Overview of Music Law and Business Issues

Overview of Music Law Overview of Music Law and Business Issuesand Business Issues

Donald R. Simon, Donald R. Simon, J.D./LL.M.J.D./LL.M.

• 9 years teaching business and 9 years teaching business and legal issues to aspiring artists.legal issues to aspiring artists.

• Teaching legal and biz courses at Teaching legal and biz courses at The Art Institutes Int’l - KC.The Art Institutes Int’l - KC.

• Prior to becoming an attorney, Prior to becoming an attorney, worked in radio, television, worked in radio, television, and performed as a musician. and performed as a musician.

• Board MemberBoard Member, KCVLAA, KCVLAA

• Advisory Committee MemberAdvisory Committee Member, , Midwest Music FoundationMidwest Music Foundation

• Co-Owner/General CounselCo-Owner/General Counsel, , Mudstomp RecordsMudstomp Records

The Music BusinessThe Music Business

• The music business is multi-The music business is multi-layered and complicated.layered and complicated.

• It can be profitable, but also It can be profitable, but also perilous.perilous.

• For example, licensing…For example, licensing…

““The music business is a The music business is a cruel and shallow money cruel and shallow money trench, a long plastic trench, a long plastic hallway where thieves hallway where thieves and pimps run free, and and pimps run free, and good men die like dogs. good men die like dogs. There’s also a negative There’s also a negative side.”side.” ~~Hunter S. Thompson~~Hunter S. Thompson

• If you have any hope of making If you have any hope of making a living out of doing something a living out of doing something that you love, you have to start that you love, you have to start thinking of your musical thinking of your musical endeavor in terms of a business.endeavor in terms of a business.

• You are not just an artist, you You are not just an artist, you are an are an entrepreneurentrepreneur!!

• But as with any entrepreneur, But as with any entrepreneur, you will be confronted by and will you will be confronted by and will have to deal with tons of legal have to deal with tons of legal and business issues.and business issues.

• These issues may not be directly These issues may not be directly related to writing and related to writing and performing, but are nonetheless performing, but are nonetheless important.important.

• Common Legal/Business IssuesCommon Legal/Business Issues::

• Copyright*Copyright*

• Music Publishing*Music Publishing*

• Recording Agreements*Recording Agreements*

• Licensing Agreements*Licensing Agreements*

• Common Legal/Business IssuesCommon Legal/Business Issues::

• Group Name (Trademark)Group Name (Trademark)

• Band Agreements/LLCsBand Agreements/LLCs

• MerchandisingMerchandising

• Selecting Good Representation*Selecting Good Representation*

• Common Legal/Business IssuesCommon Legal/Business Issues

• CopyrightCopyright::

• A form of legal protection given to A form of legal protection given to many kinds of creative works many kinds of creative works including songs, recordings, poems, including songs, recordings, poems, films, TV shows, software, and films, TV shows, software, and commercials.commercials.

• For the musicians, CRs protect both For the musicians, CRs protect both songs (notes and lyrics) and their songs (notes and lyrics) and their respective recordings.respective recordings.

• 2 Kinds of Music Copyrights2 Kinds of Music Copyrights::

1.1. Song (notes and lyrics)Song (notes and lyrics): typically : typically owned by a songwriter or by a owned by a songwriter or by a music publishing company; andmusic publishing company; and

2.2. RecordingRecording: typically owned by a : typically owned by a recording company (or the artist recording company (or the artist themselves, if unsigned).themselves, if unsigned).

• The CRs in songs and recordings The CRs in songs and recordings create create 2 different revenue streams2 different revenue streams in the form of royalties from music in the form of royalties from music publishing publishing andand from record sales. from record sales.

• These different revenue streams These different revenue streams come from various license come from various license agreements.agreements.

MusicalMusicalWorkWork

SongSong(Notes/Lyrics)(Notes/Lyrics)Songwriter/PublisherSongwriter/Publisher

RecordingRecordingArtist/Recording CompanyArtist/Recording Company

• Music PublishingMusic Publishing::

““Music Publishing”Music Publishing”

• The business of exploiting a song, The business of exploiting a song, such as in film, TV, video games, such as in film, TV, video games, ringtones, greeting cards, and ringtones, greeting cards, and even karaoke machines.even karaoke machines.

• And collecting money from such And collecting money from such uses, usually in the form of a uses, usually in the form of a license fee.license fee.

• Common Publishing Licenses:Common Publishing Licenses:

• Synchronization (Film/TV/Adv.)Synchronization (Film/TV/Adv.)

• Videogram (DVDs/VHS/Etc.)Videogram (DVDs/VHS/Etc.)

• Performance (Clubs/Rest./Broad.)Performance (Clubs/Rest./Broad.)

• Mechanical (CDs/Compilations)Mechanical (CDs/Compilations)

• Songwriters typically Songwriters typically own the CRs in the own the CRs in the songs they write and songs they write and earn money from earn money from license fees for the license fees for the commercial use of commercial use of their songs.their songs.

• Publishing can be lucrative for Publishing can be lucrative for musicians who write their own musicians who write their own songs.songs.

• Music publishersMusic publishers: find uses for : find uses for songs; issue licenses; asongs; issue licenses; administer dminister legal protection; legal protection; collect publishing collect publishing revenue; and pay you.revenue; and pay you.

• Common Publishing Deals:Common Publishing Deals:

• Single songSingle song

• Exclusive songwriterExclusive songwriter

• Co-publishingCo-publishing

• AdministrationAdministration

• CollectionCollection

• Important distinction to remember:Important distinction to remember:

• Publishing income Publishing income does notdoes not come from come from CR ownership in recordings.CR ownership in recordings.

• It comes from ownership of the CRs in It comes from ownership of the CRs in the the songssongs..

• Once publishing rights have been Once publishing rights have been secured from the songwriter, if a secured from the songwriter, if a licensee is interested in using a licensee is interested in using a pre-existing recording of a song, pre-existing recording of a song, they must also acquire a they must also acquire a Master Master Use LicenseUse License..

• Acquiring a Master Use License is Acquiring a Master Use License is technically not part of music technically not part of music publishing, but is an important part publishing, but is an important part of the process.of the process.

• A Master Use License is where non-A Master Use License is where non-songwriting members can make songwriting members can make some money.some money.

““Music Publishing”Music Publishing”

• Recording AgreementsRecording Agreements

• Recording AgreementsRecording Agreements::

• There is probably no subject in the There is probably no subject in the music biz more frequently discussed, music biz more frequently discussed, yet more misunderstood, than the yet more misunderstood, than the subject of recording contracts.subject of recording contracts.

• Recording contracts can be painfully Recording contracts can be painfully long and complex. long and complex.

• It is important to read It is important to read through and understand through and understand all the contract’s terms all the contract’s terms and conditions BEFORE and conditions BEFORE signing it.signing it.

• The devil can be in the The devil can be in the legalese.legalese.

• A little dangerous to attempt to A little dangerous to attempt to discuss generally and briefly the discuss generally and briefly the subject of recording contracts, due subject of recording contracts, due to the complexity of the subject.to the complexity of the subject.

• For every general statement which For every general statement which can be made, there are numerous can be made, there are numerous exceptions.exceptions.

• Typical recording contract sections:Typical recording contract sections:

1.1. Term (# of albums or time duration)Term (# of albums or time duration)

2.2. TerritoryTerritory

3.3. ExclusivityExclusivity

4.4. Artist royalties (for the performer(s))Artist royalties (for the performer(s))

• Typical recording contract sections:Typical recording contract sections:

5.5. Mechanical royalties (for songwriter(s))Mechanical royalties (for songwriter(s))

6.6. Costs/RecoupmentCosts/Recoupment

7.7. Ownership of the MastersOwnership of the Masters

8.8. Dispute resolutionDispute resolution

• Although artists have long been Although artists have long been frustrated with the traditional frustrated with the traditional record industry, there have been no record industry, there have been no viable alternatives until recently.viable alternatives until recently.

• The Internet and digital recording The Internet and digital recording technology has getting your music technology has getting your music out there much easier.out there much easier.

• This is not to say that labels will This is not to say that labels will cease to be powerful or the one-cease to be powerful or the one-sided nature of recording contracts sided nature of recording contracts will suddenly change.will suddenly change.

• Nonetheless, there are alternatives Nonetheless, there are alternatives and possibilities for artists today and possibilities for artists today which were impossible to imagine which were impossible to imagine before the onset of the Internet. before the onset of the Internet.

• Selecting Good RepresentationSelecting Good Representation

• Selecting Good RepresentationSelecting Good Representation::

• It can tough for artists to go at it It can tough for artists to go at it alone.alone.

• Need people around to help protect Need people around to help protect business interests and intellectual business interests and intellectual property, and sometimes protect property, and sometimes protect them from themselves.them from themselves.

• Artist free to Artist free to create and performcreate and perform..

• Selecting Good RepresentationSelecting Good Representation::

• Artist (Personal) managersArtist (Personal) managers

• Business managersBusiness managers

• AttorneysAttorneys

• Booking agentsBooking agents

Questions?Questions?

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