Book Table of Contents

Contents

 

Introduction 1

SOURCES OF INCOME 4

1.  Music, Money, Songwriting, and Music Publishing 5

Music Publishers and What They Do 6

Singles and Albums.................................................................. 7
Demo Recordings....................................................................  8
Proper Administration..............................................................  8
Television and Movie Music...................................................... 9
Commercials............................................................................  9
Video Games...........................................................................  9
Foreign Promotion and Collection of Royalties........................  9
The Publisher, Writer/Performer, Record Contracts, and
    Development Deals.............................................................. 10
Infringement Actions................................................................. 10
Home and Personal Video.......................................................  10
The Inner Workings of a Music Publisher.................................  11
Chief Executive........................................................................  11
Creative Department................................................................. 11
Promotion Department.............................................................. 11
Business and Legal Affairs Department...................................  11
Synchronization Licensing Department.....................................12
Mechanical Licensing Department...........................................  12
Finance Department................................................................. 12
Copyright Department............................................................... 12
Foreign Department................................................................... 13
Royalty Department................................................................... 13
I.T./Computer Department.........................................................  13
The Acquisition of Rights by a Publisher...................................  14
Individual Song and Exclusive Agreements..............................  14
Administration Agreement.........................................................  15
Foreign Subpublishing Agreement............................................  15
The Songwriter–Music Publisher Relationship..........................  15
Publishing Contracts..................................................................  16
The Individual Song Contract...................................................... 16
The Exclusive Songwriter’s Contract........................................... 17

Important Provisions of Songwriter-Publisher Contracts............. 18

Sale of the Musical Composition.................................................. 18
Return of Songs to the Writer....................................................... 18
The Term......................................................................................  19
Rights Granted to the Publisher....................................................  19
Exclusivity.....................................................................................  20
Compensation............................................................................... 20
Sharing of Advances....................................................................  21
Minimum Song Delivery Requirement..........................................  21
Advances......................................................................................  22
Mini-Max Advances......................................................................  23
Subfloor Advances........................................................................  24
Pipeline Income.............................................................................  24
Timing of Advances.......................................................................  25
Writing with Other Songwriters......................................................  25
Motion Picture and Television Theme Exclusions.........................  25
First-Use Mechanical Licenses.....................................................  26
Restrictions on Promotion in Certain Areas..................................  27
Altering Compositions....................................................................  28
Ownership and Promotion of Demo Recordings............................  29
Foreign Subpublisher Fees............................................................  29
Audits..............................................................................................  30
Infringement Claims........................................................................  31
Writer/Performer Development Deals.............................................  32
Development Deal Variations/Equipment Funds............................  35
Conversion of the Development Deal.............................................  36
Sources of Income for the Music Publisher and Songwriter...........  36
Performance Right Payments.........................................................  36
CD and Record Sales (Mechanical Royalties)................................  37
Downloads....................................................................................... 38
Mechanical Licenses......................................................................  38
Television Series............................................................................  40
Motion Pictures...............................................................................  41
Home Video/Personal Video/DVDs/Blu-ray/Downloads.................  42
Commercials...................................................................................  43
Broadway Musicals.........................................................................  44
Video Games..................................................................................  44
Karaoke/Sing-Alongs...................................................................... 45
Internet Karaoke Sites....................................................................  45
Video Jukeboxes............................................................................  45
Lyric Reprints in Novels or Nonfiction Books.................................  46
Lyric Reprints in Magazines...........................................................  47
Monthly Song Lyric and Sheet Music Magazines..........................  47
Public Service Announcements.....................................................  47
Recordings of Hit Songs with Changed Lyrics...............................  47
Medleys.........................................................................................  48
Promotional Videos........................................................................ 49
Greeting Cards..............................................................................  50
Musical Greeting Cards.................................................................  51
Electronic Greeting Cards.............................................................  51
Television Commercials for Motion Pictures.................................  52
Home and Personal Video (Television Programs)........................  52
Home and Personal Video (Recording Artists).............................  53
Foreign Theatrical Royalties (Motion Pictures).............................  53
Dolls and Toys................................................................................ 53

Television Programs and Motion Pictures Based on Songs..........  54
Books Based on Motion Pictures (Lyric Reprints).........................  55
Books about a Lyricist....................................................................  55
Remixes.........................................................................................  56
Novelty and Theme Song Albums.................................................  56
Lyrics on Albums, Downloads, and CD Packages.........................  57
Sheet Music and Folios.................................................................  57
Television and Motion Picture Background Scores.......................  57
Lyrics and Music on Soda Cans....................................................  58
Lyrics on Merchandise...................................................................  58
Lyrics on T-Shirts, Clothing, and Posters........................................ 59
Lyrics on Direct-To-Consumer Merchandise..................................  59
Audio Recordings of Books............................................................  60
Special Products Albums...............................................................  60
Television Sale Only Albums..........................................................  61
Key Outlet Marketing Albums.........................................................  61
Bonus and Hidden Tracks on an Album.........................................  61
Limited Edition Collectibles............................................................  62
Musical Telephones........................................................................  62
Singing Fish....................................................................................  63
Theme Parks..................................................................................  63
Ringtones.......................................................................................  63
Compilation Albums/Mechanical Rates Based on Past Success..........................................................................................  63
Musical Door Chimes.....................................................................  64
Musical Candles.............................................................................  64
Musical Flowers.............................................................................  64
Corporate In-House Videos...........................................................  64
Music Boxes..................................................................................  65
Slot Machines................................................................................  65
Musical Instrument Toys................................................................  65
Background Music Services..........................................................  65
Internet Musical Instrument Lessons.............................................  67
Physical Coins...............................................................................  68
Holograms.....................................................................................  68
Menu Screens...............................................................................  68
Co-Branding Videos......................................................................  69
Virtual Reality................................................................................  69

2.  Music, Money, Co-Publishing, and Administration 71

Standard Terms of a Co-Publishing Agreement...........................  73

Sharing of Income........................................................................  73
Compositions Covered by the Agreement...................................  75
Acquiring Songs Written by Other Writers...................................  75
Transfer of Copyright and Other Rights ...................................... 76
Term of Agreement...................................................................... 76
Term/Recoupment Only Deals....................................................  76
Album-Based Agreements..........................................................  77
Two-Album Firm Agreements.....................................................  77
Exercise of Options in Album-Based Agreements......................  78
Non-Exercise of an Album Option...............................................  80
Ownership of Songs after the Contract Has Ended....................  80
Advances....................................................................................  80
Release of Recordings (Mini-Max Advances).............................  81
Advances Based on Album Content...........................................  82
Advances Based on Licensing Rates.........................................  83
Commercial Release Definition..................................................  83
Commercial Release Considerations..........................................  84
Non-Album Based Advances......................................................  84
Advances Based on Sales..........................................................  85
“A” Side Single Chart Activity Advances.....................................  85
Reduced Advances If Unrecouped.............................................  85
Flow-Through Clauses................................................................  86
Unrecoupable Payments.............................................................  87
Costs of Demonstration Recordings............................................  87
Additional Costs...........................................................................  88
Payment of Royalties to Songwriters...........................................  88
Sharing of Income between the Two Publishers..........................  88
Pre-Recoupment vs. Post-Recoupment Royalties.......................  89
Administration Charges................................................................  89
The Writer’s Performance Right Income......................................  89
The Publisher’s Performance Right Income.................................  90
Reversions and Direct Collection of Income.................................  90
Reversion......................................................................................  90
Royalty Distributions to the Writer’s Company..............................  95
Right to Match an Offer of Sale.....................................................  95
Right of First Negotiation...............................................................  97
Participation Agreement................................................................  97
Signed Deal Memos......................................................................  97
Recap............................................................................................  98

Administration Agreements...........................................................  98

Fees Charged for Administrative Services....................................  98
Duration.........................................................................................  99
Territory..........................................................................................  99
Royalty Statements.......................................................................  100
Royalty Payment Dates.................................................................  100
Cover Records and New Uses......................................................  100
Cover Records..............................................................................  100
New Uses......................................................................................  101
Monies Earned during the Term....................................................  101
Advances......................................................................................  102
Pros and Cons of Administration Agreements..............................  102
Choosing the Right Administrator..................................................  103
Co-Administration and Joint Administration...................................  104
Songwriting Collaboration with a Performer...................................  104
Placement Deals for New Recordings...........................................  105

3.  Music, Money, Co-Ventures, and Joint Ventures.......................  107

Types of Joint Venture/Co-Venture Agreements.............................  108
Term................................................................................................. 108
Co-Publishing..................................................................................  108
Administration..................................................................................  109
Advances.........................................................................................  109
Advances to the Co-Venture Partner...............................................  110
Scope of the Agreement..................................................................  110
Songwriting Services of the Co-Venturer.........................................  110
Sharing of Income............................................................................  111
Deals that Extend Past the Term of the Co-Venture Agreement........................................................................................  111
Guaranteed Funding........................................................................  111
Carry Forward Advances.................................................................  112
Artist Development Budget/Joint Venture........................................  113
Exercise of Options for Songwriter Agreements..............................  113
Travel and Other Expenses..............................................................  114
Puts and Calls..................................................................................  114
Publishing Plus Ventures.................................................................  115

4.  Music, Money, and Copyright......................................................  117

Exclusive Rights of Copyright...........................................................  118
Works Made for Hire.........................................................................  119
Compulsory Licenses........................................................................  119
The Audio Home Recording Act of 1992...........................................  120
Copyright Royalty Judges (The Copyright Royalty Board)................. 121
Copyright Notice................................................................................  121
Fees and Forms.................................................................................  122
Duration of Copyright.........................................................................  122
Rules Governing Duration of Copyright.............................................  123
Revision of Copyright Renewal Procedures......................................  123
Renewal Claimants...........................................................................  125
Termination Rights............................................................................  125
Termination of the Extended Copyright Renewal Term.....................  125
When the Termination Notice Must Be Sent......................................  126
What the Termination Notice Must Contain........................................  126
Service of the Notice..........................................................................  126
Persons Entitled to Terminate the Extended Renewal Term............... 127
Termination Rights Under the 1998 Term Extension Act ...................  127
Termination of Agreements Made During or After 1978.....................  127
When the Termination Notice Must Be Sent....................................... 127
Sound Recordings.............................................................................. 127
Infringement of Copyright................................................................... 128
International Copyright Protection...................................................... 129
Pre-Registration................................................................................. 130
The Digital Performance Right in Sound Recordings Act of
    1995 (DPRSRA) and the Digital Millennium Copyright Act of
    1998 (DMCA)................................................................................. 130

Conclusion 131

5.  Music, Money, and the Recording Artist....................................... 133
Major Record Company 360 Deal..................................................... 133
The Phone Call.................................................................................. 133
Indie Record Net Profits Deal............................................................ 134
The Phone Call.................................................................................. 134
Major Record Company Traditional Deal........................................... 134
The Phone Call................................................................................... 134
Net Profits Licensing Deal for Future Recordings............................... 135
The Phone Call................................................................................... 135
Marketing and Distribution Deal.......................................................... 136
The Phone Call.................................................................................... 136
Inside the Business.............................................................................. 136
The Most Important Points in Every Recording Contract..................... 137
The Term.............................................................................................. 139
Artist Royalty Clauses.......................................................................... 140
Recording Artist Royalties.................................................................... 140
Retail Price Base.................................................................................. 141
Wholesale Price Base........................................................................... 141
Changes in the Computation from the Retail Price to a Wholesale Price
   or from a Wholesale Price to a Retail Price ........................................141
Factors That Determine an Artist’s Royalty............................................ 141
Graduated-Increase Royalty Provisions................................................. 142
Sales Level Increases............................................................................. 142
Contract Option Year Increases.............................................................. 143
Royalties for Sales Outside the United States........................................ 143
Album Price Lines and Royalty Rates..................................................... 144
Packaging Deductions............................................................................. 145
Free Goods/Discounted Goods............................................................... 146
The 90% to 92.5% Sale Provision............................................................ 147
New-Technology Royalty Rate Reductions.............................................. 147
Wholesale Price Calculations without Deductions.................................... 148
Cut-Outs and Surplus Copies................................................................... 148
Royalty Payments and Accounting Statements........................................ 148
Advances.................................................................................................. 149
Mini-Max Formulas.................................................................................... 150
Equipment Fund Advances....................................................................... 152
Album Release Obligations....................................................................... 152
Record Company Expenses...................................................................... 154
Videos........................................................................................................ 154
Tour Support.............................................................................................. 156
Trade Name Searches for Groups............................................................. 157
Promotion Expenses.................................................................................. 157
Marketing and Publicity Plans.................................................................... 158
Recording Costs/Recording Funds............................................................ 158
The Artist’s Obligations.............................................................................. 160
The Minimum Recording Obligation........................................................... 160
Satisfaction of an Artist’s Delivery Commitment......................................... 161
“Greatest Hits” Albums................................................................................ 161
Recording Sessions and Studios................................................................ 162
Album Artwork............................................................................................. 162
Warranties and Indemnities......................................................................... 163
Backup Musician Provisions........................................................................ 165
Side Artists................................................................................................... 165
Re-Recording Restrictions........................................................................... 166
Solo Albums (For Members of a Group)...................................................... 166
Provisions for New Band Members and Departing Band Members..............167
Recording and Delivery of Albums............................................................... 168
Delivery of the Final Master Recording........................................................ 168
Ownership of the Recordings....................................................................... 169

Motion Picture, Television, Video Game, and Commercial Uses................. 172

Shipping and Return Policies (Physical Recordings)................................... 173

Returned Recordings and the Artist’s Royalties........................................... 173

Insurance Policies........................................................................................ 175

Confidentiality Clauses................................................................................. 175

Artist–Production Company Agreements..................................................... 175

Flow-Through Clauses................................................................................. 176
Publicity........................................................................................................ 176
Responsibility for Payment of Producer Royalties....................................... 176
Producer Credit............................................................................................ 177
Producer Advances...................................................................................... 177
Producer Royalties....................................................................................... 177
Producer-Controlled Compositions.............................................................. 178

Controlled-Composition Clauses.................................................................. 178

Mechanical Rates......................................................................................... 178
Sales Plateau Increases............................................................................... 179
Increased Royalties for Later Albums........................................................... 179
Canadian Sales............................................................................................. 180
“Lock In” Rate Date....................................................................................... 180
“Greatest Hits” Albums.................................................................................. 180
Maximum Royalty Cap...................................................................................181
Downloads, Singles, and EPs....................................................................... 182
One-Use-Only Mechanical Royalties............................................................ 182
Free and Discounted Units............................................................................ 184
Midpriced and Budget Reduced Royalties..................................................... 184
Increased Royalty Rates for Compositions That Are Published by
   the Record Company.................................................................................. 184
Co-Writer/Recording Artist Acknowledgment Forms..................................... 184
Synch Rights When Co-Writing with a Recording Artist or Producer............ 185
Successful Outside Writer Exception............................................................ 185
Vinyl/Digital Redemption Programs............................................................... 186
Changing Mechanical Rates.......................................................................... 186

Copyrighted Arrangements of Compositions in the Public Domain............... 187

New Artist/Developing Artist Pricing.............................................................. 189

Net Profits Deals/Indie Labels....................................................................... 190

Net Profits License Agreements/Newly Created Recordings........................ 192
Distribution and Marketing Services Agreement........................................... 193
Quick View of Two Indie Record Deals......................................................... 195
Upstreaming.................................................................................................. 197
“360” Deals.................................................................................................... 197
Additional Rights Secured............................................................................. 198
Record Company Percentages..................................................................... 198
Songwriter Performance Income................................................................... 199

6.  Music, Money, and Sampling.................................................................... 201

Overview........................................................................................................ 201

Format of the Sample Agreement................................................................. 205

Copyright Registration................................................................................... 205
Administration of the New Composition......................................................... 205
Collection of Monies/Payment of Songwriter Royalties................................. 206
Additional Sampling....................................................................................... 206

Conclusion..................................................................................................... 207

7.  Music, Money, and Television................................................................... 209

The Television Industry.................................................................................. 209

The Making of a Television Program.............................................................. 210
The Market..................................................................................................... 211

Types of Television Music and How Music Is Used........................................ 212

The Television Music Budget.......................................................................... 213

Television Underscore.................................................................................... 214

The Television Underscore Contract.............................................................. 214
Theme Songs................................................................................................. 216
Screen Credit................................................................................................. 218
Exclusivity of Composer’s Services............................................................... 218
Ownership of the Copyright............................................................................ 219
Music Publishing............................................................................................. 219
Membership in a Performing Right Organization............................................ 219
Suspensions and Terminations....................................................................... 221
Disposition of the Score.................................................................................. 222
Transportation and Expenses......................................................................... 222
Share of Advance Payments.......................................................................... 222
Warranties and Indemnifications.................................................................... 222
Assignments................................................................................................... 223
Royalty Payments........................................................................................... 223
Theatrical Version Release............................................................................. 223

Television Series Song Demo Deals, Services and Other Provisions............ 223

Additional In-House Synchronization Fees For Other Projects...................... 225
Television Synchronization Rights (Getting Songs into Series,
    Specials, and Made-for-TV Movies)........................................................... 226

The Importance of Songs............................................................................... 227
The Phone Call from the TV Producer........................................................... 227
Negotiating the Television License for a Song............................................... 228
Actual Fees Charged for Songs Used in Television Programming................ 229
Hit Songs Used as Television Show Themes................................................ 245
Music Clearance............................................................................................ 246
Sharing of Payments..................................................................................... 248
The Performance Right................................................................................. 248
Television License Renewals........................................................................ 249
Blanket Synch Agreements for Old Programs.............................................. 249
Why Synchronization Fees Are Low............................................................. 250
Music Cue Sheets and Their Importance...................................................... 250
Television Programs Produced in Foreign Countries.................................... 251
Motion Pictures Shown on Television............................................................ 252
Guaranteed Syndication................................................................................ 252
The Importance of Written Confirmation....................................................... 253
Getting Songs into Television Programs....................................................... 253

Life after a Song Gets into a Television Program (Where the Real
    Money Is Made)........................................................................................ 256

Option Fees 257
DVD, Downloads, Personal Use Video, and Discs....................................... 258
Hit Singles from Television Programs........................................................... 260
The Television Series Soundtrack Album..................................................... 262
Television Commercials Promoting the Program.......................................... 262
Sheet Music Folios........................................................................................ 263
Royalties from Motion Picture Theaters (When a Television Program
   Is Released as a Motion Picture)............................................................... 263
Broadcasts of the Series, Special, Made-for-TV Movie, or Miniseries.......... 263
Television Songs in Commercials................................................................. 263
Television Songs Used in Other Television Programs................................... 264
Television Songs Used in Motion Pictures..................................................... 264
Turning a Song into a Movie or Television Program....................................... 264
Production Music/Library Music...................................................................... 265
Conclusion...................................................................................................... 269

8.  Music, Money, and Motion Pictures............................................................ 271

Overview......................................................................................................... 271

The Movie Industry.......................................................................................... 271
The Making of a Film....................................................................................... 272
The Market...................................................................................................... 273

Types of Motion Picture Music......................................................................... 273

The Film Music Budget.................................................................................... 274

Use of Pre-Existing Hit Songs in Films............................................................ 274

The Phone Call from the Film Company.......................................................... 274
Determining How Much to Charge for a Song.................................................. 277
Actual Fees Paid for Existing Songs................................................................ 277
Opening and Closing Credits........................................................................... 278
Multiple Uses of a Song................................................................................... 278
Lyric Changes................................................................................................... 278
Duration of License........................................................................................... 279
Rights Granted to the Film Producer................................................................ 279
Home and Personal Video................................................................................ 280
Territory............................................................................................................. 280
Limited Theatrical Distribution........................................................................... 280
Soundtrack Album Guarantees......................................................................... 280
Motion Picture Producer Cut-Ins....................................................................... 281
First-Use Restrictions........................................................................................ 282
Trailers for Movies............................................................................................. 283
Indie Films/Step Deals/Deferred Payments...................................................... 283
Restrictions on the Use of Songs in Other Films.............................................. 284
Exclusive Holds................................................................................................. 284
Reduction of Fees Due to the Use of Many Hit Records................................... 285
A Publisher Having More Than One Song in a Film.......................................... 286
Student-Produced Films/Step Deals.................................................................. 286
Rescoring and Replacing Songs in a Film Prior to Release.............................. 286
Promotional Television Programs....................................................................... 287
Nonprofit Films and Free Use of Music.............................................................. 287
Screen Credit..................................................................................................... 287
Music Cue Sheets and Their Importance........................................................... 288
Getting Songs into Films.................................................................................... 290
Websites............................................................................................................. 290
Producers and the Selecting of Songs............................................................... 290
Recap................................................................................................................. 291

The Song Written for a Motion Picture................................................................ 291

Breaking into the Business................................................................................. 291
The Song for Film—From Start to Finish............................................................ 292
The “Song Written for a Film” Contract............................................................... 292
The Writer/Recording Artist Agreement for Creating and Recording
   a Composition for a Movie............................................................................... 297

Life After the Motion Picture Release (Where the Real Money Is Made)............ 300

Motion Picture Home Video Licensing................................................................. 301
DVD and Blu-ray Only Licensing......................................................................... 302
Hit Singles from Motion Pictures.......................................................................... 302
The Motion Picture Soundtrack Album................................................................. 303
Television Commercials Promoting the Film......................................................... 305
Sheet Music Folios............................................................................................... 305
Motion Picture Songs in Commercials.................................................................. 306
Royalties from Motion Picture Theaters................................................................ 306
Television Broadcasts of the Motion Picture......................................................... 307
Film Songs Used in TV Programs........................................................................ 307
Film Songs Used in Other Motion Pictures........................................................... 307
Miscellaneous Sources of Income........................................................................ 307
Dramatizing a Song Into a Motion Picture or Television Program......................... 308

Motion Picture Underscore.................................................................................... 310

History of the Field................................................................................................ 310
The Feature Film Score Contract.......................................................................... 311

Sources of Income: The Underscore Composer................................................... 323

Composing, Arranging, and Conducting Fee........................................................ 323
Foreign Theatrical and Other Performance Royalties........................................... 324
U.S. Cable, Network, and Local Television Performances.................................... 327
Soundtrack Albums............................................................................................... 328

Conclusion............................................................................................................. 329

9.  Music, Money, and Commercials...................................................................... 331

The Advertising Agency and How It Works............................................................ 331

The Phone Call from the Advertising Agency......................................................... 331
Another Advertising Commercial Request via E-mail............................................. 332
The Advertising Agency and Its Use of Music........................................................ 332
The Importance of the Advertising Agency............................................................ 334
The Jingle............................................................................................................... 334
Creation of a Jingle and the Monies that Can Be Earned....................................... 335
The Independent Writer.......................................................................................... 335
The Jingle Production Company............................................................................. 335
The Writer as Employee of an Advertising Agency................................................. 336
Hit Songs Used in Commercials.............................................................................. 336
Permission to Use a Hit Song in a Commercial....................................................... 337
Time Limit for Fee Quotes....................................................................................... 338
Most Favored Nations Provisions............................................................................ 338
Advantages and Disadvantages of a Hit Song Being Used in a Commercial
   (From a Publisher’s and Writer’s Point of View).................................................... 338

Jingles (Songs Written for Commercials)................................................................. 339

The Jingle Writer and the Advertising Agency.......................................................... 339
The Agency and the Production Company............................................................... 340
The Writer/Recording Artist Jingle Agreement.......................................................... 340

 

Negotiating with an Advertising Agency for a Hit Song............................................ 342

Parties to the Agreement.......................................................................................... 343
Copyright Ownership................................................................................................ 343
Duration of License................................................................................................... 344
Exclusivity Versus Nonexclusivity (Competing Product versus
   Total Exclusivity)..................................................................................................... 344
Graduated Exclusivity Provisions in Commercials.................................................... 344
Right of First Refusal................................................................................................. 345
Number of Commercials............................................................................................ 346
Payment of Fees....................................................................................................... 346
Exercise of Options................................................................................................... 346
Territory..................................................................................................................... 347
Media........................................................................................................................ 348
Foreign Countries..................................................................................................... 348
Restrictions on Songwriter/Recording Artists........................................................... 349
Restrictions on First Broadcast Use by Another Product......................................... 349
Lyric Changes or Instrumental Uses........................................................................ 349
Confidentiality Agreements....................................................................................... 350
Performance Rights.................................................................................................. 351
Alternative Compensation Packages........................................................................ 351

Performance Royalties for Advertising Music........................................................... 351

Conclusion................................................................................................................ 352

10.  Music, Money, and Performances...................................................................... 353

The Performing Right................................................................................................ 355

PRO Sample Statement............................................................................................ 356

U.S. Performing Rights Organizations: Overall View................................................. 357

Royalties, Consent Decrees, Litigation, and Legislation............................................ 357

The Organizations and How to Join........................................................................... 358

ASCAP....................................................................................................................... 358
BMI............................................................................................................................. 359

Types of License Agreements.................................................................................... 360

Direct License Administration Services....................................................................... 361

Writer and Publisher Contracts and Termination Dates............................................... 361

Royalty Assignments/Buyouts of Writer Royalties....................................................... 364

Direct Licensing........................................................................................................... 364

Considerations in Making a Decision........................................................................... 366

ASCAP and BMI Income and Distributions.................................................................. 366

 

Components of ASCAP and BMI Income..................................................................... 367

Domestic....................................................................................................................... 368
Foreign.......................................................................................................................... 368
Special Distributions...................................................................................................... 269
Interim Fees.................................................................................................................. 370

Advances/Guarantees/Loans/On Account Payments/
   Other Financial Transactions..................................................................................... 370

Payment Dates and Methods of Payment.................................................................... 371

ASCAP.......................................................................................................................... 371
BMI................................................................................................................................ 373

ASCAP and BMI Payment Philosophy and Rules......................................................... 374

ASCAP.......................................................................................................................... 374
BMI................................................................................................................................ 376

Payment Changes......................................................................................................... 376

Co-Written Compositions.............................................................................................. 377

Removal of Works......................................................................................................... 378

Benefits and Services................................................................................................... 378

Performance Surveys................................................................................................... 379

ASCAP Payments and Payment Rules........................................................................ 379

Types of Performances and Their Values..................................................................... 380
Weights 381
Payment Formulas/Weights into Dollars....................................................................... 383
Radio 384
Audio Feature Premium (AFP)/The Radio Bonus......................................................... 384
Classic Song Bonus...................................................................................................... 386
Network Payment Formulas.......................................................................................... 388
Local Television............................................................................................................. 388
Highly Rated Shows Bonus Payments/Television Premium.......................................... 390
Cable............................................................................................................................. 391
Audiovisual Streaming Services.................................................................................... 392
Music and Lyrics in Ads, Promos, and PSAs................................................................ 392
Payments...................................................................................................................... 393
Live Performances........................................................................................................ 394
Per Program Distributions............................................................................................. 394
The Internet................................................................................................................... 395

The BMI Payment Schedule.......................................................................................... 395

The Current Radio Payment System............................................................................. 395
Additional Criteria For Payment..................................................................................... 396
Radio Payment Examples.............................................................................................. 396
Television........................................................................................................................ 397
Local Television.............................................................................................................. 399
Cable.............................................................................................................................. 399
Music and Lyrics in Commercials................................................................................... 400
Live Performance Payments.......................................................................................... 400
Internet........................................................................................................................... 401

SESAC........................................................................................................................... 401

Affiliation and Contracts.................................................................................................. 401
Past Payments................................................................................................................ 402
Current Payments........................................................................................................... 402
Payment Dates............................................................................................................... 404

Global Music Rights (GMR)............................................................................................ 404

Agreements..................................................................................................................... 404
Licenses.......................................................................................................................... 405
Royalty Payments and Statements................................................................................. 405 

PRO Competitive Payments........................................................................................... 406

Chart Songs—What They Earn....................................................................................... 406

Future Changes.............................................................................................................. 409

11.  Music, Money, and Broadway.................................................................................. 411

Broadway........................................................................................................................ 411

Types of Broadway Musicals.......................................................................................... 411
Weekly Costs of a Broadway Musical............................................................................ 412
The Broadway Composer and Lyricist........................................................................... 414
Sources of Income for the Broadway Composer and Lyricist........................................ 414

Music Licensing Agreements......................................................................................... 415

DGA/APC....................................................................................................................... 415
Option Payments............................................................................................................ 415
Advance Payments........................................................................................................ 416
Pre-Broadway Performances......................................................................................... 417
The Broadway Opening................................................................................................. 417
Broadway Writer Royalties............................................................................................ 418
Copyright Ownership..................................................................................................... 419
Royalty Pools and Operating Profits.............................................................................. 419
Fixed-Dollar Shows/Combination with Royalty Pool...................................................... 420

Grand Rights Song License Agreement........................................................................ 421

Writing a New Song for a Musical................................................................................. 422

Underlying Rights Agreement....................................................................................... 422

The Motion Picture as a Broadway Musical.................................................................. 423

The Television Series as a Broadway Musical.............................................................. 424

Road Performances During and After the Broadway Run............................................ 424

Weekly Costs of a Show on the Road........................................................................... 424

Adjustments in a Writer’s Royalties (Dramatists Guild Contracts)................................ 427

The New York Run (Minimum Weekly Guarantee)....................................................... 427
Touring Shows (Minimum Weekly Guarantee).............................................................. 427

Broadway Shows Produced under Non-Dramatists Guild Contracts............................ 428

Percentage-of-Receipts Royalty................................................................................... 428
Touring Shows with Guarantees................................................................................... 428
Touring Shows versus the Broadway Production......................................................... 429
Off-Broadway to Broadway to Off-Broadway................................................................ 429
Secondary Performances/Broadway Musicals............................................................. 429 

Subsidiary Rights and the Producer............................................................................. 430

United States................................................................................................................ 430
United Kingdom............................................................................................................ 431
Australia and New Zealand........................................................................................... 431

Producer’s Share of Subsidiary Rights Under Dramatists
   Guild Contracts.......................................................................................................... 431

Producer’s Right to Subsidiary Income Under Non-Dramatists
   Guild Contracts.......................................................................................................... 433

Life after Broadway (Where the Money Is Made)......................................................... 433

Hit Singles from Broadway Shows............................................................................... 433
Touring Productions...................................................................................................... 433
Mechanical Royalties.................................................................................................... 434
Motion Picture Rights to the Musical............................................................................ 434
Theme Parks, Ice Shows, and Other Live Versions..................................................... 435
Television Rights.......................................................................................................... 435
Performance Royalties................................................................................................ 435
Broadway Show Music in Commercials...................................................................... 436
Television and Internet Commercials Promoting a Broadway Musical........................ 436
Television Performances of Songs in the Play............................................................ 436
Television Performances of the Play........................................................................... 437
The Broadway Show Cast Album............................................................................... 437
Motion Picture Soundtrack Albums............................................................................ 438
Successful Cover Records......................................................................................... 438
Cover Singles............................................................................................................. 438
Sheet Music Folios..................................................................................................... 438
Royalties from Motion Picture Theaters..................................................................... 439
Broadway Songs Used in Television Programs......................................................... 439
Broadway Songs Used in Motion Pictures................................................................. 439
The Broadway Musical as a Motion Picture............................................................... 440
Home Video/DVD/Blu-ray/Downloads/Video-On-Demand......................................... 441
Non-Cast Albums of the Broadway Musical............................................................... 441
Catalogue Musicals.................................................................................................... 441

Developing a Jukebox or Catalogue Broadway Musical............................................ 442

Conclusion................................................................................................................. 446

12.  Music, Money, and Video Games....................................................................... 449

Video Games............................................................................................................. 449

Types of Video Game Music...................................................................................... 450

Songs in Video Games.............................................................................................. 450
Sales Plateau Bonuses/Per-Unit Royalties................................................................ 452
Downloadable Content (DLC) Royalties.................................................................... 453
Bundled Content........................................................................................................ 453

Console and Streaming Games................................................................................ 455

Platforms................................................................................................................... 455
Delivery Methods for Streaming................................................................................ 456
Composition Uses..................................................................................................... 456
Duration of the Use................................................................................................... 456
Editing....................................................................................................................... 456
Financial Terms......................................................................................................... 456
Performance Royalties.............................................................................................. 457

User Generated Content........................................................................................... 457

Mobile Games........................................................................................................... 457

Summary Video Game Deals................................................................................... 458

Video Games Based on Television Series................................................................ 459

Video Games Based on Movies................................................................................ 459

Video Game Underscore Contract Provisions.......................................................... 460

13.  Music, Money, and Digital Media....................................................................... 465

Rights........................................................................................................................ 465

The Laws.................................................................................................................. 466

The Song................................................................................................................... 466
The Recording........................................................................................................... 466

SoundExchange........................................................................................................ 467

Rates and Terms of the Statutory License................................................................. 467
Artist and Record Company Payments...................................................................... 469
Letters of Direction for Producers and Other “Creative Participants”......................... 469
Foreign Country Royalties.......................................................................................... 469
Contracts.................................................................................................................... 470
Administration of Direct Licenses............................................................................... 470
Statements................................................................................................................. 470
Purchase of CMRRA.................................................................................................. 471
Pre-1972 Recordings................................................................................................. 471

Digital Downloads: Sound Recordings...................................................................... 472 

Subscription: Sound Recordings............................................................................... 472 

Synchronization: Songs and Sound Recordings....................................................... 472 

Ascap, Bmi, Sesac, and GMR Internet Licenses...................................................... 472 

Downloads and Online Subscription Services.......................................................... 473

On-Demand Streaming and Limited Downloads
   (Subscription Services).......................................................................................... 474 

Royalty Calculation Steps......................................................................................... 477

Sharing in Advertising Revenues for User Generated Content................................ 480 

Subscription, Cloud, and Lyric Services................................................................... 482 

Cloud Services......................................................................................................... 482

Streaming (Noninteractive)....................................................................................... 483 

Licensed Rights........................................................................................................ 483
License Fees and Services...................................................................................... 483
Performance Rights.................................................................................................. 483

Podcasting................................................................................................................ 484 

Ringtones/Mastertones/Mobile and Smartphones.................................................... 484 

Ringbacks/Other Uses/Mobile, Smartphones, and Other
   Digital Devices....................................................................................................... 484

Master Ringtones/Master Ringbacks........................................................................ 489

Ringtones with Video................................................................................................ 489

Ringtones/Foreign Countries.................................................................................... 489

Applications (Apps)................................................................................................... 490

Digital Jukeboxes ......................................................................................................493

Record Company Contracts...................................................................................... 494

Recording Artist Royalties for Downloading Master Recordings.............................. 494
Licensed Masters/Download Royalty Calculations................................................... 495

Website Ownership and Control............................................................................... 496

Website Merchandise Sales..................................................................................... 497

Conclusion................................................................................................................ 498

14.  Music, Money, and Foreign Countries............................................................... 499

Overview................................................................................................................... 499

The Role of the Subpublisher.................................................................................... 500

Administration versus Promotion............................................................................... 501
Worldwide Representation versus Territory-by-Territory Agreements........................ 501

 

The Subpublishing Agreement.................................................................................. 502

Term........................................................................................................................... 502
Royalty Percentages.................................................................................................. 502
Local Cover Recordings............................................................................................. 503
Increased Fees for Cover Records (Mechanical versus Performance Income)......... 503
Print............................................................................................................................ 504
Compositions Controlled by the Agreement............................................................... 504
Advances.................................................................................................................... 505
How Advances Are Paid............................................................................................. 506
Information That Must Be Supplied to the Foreign Representative............................ 507
At-Source Royalty Payments...................................................................................... 508
Rights Granted to the Foreign Representative........................................................... 509
Audiovisual Rights...................................................................................................... 509
Rights Reserved by the U.S. Publisher...................................................................... 511
Royalty Payment Dates and Audit Rights.................................................................. 511
Retention Rights......................................................................................................... 511

Foreign Performing Rights Societies.......................................................................... 513

Organization and Distribution Rules........................................................................... 513

Pan European/Multi-Territory Licensing...................................................................... 517

Mechanical Royalties.................................................................................................. 518

Ringtones................................................................................................................... 520
Downloads/Streams/Subscription Services............................................................... 520

Conclusion................................................................................................................. 521

15.  Music, Money, and Putting It All Together........................................................... 523

Mechanical Royalties (Digital and Physical).............................................................. 525

U.S. Performance Royalties....................................................................................... 526

Recording Artist Royalties.......................................................................................... 526

Album Download Recording Artist Royalties.............................................................. 527
Single Track Download Royalty.................................................................................. 527

Streaming Royalties: Songs and Sound Recordings................................................. 528

Commercial Use........................................................................................................ 528

Motion Picture Use.................................................................................................... 529

Television Series Use................................................................................................ 530

Foreign Mechanicals and Performances................................................................... 530

The Broadway Musical.............................................................................................. 531

Motion Picture Underscore......................................................................................... 531

Additional Income-Producing Areas........................................................................... 532

Conclusion................................................................................................................. 532

16.  Music, Money, and the Buying and Selling of Songs.......................................... 533

Overview.................................................................................................................... 534

Purchase of Assets.................................................................................................... 534
The Purchase Price................................................................................................... 534
Calculation of Net Income (Cash versus Accrual Basis)........................................... 535
Salaries and Other Costs of Doing Business............................................................ 536
Purchase Price Multiples........................................................................................... 537

The Prospectus: Its Form and Content...................................................................... 537

Business Summary.................................................................................................... 537
Financial Information.................................................................................................. 538
Listing of Top-Earning Compositions......................................................................... 538
Net Income and Earnings History Charts.................................................................. 539
Current Contracts...................................................................................................... 541
Foreign Subpublishing Agreements.......................................................................... 541
Future Commitments................................................................................................. 542

The Letter of Intent/Short-Form Commitment-to-Sell Agreement.............................. 543

Description of Assets Being Sold.............................................................................. 543
Earnings History....................................................................................................... 543
Purchase Price......................................................................................................... 543
Warranties................................................................................................................ 546
Subpublishing Agreements....................................................................................... 548
Income Cutoff Date................................................................................................... 548
Definitive Closing Date.............................................................................................. 548

Investigating the Assets Being Acquired................................................................... 548

Financial Due Diligence............................................................................................ 549
Legal Due Diligence................................................................................................. 552
Copyright Protection and Musical Compositions...................................................... 552
Songwriter Agreements............................................................................................ 554
Subpublishing Agreements....................................................................................... 554
Future Obligations.................................................................................................... 555
Guaranteed Future Income Commitments............................................................... 555
Expiring Agreements, Reversions and Terminations................................................ 555
Company versus Asset Sale.................................................................................... 556

The Formal Purchase Agreement............................................................................. 557

The Aftermath of the Acquisition Agreement............................................................ 558

Buy-Back Provisions................................................................................................. 559
Term Plus Reversion Acquisitions............................................................................. 560
Income Participation.................................................................................................. 560
Acquisition Earn Out Provisions................................................................................ 560
Compositions Acquired in the Future........................................................................ 560
Divestiture of Acquired Assets.................................................................................. 560

Mergers..................................................................................................................... 563

Securitization............................................................................................................ 563

U.S. Termination Rights............................................................................................ 563

Assignments of Writer Royalties............................................................................... 566

Conclusion................................................................................................................ 567

17.  Music, Money, Lawyers, Managers, and Agents............................................... 569

Lawyers and Their Role........................................................................................... 569

Lawyers’ Fees.......................................................................................................... 570
Costs and Disbursements........................................................................................ 573

Managers and Their Role........................................................................................ 573

Manager’s Contracts................................................................................................ 574
Manager’s Fees....................................................................................................... 574

Agents...................................................................................................................... 576

Conclusion............................................................................................................... 576

18.  Music, Money, and Breaking into the Business................................................ 577

Social Media Platforms/Music Websites/Internet.................................................... 577

Informational and Referral Sites and Apps............................................................. 579

Co-Writing Songs with Writers Who Have Publishing Deals.................................. 579

Being in a Performing Group.................................................................................. 579

Submitting Songs to Music Publishers................................................................... 580

Demo Recordings................................................................................................... 580

Songwriter Conferences......................................................................................... 581

Showcases............................................................................................................. 582

Attorneys................................................................................................................ 582

Record Producers.................................................................................................. 583

Managers............................................................................................................... 583

Agents.................................................................................................................... 583

Music Videos.......................................................................................................... 584

Cable Television..................................................................................................... 584

ASCAP, BMI, and SESAC...................................................................................... 584

PBS/NPR Radio Stations....................................................................................... 585

Internet Radio........................................................................................................ 585

Paying to Get Your Songs Published..................................................................... 585

Finding the Right Publisher................................................................................... 585

Different Types of Publishers................................................................................ 586

Film and Television............................................................................................... 587

Music Supervisors................................................................................................ 589

Video Games....................................................................................................... 589

Demo Reviews in Print and Online Publications.................................................. 590

Conclusion........................................................................................................... 590

19.  Guide to Music Industry Organizations......................................................... 591

Academy of Country Music (ACM)....................................................................... 591

American Federation of Musicians (AFM)............................................................ 592

SAG-AFTRA......................................................................................................... 592

Country Music Association (CMA)........................................................................ 593

Dramatists Guild, Inc............................................................................................. 593

Gospel Music Association (GMA)......................................................................... 593

Harry Fox Agency................................................................................................. 594

Nashville Songwriters Association International (NSAI)....................................... 594

National Academy of Recording Arts & Sciences (NARAS)................................. 594

National Music Publishers Association (NMPA)................................................... 595

Performing Rights Organizations......................................................................... 596

ASCAP................................................................................................................. 596

BMI...................................................................................................................... 596

SESAC................................................................................................................. 597

GMR.................................................................................................................... 598

Recording Industry Association of America (RIAA)............................................ 598

Society of Composers & Lyricists (SCL)............................................................. 598

Songwriters Guild of America (Sga)................................................................... 599

SoundExchange................................................................................................. 599

U.S. Copyright Office.......................................................................................... 600

20.  Sample Contracts......................................................................................... 601

Motion Picture Synchronization License.............................................................. 601

Television Synchronization License..................................................................... 610

Advertising Commercial Synchronization License.............................................. 618

Video Game License........................................................................................... 614

Digital Download License.................................................................................... 630

Mechanical License Agreement.......................................................................... 634

Index................................................................................................................... 638