management input on producers and sound engineers, ments. 49 If they don’t provide you with a re - company may not budge on this work with your booking agent to ensure tainer letter, ask your lawyer for a retainer one unless the artist has signifi - you have successful tours, and generally letter setting out all this information. de - cant bargaining power. ‘makes things happen’ for the artist. The en - pending on the services being provided, tertainment lawyer will provide legal advice •Management expenses - Man - on all aspects of your career. agers will often seek reimburse - 49 Disbursements are non-legal fees that lawyers/law ment of expenses during the Anytime a recording contract, publishing firms will typically pay on your behalf, but pass off course of their management du - deal, or live performance agreement, for ex - to you in your invoice. Disbursements could include, ties. The artist should ensure the ample, are being negotiated, your lawyer for example, things like copying/printing, standard manager doesn’t spend indiscrim - should review those contracts, advise on the incorporation fees that are charged by the province, inately and that expenses are (1) risks, and provide a suggested redraft before or trademark filing fees charged by CIPO.

26 your lawyer should give you a ball-park quote for the cost of their services. your lawyer might even be willing to provide a ‘fixed fee’ for services, meaning you will know exactly, at the outset, how much legal fees will run you (instead of being billed at an hourly rate). use of a fixed-fee billing structure is increasingly becoming the norm for legal services in Canada and the u.S.

1. lIve performAnCe CopyrIght

27

LeGAL COnSIderATIOnS fOr LIVe PerfOrMAnCeS

PArT V: And TOurS

ment lawyer, and the promoter for individ - mercials, movies, or soundtracks. With traditional record sales declining, more ual gigs. your status as a performer (e.g. As always, everything is negotiable, and more artists/performers are relying on super-star, just trying to get by, or some - but will depend on your bargaining cash flow from live performances as their thing in between) will likely dictate whether power as a performer. dominant revenue stream. As noted in Part you have a separate booking agent (possibly 1, the owner of a copyright has the sole right associated with your label) or whether your •Personal managers – The role to perform a work or any substantial part in personal manager is doing most of the ne - of personal manager is discussed public. 50 This means that a performer can gotiating and hustling while you are on the in detail in Part IV, section 6. prevent others from performing his/her road. nonetheless, it is important to know Managers are mentioned in this work in public unless appropriate SOCAn li - a little bit about these roles: section because personal man - censes are in place. furthermore, a per - agers often negotiate live con - former has a copyright in their performance •Booking agent – Their role is pri - tracts and assist artists on the (i.e. live or recorded performance), which marily to assist the artist with road. If so, the manager often be - consists of the sole right to record the per - booking shows, arranging appear - comes the de facto booking agent. formance and communicate it to the pub - ances (radio shows, T.V., possibly Managers typically collect a com - lic. 51 This means that a performer has the movies), negotiating contracts mission on the artist’s entire right to prevent others from recording their (with the assistance of the artist’s earnings, which include earnings live performance and broadcasting the per - lawyer), and providing advice with from live performances. formance without permission, which be - respect to the artist’s life on the comes a relevant deal point when road. If you have a personal man - •entertainment lawyer – The negotiating a Live Performance Agreement ager, you may not see your booking role of entertainment lawyer is with a promoter (discussed further in section agent often (maybe at certain con - discussed in Part IV, section 7. en - 5, below). next time you are playing a show certs/festivals or before a tour). It’s tertainment lawyers are men - and someone tries to record it without your a good idea to have your manager tioned in this section as, like permission, wag your finger and tell them to assist with selecting a booking managers, your entertainment stop unless they pony up. agent, who will likely be dealing lawyer will provide legal advice with your manager more than you with all aspects of your career, in - anyway. Agents may receive 5-10% cluding live performances and life 2. bookIng Agents, of live performance revenue, and on the road (contracts, liability, mAnAgers, lAwyers, generally don’t receive cash from immigration, etc.). Irrespective of And promoter other revenue streams such as whether your manager or book - record sales and/or publishing. In ing agent negotiates live perform - There are a number of people who may be addition to live performance rev - involved with respect to your life on the enue, some agents may try to col - road. The most important are probably lect commissions on things like 50 Ibid, section 3(1) your booking agent, manager, entertain - appearances on T.V. shows, com - 51 Section 15(1), Copyright Act , RSC 1985, c C-42

29 ance contracts on your behalf, all members when musical works are played on the the artist and the promoter of the concert. contracts should be reviewed and radio, commercial establishments, TV, movies, The promoter would also have a separate vetted by your entertainment etc., SOCAn will also assist songwriters with contract with the owner of the venue for use lawyer to ensure every paragraph, getting paid when their songs are performed live. of the space. The artist should only sign sentence, and word is appropriate. for some artists, this might be the first time they contracts that are applicable to the artist. If something doesn’t look quite see publishing revenue come in. In order to get for example, the artist should normally not right, your entertainment lawyer paid for the live performance of your musical be required to sign the contract for use of will provide advice on the prickly compositions, the catch is that the musical work the venue, which is typically between the bits of the contract so you are in a must be performed at a concert where live music venue owner and promoter. position to assess the potential is the focal point of the event, such as music fes - risks before signing. tival, bar gig, or even a house concert. The following is a non-exclusive list of some terms/conditions that the artist will want to •Promoter – not every show you In order to get paid by SOCAn when your confirm in the Live Performance Contract: play is going to have a promoter, but musical work is performed at a concert, bigger shows may. Simply put, the SOCAn will need to ensure (1) the venue has •Payment – Most importantly, promoter is responsible for pro - paid a SOCAn license fee; and (2) there is a what are the payment terms of the moting the show and ensuring peo - minimum $6.00 cover. The first requirement contract? Is it a lump-sum pay - ple show up en masse . The promoter makes a lot of sense: since royalties from the ment, based on ticket sales, or will likely deal with your booking performance of musical compositions are both? you will also want to deter - agent or manager, and should be re - coming from the payment of SOCAn license mine when you are getting paid. sponsible for all aspects of the live fees, those SOCAn license fees need to be Are you getting everything at once event such as security, insurance, paid for royalties to flow. Bars/clubs that reg - before the show, or 50% before the appropriate licenses, etc. The pro - ularly host shows have likely paid the appro - show and 50% after? Both would moter will contract with the musi - priate tariff, but it’s something the artist be reasonable. furthermore, if cian for the musician’s services should know beforehand. The second re - payment is based on ticket sales (discussed below in section 4). de - quirement illustrates that music is the focal (exclusively or in addition to a pending on the show, the promoter point of the event, which is assumed if people guarantee), pay careful attention to may also contract with the owner of are paying $6.00 or more at the door. whether your cut is based on “net” the venue. That contract (likely a li - or “gross” receipts. net receipts cense), would outline how long the To ensure you get paid for the live perform - means that the promoter puts all promoter requires the space, terms ance of your musical composition, you their cash on a table, deducts ex - concerning use of the space, and li - should maintain as much documentation as penses like sound, security, door ability should someone at the show possible with respect to the concert, which guy, etc., and then pays your share get injured, for example. your con - includes ticket stubs, concert posters, out of that smaller cash-pool. If tract with the promotor should, in emails from the promoter, etc. This docu - you are agreeing to a percentage of most cases, be limited to providing mentation is required to prove that the “net” receipts (anywhere from your musical services, and you event actually took place and that SOCAn 70/30 to 90/10 in the musicians should proceed with caution before isn’t dishing out royalties for nothing. The favor), you should also have a guaranteed minimum to ensure signing anything with the venue performer will need to fill out a notification you don’t take a haircut if expenses owner, which is normally the pro - of Live Music Performance within 1 year of get out of control. motor’s responsibility. the performance. •copyright considerations – As previously discussed, the 3.soCAn And lIve 4. lIve performAnCe owner of a copyright has the sole performAnCes ContrACts right to perform that work in pub - As discussed in Part II, SOCAn assists its mem - If you are lucky enough to play shows big lic. further, a performer owns the ber songwriters and publishers with collecting enough to necessitate a Live Performance copyright in their performance, and distributing royalties on behalf of its mem - Contract, it’s important to understand the which prevents others from bers for the public performance of musical terms of the contract and legal issues at play. recording that performance and works. In addition to distributing royalties to its These contracts would typically be between distributing it without the per -

30 former’s consent. Consider other provisions known as “rider” provi - If you are planning to tour in the u.S., it is whether you want to give the pro - sions, which will likely be attached to the essential that you contact your lawyer moter the right to record and dis - Live Performance Contract as a schedule or (who should be well versed in immigration tribute the performance. appendix. So long as the Live Performance law) or the American federation of Musi - Contract is drafted appropriately, the artist cians (see below) to determine whether •Limit of Liability/indemnity rider forms part of the contract and is just you require a temporary work visa. for – These provisions can tend to be as enforceable as any other term. The rider Canadian musicians, the visa you need to confusing in all contracts. Ideally, is where artists might try to get away with secure is likely a ‘P’ or ‘O’ visa. If you don’t the “limit of liability” provision outrageous demands like an empty hotel acquire the appropriate visa before you would state that, should the pro - room so they can fill the vacant space with tour the u.S., it’s possible you will be (a) kicked out of the country (quickly), (b) moter be sued for its own acts, custom furniture (*cough*…Madonna), fined; (c) barred from entering the u.S. for omissions, negligence, etc., the full-size snooker table (The Stones), or the up to 5 years; or (d) all of the above. artist will not be responsible. It systematic removal of all brown M&Ms should also indicate that, even if (Van halen). Some more common artist the artist is sued by someone If you are looking to legally enter the rider provisions could include the following: united States to work as a touring musi - other than the promotor for the cian, the majority of artists will obtain a P- acts, omissions and negligence of •Adequate security at the event; 2 classification visa , which is available to the promotor, the promoter will well-known or emerging artists. To get a P- “indemnify” (reimburse) the •Sound and lighting specifica - 2 visa you should become a member of the artist, which includes all of the tions; American federation of Musicians (AfM), artist’s out of pocket expenses who will be able to petition on your behalf. (even legal fees). •Sound check requirements; The AfM will provide the same service as an immigration lawyer. P-2 visas will gen - •The Performance – The artist •Cancellation by artist, which erally be good for up to 1 year; however, should ensure that provisions re - might include an illness, low ticket your application must outline your tour lating to the performance itself are sales, or the promoter failing to dates in advance, which cannot be spaced included in the contract, such as: meet material obligations; apart by more than 28 days (you cannot (1) the venue; (2) time of the per - add more tour dates after applying!). So formance; (3) the required length •Choice of opening act; long as you have negotiated contracts to of artist’s set; (4) opening act and play at least every 28 days in the u.S., you who can choose it; etc. •Benefits or perks (as discussed extract the full 1-year benefit of the visa above), which would cover the re - and avoid the need to “re-apply, re-pay, and •insurance – it is essential that 53 quest for a bathtub of golden teddy re-wait” for another visa. The visa appli - both the artist and promoter be cation will cost you $325 uS, plus an adequately insured prior to a gig, bears, assortment of vegan food, or baby-proofed rooms; admin fee of $100. The admin fee increases which would include personal in - by $20.00 per musician you add to the ap - jury, cancellation, and equipment. plication. for further information, check •no recordings, photographs, or Artists should speak to an insur - out the AfM website , which includes the videos are to be made of the per - ance provider to ensure they are required P-2 application documents. adequately covered at all times in formance; and/or 6. enforCIng your case someone, for example, gets rIghts injured at a concert and sues the •Artist input on advertising, pro - artist. The limit on liability provi - motion and press associated with sion in the contract, however, the performance. 52 no one likes getting stiffed, particularly should protect the artist if the in - jury was the promoter’s fault. 52 See, generally, Musicians and the Law 5. tourIng In the in Canada, Sanderson, Paul 4th ED, 2014 unIted stAtes The above list just scratches the surface (pages 251-261) with respect to relevant terms in a Live Per - 53 I stole these words from Ben Caplan. formance Contract. There will usually be Thanks, Ben!

31 hard working musicians who may not be generally commence an action in the Small making tons of cash early in their career. for Claims Court if the claim is under a certain touring musicians, if a venue owner/pro - amount (typically $25,000). Please review moter does not pay what was agreed upon, your applicable provincial legislation/gov - you have a right to initiate legal action ernment website for more information on against them for breach of contract (even if the small claims process. Small Claims is a no formal live performance contract has relatively quick way to resolve your dispute been excited). (usually a few hours in the evening). Al - though you can retain a lawyer for Small Suppose the owner of venue X wants to Claims Court, the process is designed to be book your band. The agreement is that your more informal and the laws of evidence are band will close the show, play for 1 hour, somewhat relaxed. Therefore, many and you will get paid a guaranteed mini - claimants represent themselves at Small mum of $2500 plus a percentage of ticket Claims Court. you will need to attend your sales. you agree to collect your money after local courthouse and pick up the appropriate the show. After the show, however, the claim form, which will be served on the other venue owner is nowhere to be found. you party with a specified court date. email and call him, but no response. you continue to follow up over the next week, Getting involved in legal proceedings is gen - but radio silence. What do you do? So long erally never a pleasant experience. It can eat as you can establish that you had a contract up a lot of the artist’s time and money, with the venue owner, your prospect of suc - which often dissuades artists from pursuing cess is probably pretty reasonable. In legal action in the first place. It is important, essence, you need three things to establish however, that you understand what options that a contract existed: (1) an offer, (2) ac - are available should you decide to enforce ceptance of the offer, and (3) consideration. your rights. If you believe your rights have In this hypothetical, the venue owner offers been violated, it never hurts to discuss the the artist a gig at his venue for cash (check). situation with a lawyer and determine The artist accepts the venue owner’s offer at whether a legal claim is worth pursuing, ei - the price stated (check). Consideration is the ther with the assistance of a lawyer or as a benefit that is transferred to the venue self-represented litigant.” owner (promisor), or the detriment or loss suffered by the artist/band (promisee). In this case, the venue owner has received the benefit of your musical services (check). In addition, the band suffered a detriment by spending time, money (expenses) and ex - erted effort in performing the show (double check). The threshold for establishing con - sideration is quite low under Canadian law, which is why you might see a party agree to pay $1.00 under a contract as “good and valuable consideration”.

If you can establish that a contract existed, the next step would normally be to write the venue owner (either by email or letter), indi - cating that you are owed money and are de - manding that they pay up. This is known as a “demand letter”, and could be written either by you or a lawyer. If still nothing, you can 32