M. William Krasilovsky and Sidney Shemel John M
The Definitive Guide to the Music Industry 10th edition
M. WILLIAM KRASILOVSKY AND SIDNEY SHEMEL
CONTRIBUTIONS BY JOHN M. GROSS JONATHAN FEINSTEIN
BILLBOARD BOOKS AN IMPRINT OF WATSON-GUPTILL PUBLICATIONS / NEW YORK INTRODUCTION
Part One: MUSIC BUSINESS TRENDS AND TRANSFORMATIONS 3
Chapter 1 THE MUSIC INDUSTRY IN THE TWENTY-FIRST CENTURY 4 Industry Growth 5 Factors Relating to Growth 7 Factors Inhibiting Growth 10 Legislative Changes 10 Pending Legislation 11
Part Two: RECORD INDUSTRY AGREEMENTS AND PRACTICES 13
Chapter 2 RECORDING ARTIST CONTRACTS 14 The Standard Agreement 14 Duration 15 Group Artists 16 Exclusivity 17 Recording and Release Requirements 18 Artist Royalties 19 Recording Costs 22 Recording Funds 23 Publishing Rights 23 Controlled Compositions 24 Tour Support 25 Video Rights 25 Assignment 26 Ownership and Use of Masters 27 Coupling 27 Accountings and Defaults 28 Bankruptcy 28
Chapter 3 CONTRACTS WITH MINORS 30 Voiding of an Agreement 30 Ratification of an Agreement 31 Statutory Provisions of Contracts with Minors 31 Parents' Guarantee of Contract Performance 32 Chapter 4 INDEPENDENT RECORD PRODUCERS 33 The Role of the Independent Record Producer 34 Label Deals and Pressing and Distribution Deals 35 Producer Royalties 35 Recording Funds 36 Production and Development Deals 37 Producer Fees 39 Music Publishing and Follow-up Rights 39 Contractual Safeguards 40
Chapter 5 FOREIGN DISTRIBUTION AGREEMENTS 42 Royalty Provisions 42 Advances and Guarantees; Term 43 Exclusivity 44 Broadcast Performance Fees 45 Music Publishing 46 Labels 46 Release Requirements 46 Record Clubs 47 Coupling 47 Cover Recordings 47 Samples and Materials 48 Accountings and Auditing 48 Termination Procedure 49 Variations in Currency Values 49 Transmittal of Funds 50 Jurisdiction over Disputes 50 Default Clauses 50
Chapter 6 LABOR AGREEMENTS 52 Key Labor Agreements 52 Arbitration 53 AFTRA and AFM Scale Payments 53 AFM Special Payments and Trust Funds 54 AFTRA Health and Retirement Funds 56 Retirement and Death Benefits 57 Royalty Performers 57 Contractors 58 Dubbing 59 AFM and AFTRA Scales for New Media 59 Protections Against Illicit Practices 60 Domestic and Foreign Territory 61 Other Income for Artists 61 Legislative Advocacy 62 Chapter 7 SOUND RECORDINGS: RIGHTS, RESTRICTIONS, AND ROYALTIES 63 Copyright Protection for Published and Unpublished Works 63 Authorship 64 Rights of the Copyright Owner 64 Copyrightable Works 65 Albums 65 Derivative Works 65 Compilations 66 Audiovisual Recordings 66 Foreign Sound Recordings 67 Neighboring Rights 68 Sampling 68 Master Licensing 69 The Audio Home Recording Act 70 The Digital Performance Right in Sound Recordings Act of 1995 72 The Provisions of the Act 72 The Digital Millennium Copyright Act of 1998 73 Foreign Performance Royalty Practices 75
Chapter 8 BOOTLEGGING, PIRACY, AND COUNTERFEITING 77 Federal Legislation 78 Piracy and Counterfeiting Amendments Act of 1982 79 Uruguay Round Agreements Act of 1994 79 State Legislation 80 Compulsory License for Sound Recordings 80 New Tactics 81
Chapter 9 RECORD COVERS, LABELS, AND LINER NOTES 83 Album Titles 84 Illustrations 84 Recording Identification 85 Trademarks 86 Anticounterfeit Practices 86 Warning Stickers and Censorship Issues 87
Part Three: MUSIC PUBLISHER AND WRITER AGREEMENTS AND PRACTICES 89
Chapter 10 COPYRIGHT LAW IN THE UNITED STATES 90 Copyright Revision: 1790 to 1976 90 The Copyright Status of Sound Recordings 91 Common Law Copyright 91 Statutory Copyright 92 Copyright Registration 92 Registration of Published and Unpublished Works 95 The Copyright Notice 98 The Deposit of Copyrighted Works 98 Transfers of Copyright Ownership 100 Errors in the Copyright Notice 101 The Correction of Errors 102 Fair Use 102 Copyright Protection of Song Titles 104 Compulsory Mechanical License for Recordings 105 Record Rentals 106 Jukebox Public Performance Fees 107 Copyright and Cable Television Transmission 108 Licensing for Noncommercial Broadcasting 109 Satellite Carrier Compulsory License 109
Chapter 11 THE DURATION OF COPYRIGHT PROTECTION 110 Term of Copyright Protection 110 The Supreme Court Decision on Eldred v. Ashcroft 110 The Duration of Copyright 111 Works Created by Natural Persons after December 31, 1977 112 Works for Hire; Anonymous or Pseudonymous Authors 112 Pre-1978 Works 112 Sound Recordings 112 Works in the Public Domain 113 End-of-Calendar-Year Copyright Computation 113 The Duration of Copyright Protection for Joint Works 113 The Determination of Date of Death 113 Copyright Renewal 114 Termination of Transfers 116 Pre-1978 Contracts (Renewal Termination) 117 1978 and Post-1978 Contracts (Transfer Termination) 117 Who Can Terminate? 117 Notice of Termination 118 Legislative Implications 118 Duration of Copyright and Protection Outside of the United States , 121
Chapter 12 THE USES OF PUBLIC DOMAIN 122 Works in the Public Domain 123 The Purposes of Public Domain ' 124 Determining the Public Domain Status of Works 126 The U.S. Copyright Office 126 The Library of Congress 127 Editions of Old Songs 128 Catalogues of Performing Rights Societies and the Harry Fox Agency 128 Other Reference Sources 129 Another Approach: Creative Commons 130 Copyright Registration of New Versions and Arrangements ofWorks 130
Chapter 13 ARRANGEMENTS AND ADAPTATIONS 132 Head Arrangements of Compositions 132 Copyrighting Arrangements 133 The Statutory Treatment of Arrangements 134 Duration of Basic Work Not Affected 13 5 Standards of Originality 135 Derivative Works 137 Soundalikes 139 The Arrangement of Works in the Public Domain 139 Foreign Treatment of Arrangements and Adaptations 141
Chapter 14 PERFORMING RIGHTS ORGANIZATIONS 142 Performance Monies and the World Economy 143 Clearing Functions 143 American Society of Composers, Authors, and Publishers (ASCAP) 145 Broadcast Music Inc. (BMI) 145 SESAC 146 Title Registration 147 i Surveying and Statistical Sampling 148 ; Membership in ASCAP, BMI, and SESAC 150 I The Fairness in Music Licensing Act of 1998 152 I The ASCAP Payment System 152 | The BMI Payment System 154 5 Loan Assistance 155 i Insurance Plans 155 I Writer Awards 156 I Foreign Collections 157 I Dramatic Performance Rights <~ 158 f I Chapter 15 MECHANICAL AND OTHER AUDIO REPRODUCTION RIGHTS 161 Parting with Possession; Returns 162 Notice of Intention . 163 Compulsory License Accountings 164 Identification of Copyright Owners 164 Negotiated Licenses 164 The Harry Fox Agency 165 Other U.S. Mechanical Rights Organizations 167 The Canadian Mechanical Rights Organizations 167 International Mechanical Rights Societies 168 The Writer's Share of Mechanical Fees 170 Record Clubs 170 Tide Use Restrictions 171 Record Rentals 171
Chapter 16 SONGWRITER CONTRACTS AND ROYALTY STATEMENTS 172 Duration of Copyright Assignment 172 Songwriters Guild Contracts 172 Copyright Divisibility 173 Royalty Statements 174 Recapture of Rights 175 Printed Editions 175 Sheet Music Sales 176 Mechanical Rights 176 Accountings and Audits 177 Default 179 Performance Fees 180 Assignments 180 Lyrics Versus Music 181 Royalties Held in Trust Funds 181 Arbitration 182 Exclusive Writer Agreements 182
Chapter 17 WORKS FOR HIRE 185 Factors Determining a Work-for-Hire Relationship 186 Commissioned Works 187 Assignments of Copyright 189 Joint Work Status 189
Chapter 18 CO-OWNERSHIP AND JOINT ADMINISTRATION OF COPYRIGHTS 191 Registration and Notice 191 The General Rights of Co-Owners 191 The Problems of Co-Ownership 192 Community Property 192 Synchronization Rights 193 Foreign Rights 194 Consent by Silence 194 Restrictions on Assignment 194 The Writer's Interest in Co-Ownership "194 The Cut-in 195
Chapter 19 COPYRIGHT INFRINGEMENT 197 Proof of Access to a Copyrighted Work 197 The Use of Music in the Public Domain 198 Vicarious Liability 199 Registration 200 Who May Sue for Infringement 200 Civil Remedies for Infringement 201 Court Costs and Attorney's Fees 202 Criminal Remedies for Infringement . 204 Mechanical Rights Infringement 204 Infringement by Importation 205 Copyright Registration 206 Recording Transfer of Copyright 206 Time Frame for Legal Actions 206 Sampling and Copyright Infringement 207
Chapter 20 INTERNATIONAL COPYRIGHT PROTECTION 211 The Berne Convention 211 The Effects of Berne Adherence 212 Droit Moral 213 Trade Negotiations and the General Agreement in Tariffs and Trade 213 The United States Trade Representative 214 The Geneva Phonogram Convention 214 World Intellectual Property Organization Treaties 215
Chapter 21 FOREIGN PUBLISHING 217 The World Market for Music 217 Representation by Subpublishers 218 Foreign Performing Rights Societies 218 Foreign Mechanical Licensing 219 Synchronization Fees 221 Printed Editions 222 Local Lyrics and Versions 222 Local Writer Royalties 222 Copyright and Term of Rights 223 Fees from All Usage, Accounting, and Audits 224 Subpublishing in Diverse Territories 225 The European Union 226 Default Clauses 227 Jurisdiction 228 Catalogue Agreements 228 Local Firms 228 Joint Firms 229 Termination of Joint Ownership 230
Chapter 22 THE WRITER AS PUBLISHER 232 Joint Writer-Publisher Firms 233 Self-Publishing 233 Sources of Copyrights for the Self-Publisher 235
Chapter 23 MUSIC FOR MOTION PICTURES 236 Rights Required for Films 237 Employee-for-Hire Agreements 237 Synchronization and Performance Licenses 238 Licensing Agents and Research Firms 239 Videos and DVDs 239 Music Publishing Rights 240 Recording Artist Royalties 241 Soundtrack Album Contracts with Record Companies 241 Component Parts of Films 242 Performances in Europe 243
Chapter 24 LICENSING RECORDINGS FOR FILMS, TELEVISION PROGRAMS, AND VIDEOGAMES 244 The Protection of Recordings 244 The Consent of the Music Publisher 245 Union Reuse Fees 245 Artist Contract Restrictions 246 Soundtrack Albums 246 Videogames 247
Chapter 25 MUSIC FOR THE THEATER 248 The Rights of Producers and Writers 249 Original-Cast Albums 250 Subsidiary Rights 252 American Productions Abroad 252 Initiating the Writing Process 253 Music in Dramatic Shows 253 Investment in Musical Theater 254 Sources of Investment 256 American Federation of Musicians Union Scale 257
Chapter 26 COMMERCIAL JINGLES 258 Uses of Music in Commercial Jingles 258 Payments for Music Used in Commercials 259 Negotiations for Licensing Fees 261 Warranties and Indemnities 262 The Packaging of Jingles 263 Payments to Singers and Instrumentalists 264 Simultatins an Artist's Stvle in Tineles 264 Chapter 27 BUYING AND SELLING MUSIC PUBLISHING COMPANIES AND RECORD COMPANIES 266 The Buying and Selling of Catalogues 266 Large Catalogues 266 Universe Music Group 266 BMG Music Publishing 267
Warner-Chappell 4 267 Sony/ATV Music Publishing 268 EMI • 268 Factors to Consider 269 Smaller Catalogues 269 Sources of Individual Copyrights 270 Renewal Rights 271 Reversion Rights 271 The Purchase of Assets or Stock 272 The Price of Purchasing a Copyright 273 Users of Copyrights 274 Capital Gains 274 Due Diligence 275 Buying and Selling Record Companies and Masters 277 Consolidation 277 Factors to Consider 280 Leadership of the Newly Acquired Label 280 Due Diligence 281
Chapter 28 LOANS TO MUSIC PUBLISHERS 284 Special Risks 285 Loan Amounts 286 Copyright Search Report 287 Recordation of Loans in the Copyright Office 288 Recordation of Loans in Local and State Jurisdictions 289 Sale of Property upon Default 289 Exclusive Writer Contracts 290 Conditions on the Administration of a Loan 290 Outstanding Advances at the Time of a Loan 292 The Appraiser's Report and Representations of the Borrower 292 Bankruptcy of the Borrower 294
Chapter 29 PRINTED MUSIC 296 Writer Royalties . 297
Print Publishers o - . 298 Royalties on Licensee Arrangements 298 Selling Agent Agreements 299 Term 299 Specialty Folios 299 Notice of Copyright 300 Fakebooks 300 Return Privileges and Reserves 301 Discounts 301 Subpublishing Deals 301 The Internet: Digital Sales and Distribution 302 Guitar Tabulature and Lyric Licensing 303
Part Four: OTHER ASPECTS OF THE MUSIC BUSINESS 305
Chapter 30 PRIVACY AND PUBLICITY RIGHTS 306 The Right of Privacy . 306 The Right of Privacy and Freedom of the Press 307 The Right of Publicity 307 Use of Name or Likeness for Trade or Advertising 309 \ Privacy Contract Clauses 310 Remedies for the Invasion of Privacy 311 Works in the Public Domain 312
Chapter 31 THE PROTECTION OF IDEAS AND TITLES 313 Compensation for Ideas 313 Concreteness and Originality 314 Unsolicited Ideas 314 Titles 315
Chapter 32 NAMES AND TRADEMARKS 317 Copyrightability 318 Trademarks and Service Marks 318 Differentiating Between Copyrights and Trademarks 318 Selecting a Name 319 Prior and Conflicting Company Names and Marks 320 Search Organizations and Services 321 Trademark and Name Infringement 322 Names of Artists 324 Registration of Names 324 Registration of Marks 325 The Advantages of Registration 327 Trademark Registration at Home and Abroad 327 The Ownership of Rights in an Artist's Name 328 A Record Company's Rights in a Name 329 Group Members' Rights in a Name 329 Doing Business Under an Assumed Name 330 "Branding": Trading on a Name - 330 Chapter 33 AGENTS AND MANAGERS 332 The Roles of Agents and Managers 332 Exclusive Representation 334 The Standard Contract 334 Changes in Agency Personnel 336 Abuses by Agents and Managers 337 Regulation of Agents and Managers 337 Trade Organizations for Personal Managers 339 Do You Really Need a Personal Manager? 339 Notices and Payments 342
Chapter 34 TAXATION IN THE MUSIC BUSINESS 343 Capital Gains 343 Estate and Gift Taxes 345 Depreciation and Amortization 346 Tax Treatment of Record Masters 348 Charitable Contributions ' 349 Home Office and Studio Deductions 349 Shifting Taxable Income to Persons in Lower Tax Brackets 350 Shifting Income from One Year to Other Years 351 Deferral of Income Through Retirement Plans 352 The Tax Implications of Type of Business Organization 355 S Corporations 355 The Limited Liability Company 355 Family-Owned Businesses 356 The Personal Holding Company 356 Taxation of Royalties 357 Royalties Earned Abroad 357 Keeping Records 357 Audit Procedures 358 Songwriters 358 Music Publishers 358 Live Performers 358 Video and Record Producers 359 Managers 359
Chapter 35 RECORD CLUBS AND PREMIUMS 360 Membership Plans 360 Outside-Label Agreements 361 Artist Royalties 362 Foreign Record Clubs 362 Mechanical License Fees 363 Premiums 364 Chapter 36 MUSIC VIDEOS 365 Major Music Video Networks 3 66 Video Technology 366 Video Licensing 3 67 Audiovisual Rights 368 The Recoupment of Production Costs 371 Musical Composition Licenses 372 Trade Paper Coverage of Music Videos 372
Chapter 37 DEMONSTRATION RECORDS IN THE ELECTRONIC AGE 374 Production Methods 374 Doing It Yourself 3 76 Cost Factors 376 The Assumption of Demo Expenses 376 Subsidized Demos 377 Submitting Demos 378
s The Independent Demo 379
Chapter 38 PAYOLA 380 The Incentive to Engage in Payola 380 Commercial Bribery 381 Publishing Interests and Payola 381 Payola and Trade Papers 381 The 1960 Congressional Hearings 382 Enter the Independent Promoter 383 The Spitzer Campaign 383 The Racketeer Influenced and Corrupt Organization Act (RICO) 384 Current Congressional Initiatives 384
Chapter 39 TRADE PRACTICE REGULATIONS 386 Discriminatory Price Differential Practices 386 Proportional Equality in Advertising, Promotional Allowances, or Facilities 388 Price Fixing, Tie-in Sales, and Other Deceptive Practices 388 Soundalike Recordings 390 Marketing for Mature Audiences 390
Chapter 40 WORK PERMITS FOR FOREIGN ARTISTS 391 Types of Work Visas 391 The Proper Petitioner and Petitions 392 Types of Petitions and Accompanying Documents 394 Where to File Petitions 395 Artist's or Group's Accompanying Personnel 396 Rejection and the Right of Appeal 397 Union Comity 397 Impact of the Homeland Security Act 398 Multiple Entries into the United States plus Extensions 398 Taxation 399
Chapter 41 SOURCES OF INFORMATION 400 Trade Press 400 Government and Educational Institutions 405 The U.S. Copyright Office 405 Thomson CompuMark 406 The Archive of Folk Culture 407 The National Recording Registry 407 The Smithsonian Collections 408 The Center for Black Music 409 Cylinder Digitization and Preservation Project 409 Music Organizations , 409 Professional Research Services 410 Reference Materials 411 International Trade Shows and Associations 412 Websites 413
Chapter 42 TECHNOLOGY IS A CHALLENGE, NOT A CHOICE 414 A New Perspective 416 Digital Information Technology 418 CDs: The First Practical Step 419 Storage Capacity: To Infinity and Beyond 419 Portability 421 High-Speed Digital Networks 422 A Case Study in Delivery Quality: The Ringtone Phenomenon 423 The Business of Music in the Digital Age 426 The Technology Industry Perspective 427 The Zipless Buck 428 Digital Rights Management 430 What's Being Sold? (Bits, Bytes, and Notes) 431 I What Is a Digital Copy: Too Much, Too Little, or • Just Right? 433 The Question of Quality 438 , Territoriality: Are There Borders in Cyberspace? 439 j Digital Music: A Marketing Tool or a Product? 443 | How to Get There from Here 447 I Addressing Security Issues 448 * Creating a Viable Tracking System 450 A Celestial Cash Register for the Celestial Jukebox 451 A Cautionary Note: 458 Looking Ahead 460 Appendix A MUSIC INDUSTRY ORGANIZATIONS 461 Government Organizations: United States 461 International Organizations 462 Performance and Mechanical Rights Licensing Organizations 464 Unions 468 Trade Associations and Affiliates 469 Industry Service Organizations 473 Educational Groups 474 Publications and Directories 476 Music Trade Shows 477 Miscellaneous 477
Appendix B CONTRACT CHECKLISTS 481 Negotiation Checklist: Demo Shopping Agreement 482 Negotiation Checklist: Demo Subsidy Deal 483 Negotiation Checklist: Distribution Agreement Between v Independent Label (Owner) and Major Label (Distributor) 484 Negotiation Checklist: Exclusive Artist Agreement 486 Negotiation Checklist: Exclusive Songwriter Contract 488 Negotiation Checklist: Foreign Subpublishing Agreement 489 Negotiation Checklist: Home Video/DVD Reproduction of Song 490 Negotiation Checklist: Live Concert Appearances 491 Negotiation Checklist: Master Use License for Film or TV Show 492 Negotiation Checklist: Mechanical Reproduction License 493 Negotiation Checklist: Personal Manager 494 Negotiation Checklist: Single-Song Contract 495
Appendix C CURRENT U.S. LICENSING AND COLLECTION PRACTICES FOR DIGITAL USES 496
INDEX 497