Below is some great and useful writing compiled by the Volunteer Lawyers and Accountants for the Arts, an extraordinary institution based out of St. Louis, Missouri – led by Sue Greenberg. Sue helped Tantrum Niche organize the legal processes and agreements that make our label the uniquely fair, and exceptionally beneficial for all of the associated artists, musicians, fans, and staff.
At Tantrum Niche, we don’t compete with other labels. Often, we instead consult and confer with other labels- advising them on how to utilize modern social trends and technology in a way that is profitable without exploiting anybody. We believe it is better to collaborate in the arts than to compete as, say, a bunch of football teams do.
In addition to the text we’ve reposted from VLAA.ORG, if you’re interested in starting or growing your own record label, you should also look for a couple of books that are extremely handy references. The obvious recommendation is the frequently revised and updated tome entitled “All You Need To Know About The Music Business” by Donald S. Passman. If you’re looking for something that is a much quicker read with a younger, more relevant, and considerably more modern and accessible take on forming a label and/or promoting your music, look for a book called “Here Come The Regulars” by Ian Anderson.
There are many other good books we’d be happy to recommend, and remember- because we’re non-competitive, we’re collaborative. That means that if you want to email us at firstname.lastname@example.org with any questions, we are happy to help and usually pretty quick to respond. We’re proud of all of the albums and artists we’ve helped to grow over the years, even the ones who are technically on another label or who have stopped making music altogether.
Meeting Sue and subsequently other lawyers and accountants from her organization was extremely important in the early days of the label, and the VLAA continues to be one of Tantrum Niche’s most valuable connections. Now, without further ado- here is their “crash course” on music law- which should equip you with (at least the beginnings of) the passing knowledge you will need to have in your brain in order to form a success story out of your music career.
Welcome to our music law pages. Our goal is to provide an overview of the most important legal issues affecting musicians, so you can be well informed as you pursue your music-related endeavors. Entire books could be (and have been) written on many of these topics covered on this website. This is not a comprehensive music law and business treatise. Instead, we seek to deliver practical information in an accessible format and provide answers to the questions we hear most often.
THIS WEBSITE HAS BEEN PREPARED FOR EDUCATIONAL AND INFORMATIONAL PURPOSES ONLY AND IS NOT LEGAL ADVICE OR A LEGAL OPINION. ONLY YOUR ATTORNEY CAN ADVISE YOU ABOUT WHICH LAWS ARE APPLICABLE TO YOUR SPECIFIC SITUATION.
Band Partnership Agreements
If your band wants to make a profit, you must think about more than making music. Discussing how you will conduct business (while everyone is still getting along) will help clarify responsibilities, simplify decision-making, and prevent conflicts. Ideally, the decisions you make will be put in writing, which will reduce the risk of misunderstandings.
If you’re investing a lot of time, money or equipment in your band, you may want to consider writing an agreement among the group members — a Band Partnership Agreement (BPA). A BPA typically addresses the following key issues:
• Who owns the band name and logo?
• What happens to the band name if the band breaks up or a band member quits or is fired?
• If the band breaks up, who can still perform using the name?
• How will band profits/debts be distributed?
• How are performance fees and royalties distributed among members?
• What will happen when one band member contributes more/less time/money than expected?
• Who keeps track of the money and how?
• How will band business decisions be made?
• Are decisions made by majority or unanimous vote? Do any band members possess veto power?
• How will the band resolve disputes?
Acquisition of Equipment
• How will the band purchase equipment?
• How will it be stored and transported?
• Do we need insurance?
• Who owns the songs we write?
• Who decides which songs to perform/record?
• How is it determined who gets songwriting credit?
• Who owns the master recordings we make?
• Who decides what gigs to play?
• What happens when a new member joins or an existing member leaves the band?
Type of Business Entity
• Which legal structure is right for your band?
• What are the tax and personal liability and start-up expenses associated with operating as a sole proprietor, partnership, limited liability company (LLC), corporation or nonprofit organization?
A simple BPA can be written by a band member and signed and dated by all band members. Alternatively, your band can use one of many “fill-in-the-blank” partnership agreements available for a fee on the web or in books, such as the agreement in Music Law: How to Run Your Band’s Business by Richard Stim. Like any “off the rack” contract, the agreement should be tailored to your specific needs. If you live in Southwestern Illinois or Missouri and would like an attorney to help you draft a BPA, please send us an application for assistance.
Protecting Band Names
Your fans will recognize you by your band name. It is a valuable asset that deserves careful consideration. First, do your research so you select a name that is not being used by another band. Second, it is critical that you determine who owns the name and put the agreement in writing. Finally, in some circumstances you may want to protect the name by documenting its use and registering the name as a federal trademark.
Find Out If Your Band Name Is Being Used
• Do a Google search.
• Check industry resources, including Billboard’s Talent Directory (expensive).
• Search the Band Register, which has a growing database of more than 310,000 bands and artists. The site includes a link to the U.S. Federal Trademark Registration Service, which is available for a $30 fee.
• Check with BMI and ASCAP, the two major music licensing organizations. They will do a search of their rosters for conflicting names.
• Do a database search of the U.S. Patent and Trademark Office. (This is also a great site to find out what defines a trademark and how to register for a federal trademark.).
• Call the main public library in your region and ask if it has a Federal Trademark Register CD-ROM. Search for your full band name, then each word individually.
• Hire a search firm (relatively costly, but reliable). A well-known sources for trademark searches isThomson Compumark.
• Don’t forget to check out domain names. To perform a search, go to InterNIC. If your band’s desired domain name is available, be sure to register it ASAP. To register, check out the Accredited Registrar Directory on the InterNIC site.
Determine Who Owns The Name
Just because the drummer made up the band name doesn’t mean it belongs to him (same with the guitarist who said, “I called the band name!”). The band name could be owned by anyone or everyone, even someone outside the band, so your best bet is to create a written agreement resolving the matter. A band partnership agreement should outline who owns the band name. If band members change, the agreement should be updated to assure complete understanding and clarity regarding ownership of the name. Also, in any agreements with third parties (such as record companies, manager, agents, etc.) there should be an express written provision indicating that such third parties have neither interest in nor right to the name.
Protecting The Name
If your band might ever sell CDs or other merchandise, maintain a website, Facebook or MySpace page, or perform in concert, keep reading. Name protection is the subject of two common misconceptions:
• Band names are not protected by copyright law. They are covered by trademark law.
• The filing of a Fictitious Business or Assumed Business Name with the Secretary of State does not guarantee exclusive use of that name. Name registration simply provides a vehicle for checking the ownership of a business. Essentially, it notifies the public that you are “doing business as” someone other than yourself (or as a “nickname” for your corporation or partnership) and allows creditors to know who is responsible for the activities of the business.
Rights in a group name are usually created by use of the name, not by trademark registration. To establish rights, a band must actively perform under its name, advertise under its name, and/or sell products bearing its name to the public. Therefore, it is imperative that you keep records of your commercial activities. If no other band is already using that name in your area, you will establish rights in the name and can prevent other bands from using it in your region.
A trademark is a word, phrase, design or symbol, or a combination of words, phrases, designs or symbols, that identifies and differentiates one set of goods from another. Band names are actually considered “service marks” because they help distinguish between providers of entertainment services.
To protect the name beyond your local area, registration with the U.S. Patent and Trademark Office is recommended. Besides giving notice to other bands that you have pre-existing rights to a name, registration allows you to sue in federal court for trademark infringement. More importantly, the threat of a lawsuit is usually enough to deter other bands from using your name.
The federal trademark application procedure involves submitting (1) the appropriate application form, (2) proof that the name was used in “interstate” commerce (through public performances, advertising or sales of merchandise) and (3) a filing fee of approximately $325.
Although trademark rights are generally granted to whoever can establish prior commercial use, it is possible to reserve a name by filing an “intent to use” (ITU) registration. You can reserve the name with the Trademark Office by showing a bona fide intent to use your “mark” on specific goods or services (such as records or a concert tour) in the near future. For the registration to be granted, you must also file subsequent proof that you in fact used the name on a commercial basis.
If you think you want to register a trademark, VLAA strongly advises seeking the assistance of a qualified intellectual property attorney. If you live in Southwestern Illinois or Missouri and would like an attorney to work with you, please send us an application for assistance.
Learn More About Trademarks
U.S. Patent and Trademark Office
The purpose of performance agreements is to clarify the relationship between the venue and the performer and to bring to light all the issues that are important to each party. Even a casual agreement to show up and play for free is a contract and each party should be fully aware of the other’s expectations. Agreements can be oral or written, but putting it in writing is preferred. Performance agreements often consist of the agreement itself, including the basic terms, and a rider, which states additional terms and conditions. When a formal agreement is not signed by both parties, the following sample can serve as a checklist of issues that should be discussed prior to the gig.
Sample Performance Agreement
Copyright law allows artists to reap the economic benefits of their creative endeavors by enabling creators, producers, publishers and distributors of artistic works to control how, when and whether their works are used. For bands, the key concerns are determining who owns the copyright in newly created songs and understanding what rights and benefits are given to copyright owners.
Copyright law protects “original works of authorship” that are “fixed in a tangible medium of expression.” It protects the particular way an “author” has expressed himself. It does not protect ideas, systems, or factual information conveyed in the work. Nor does it protect song titles.
Works that may be copyrightable include musical works (songs and arrangements) and sound recordings.
The work must be original in its melody, harmony, or rhythm; Fixation requires being written on paper, pressed on a phonorecord, recorded on audiotape, or digitally recorded, etc. Musical works receive separate copyrights from sound recordings. A sound recording protects the individual artist from those who might copy her recorded work, regardless of who owns the copyright to the music performed.
Copyright law gives you exclusive rights to:
• Reproduce your work;
• Distribute copies of your work;
• Make a derivative work;
• Display your work publicly; and
• Perform your work publicly, which means to perform at a place open to the public or at any place where a substantial number of persons outside of a normal circle of family and social acquaintances are gathered or to transmit a performance to the public (i.e. through a radio/TV broadcast), whether or not members of the public are capable of receiving the performance in one place and at one time.
Several “public interest” performances are excepted from this group:
• Live educational performances;
• Transmissions to classrooms;
• Religious performances;
• Face-to-face performances of musical works for free or for some charitable purpose;
• Record stores may play records to promote sales;
• Home listening is OK; and
• Small businesses and restaurants conforming to limitations on the number of loudspeakers and TV screen sizes also are permitted.
Before you write a song with someone else, you should decide who will own the song. Absent a written agreement, collaborators have equal interest in the copyright. Joint authors enjoy undivided ownership in the copyrighted work and may independently exercise any of the “exclusive” rights. A work is considered “joint” if it is prepared by two or more authors (musicians) with the intention that their contributions be merged into inseparable or interdependent parts of the whole. The contribution of each author must itself be copyrightable (i.e. original and fixed). You can, of course, decide to split the ownership in some other manner. If you do, put it in writing.
Exclusive Rights? Really?
Copyright protection does not last forever. Most works are protected until 70 years after the death of the last surviving author. Although the general rule is that the person who creates a work is the author of that work, there is an exception to that principle: “works-made-for-hire.” When works are made by employees while acting within the scope of their regular employment, the employer is considered the author. The term of copyright protection of a work-made-for-hire is 95 years from the date of publication or 120 years from the date of creation, whichever expires first. Works that are no longer protected are considered “in the public domain.”
“Fair use” is probably the most significant limitation on a copyright owner’s exclusive rights. While courts define what constitutes fair use on a case-by-case basis, using a portion of a copyrighted work for purposes of parody, news reporting, research, or education generally does not require the permission of the “author.” Copyright law sets out four factors to be considered in determining whether or not a particular use is fair: the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; the nature of the copyrighted work; the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and the effect of the use upon the potential market for or value of the copyrighted work.
The distinction between “fair use” and infringement may be unclear and not easily defined. There is no specific number of words, lines, or notes that may safely be taken without permission. Acknowledging the source of the copyrighted material does not substitute for obtaining permission.
Sampling without the authorization of the copyright holder is likely not fair use.
Compulsory licenses, also known as statutory licenses, are another exception to the copyright holder’s exclusive rights of reproduction and distribution. They allow anyone to record and distribute any commercially-released, non-dramatic (a song that is not from a musical or an opera) song as long as the mechanical license rates established by copyright law are paid to the copyright owner of the song.
Be aware that there are separate copyrights in the song, the arrangement, and the recording. Generally, the copyright in the sound recording is owned by the record company.
How Do You Copyright A Song?
The way in which copyright protection is secured under the present law is often misunderstood. Copyright protection occurs automatically when your work is “created,” which is defined as being “fixed” on a lead sheet or recorded for the first time. A composition that exists only in the composer’s head is not eligible for copyright protection. No publication or registration is required to secure copyright protection. There are, however, certain advantages to registration:
• Registration establishes a public record of the copyright claim;
• Registration is necessary before an infringement suit may be filed in court; and
• If registration is made prior to an infringement claim or within three months of publication, the copyright owner may be entitled to statutory damages and attorney fees.
Generally, the copyright registration process is not difficult and probably does not require the assistance of an attorney. If you live in Southwestern Illinois or Missouri and would like an attorney to work with you, please send us an application for assistance. For online forms, instructions and free circulars, visit the U.S. Copyright Office site.
How About Copyright Notice?
Use of the copyright notice (c) John Doe, 2009 is optional, though highly recommended because it informs the public that the work is protected by copyright, identifies the copyright owner, and shows the year of first publication. The notice for sound recordings is (p) John Doe, 2009.
How About Using Works By Other Artists?
As a songwriter, you may be able to earn money by licensing your songs for various uses and collecting the corresponding royalties. Respecting the rights of other artists isn’t just about copyright law; it’s about treating others as you wish to be treated yourself.
• When performing works by other artists in a club or some other venue, the burden is on the venue owner to obtain licenses, usually from ASCAP and/or BMI.
• When using artwork and photographs for websites, CDs, posters or other purposes, be sure to get permission.
• When recording covers or sampling, get permission.
Learn More About Copyright
U.S. Copyright Office
VLAA Guide to Copyright Basics
Publishing and Performing Rights Organizations
Music publishing can be a major source of income for songwriters. A song is considered published whenever it is available for public sale. This applies to any musical medium — sheet music, cassettes, CDs, software, etc. A songwriter may decide to sign with an established publishing company or may want to form his or her own music publishing company. Songwriters should also understand how the two major performance rights societies — ASCAP and BMI — work.
Performing Rights Organizations
• Performing rights organizations are not music publishers.
• Performing rights organizations negotiate nondramatic blanket license agreements on behalf of songwriters and publishers for all public performances (in clubs, at live concerts, on the radio, and on television) of songs.
• They collect money from these licenses and distribute performance royalties to their members.
• Distribution of royalties is based on the frequency of a song’s play.
• Membership is open to both writers and publishers.
• ASCAP and BMI are the two major American performing rights societies. Each has its own eligibility requirements and each uses different formulas to calculate royalty payments. An excellent comparison can be found in The Musician’s Business & Legal Guide by Mark Halloran. Should you join BMI or ASCAP? For guidance, see Madalyn Sklar’s e-booklet, How To Choose The Right P.R.O. (Performing Rights Organization) For You.
• A music publisher is a company that owns or administers song copyrights.
• Publishing companies find artists, record companies, film and television producers, and advertisers to make use of a song.
• They negotiate royalties and makes sure the royalties are paid.
• They monitor a song’s public usage to make sure it is accurately reported to the performance rights society.
If you sign with an established publishing company:
• You may earn considerably more royalties.
• You may increase your music industry contacts.
• You don’t have deal with the administrative matters.
Don’t sign with a publishing company without seeking the assistance of an attorney. If you live in Southwestern Illinois or Missouri and would like to meet with an attorney, please send us anapplication for assistance.
Starting your own publishing company
A viable alternative for composers who are interested in properly administering and promoting their songs.
• Makes the most sense when a record is released on an independent label that is financed by the composer.
• You will receive a greater share of profits.
• Performance royalties are paid to both the composer and publisher.
• By forming your own company, you will receive all of the royalties.
• May provide leverage in negotiations with record, film and TV producers.
If you decide to start your own publishing company you’ll need to:
• Prepare publishing agreements for songwriters.
• Affiliate with ASCAP or BMI for information and an application — allow five weeks for approval. Because these societies will not let you register a duplicate name, you must provide three potential names for your publishing company. If you are a songwriter and have not yet affiliated, you should affiliate with one of these societies at the same time (you cannot affiliate with both). You will have to affiliate as a publisher with the same society that you affiliate with as a songwriter. Once your company has registered its name, put it on everything you publish. This signals to others that you have established your rights as a publisher and writer.
• Create a Business Entity and/or file a Fictitious Name registration.
• Register your songs with the Copyright Office in the name of your publishing company. If you have previously copyrighted the songs in your name, you will need to file an assignment transferring them to the publisher’s name.
• Register your songs with your performing rights society. For more information about the necessary registration forms, visit your society’s web page. You only have to register the songs as the publisher or writer, not both.
If you make money by playing music, you are both a musician and in business. There are several other ways to structure your business, each having advantages and disadvantages to be weighed (with the advice of a lawyer and/or accountant) against practical needs and goals. Below, we explain the most common entities. For a more detailed discussion, visit our Independent Filmmaker pages.
As a sole proprietorship, an unincorporated business owned by an individual, you have total control over all decisions, get all the profits, and pay everyone else’s salary. You also will be personally liable for all debts and legal liabilities. The income generated by your business is considered personal income and is taxed accordingly by adding Schedule C to IRS Form 1040 to calculate the business’s profit or loss and then completing Schedule SE to figure self-employment tax.
• No legal steps are required, so no lawyer is needed
• Easy to create and operate.
• Few costs are involved.
• Relatively simple tax compliance.
• A good choice for solo artists and band leaders. Many solo artists initially operate as sole proprietors and graduate to a different business entity, when appropriate.
A Note About Ficticious Names
When the business name is substantially different from the owner’s full legal name, registration is required. In Illinois, file with your local county clerk’s office; in Missouri, the “fictitious name” of the business must be registered with the Secretary of State.
Most bands are partnerships. Under a partnership (either general or limited), defined as two or more persons in business together, you would split the profits among the members and share decision-making. Warning! The partners are personally liable for all debts and liabilities of the business partnership, regardless of which partner incurred the liability. Your share of the partnership income is considered personal income and is taxed as such.
You don’t have to do anything formal to create a partnership. When two or more people contribute towards a business and share in the profits without having any other agreement about the form of the business, the business is automatically classified as a partnership.
Although a general partnership can be formed by a handshake, it is strongly recommended that an attorney prepare a written partnership agreement. The most compelling reason for preparing this agreement is to guarantee the continued existence of the partnership in the event one member leaves the band; without an agreement, the departure of that partner automatically ends the band partnership.
• Lawyer recommended.
• Easy to create and operate.
• Small cost involved.
• Relatively simple to file tax returns. Owners file a federal partnership tax return, and adjust their personal tax returns to account for these profits or losses reported as a partnership.
• A legal partnership is not the same thing as a band partnership agreement.
• May be required to file a fictitious name registration.
Limited Liability Company
A limited liability company (LLC) is a partnership-corporation hybrid that provides corporate-like liability protection for the owners and partnership-like flexibility in management structure. The LLC structure is commonly used by professional performing personal services and may offer more favorable tax benefits.
• A lawyer is necessary for LLC formation, but the filing fee is relatively small ($105 in Missouri; $500 in Illinois). • No annual registration is required in Missouri; Illinois does require annual registration along with a modest fee.
• A good business entity choice for bands that earn a substantial amount of income from touring and have serious concerns about taxes and personal liability.
• Band members have limited personal liability for business debts.
• More expensive to create and operate than a partnership or sole proprietorship.
• Requires strict compliance with IRS rules and regulations.
• A written operating agreement is strongly recommended.
If you live in Southwestern Illinois or Missouri and would like an attorney to help you decide on the most appropriate business entity for your band, please send us an application for assistance.
Is it time to start looking for others to help promote and protect your band’s interests? That is where professionals like attorneys, accountants, managers and agents come into play.
Managers and Agents
The exact difference can be confusing because managers and agents often fulfill many of the same roles. A manager is the person who advises you or your band in every aspect of your career from what you wear on stage to choosing a producer and selecting agents, attorneys, and accountants. On the other hand, agents in the music business seek out and negotiate agreements for your live appearances.
Managers (often known as personal managers) serve a variety of functions. They direct, advise, counsel, and develop your career. The managerial role is often considered the most important member of a band’s professional team. It can also be the most frustrating, particularly when your career is not progressing as you would like and you feel locked in for a long term with the wrong manager.
• Fees vary, but managers are usually paid on commission.
• Handshake deals with managers can be an invitation for trouble. VLAA encourages you to sign a written agreement that has been reviewed by an attorney representing YOUR interests. If you live in Southwestern Illinois or Missouri, please send us an application for assistance.
• Business points that should be covered in the management agreement: manager’s specific responsibilities; length of manager’s term (usually 3-5 years); specific short-term milestones; circumstances under which termination is acceptable; amount of compensation (usually between 10-20% gross earnings); whether manager will be paid for his or her expenses; and what authorization the manager has to make communications on behalf of the band without prior approval.
Agents get you signed for live appearances. In short, they are the ones in charge of getting gigs that you can’t get by yourself. Some issues:
• Roster — do the other bands on the agent’s roster play the same kind of music that you do? How big is the agent’s roster? If it’s too big, you may not get the attention you deserve.
• Payment related to gigs booked by agent (usually 10% off the top)
• Agents do not get a portion of an artist’s income from record sales, songwriting or publishing – never agree to give agents earnings from records like some prepackaged form contracts allow you to do.
• If you sign a contract with a booking agent, here are three tips: 1) Try to keep the term to one year. 2) Try to exclude territories outside the USA. If you tour abroad, you’ll be better off with an agent in the specific market. 3) Try to get a clause that allows you to end the agreement if the agent does not get you work for 90 days.
Entertainment attorneys can:
• Draft band partnership agreements.
• Find a record or publishing deal if you are unsigned by shopping your demo tape (most record companies only accept unsolicited material from established entertainment attorneys).
• Negotiate deals for your services.
• Negotiate merchandising deals.
• Make sure you understand all the deals negotiated on your behalf.
• Help find a personal manager, booking agent, and/or business manager.
• Locate copyright owners.
• Draft licensing agreements.
• Help you get out of bad deals.
• Offer advice on your legal problems by telling you what to do or not to do.
• May be able to settle disputes for you out of court, saving you trouble and expense.
• Represent you in the civil courts.
• Render innumerable other services because of training and experience in the law.
The best time to consult with a lawyer is before, not after, you have a legal problem. Look for:
• Experience in the entertainment industry.
• Excellent reputation; references from other musicians.
• Fees (hourly, flat rates, retainer) For more information about how lawyers set their fees, visit the Missouri Bar site.
• Someone that understands your goals and who will help you achieve them.
If you live in Missouri or Southwestern Illinois and would like a referral to an entertainment attorney, please complete an application form.
If your band is profitable, or making any money at all, you may want to consult with an accountant, who can help set up a simple bookkeeping system and prepare your tax return. Don’t wait until April 14th to decide whether you need help. Your decision should be based on the complexity or your tax situation, not the level of your income. Before you hire someone else to prepare your taxes or assist with other financial matters, ask the following questions:
• Are you a CPA (certified public accountant)?
• Are you familiar with the music business?
• What is your fee structure (hourly, by number of forms completed, or fixed price)? Beware of accountants who base their fees on a percentage of your refund or those who guarantee a refund or refuse to sign your return.
• What is your billing procedure?
• Who will be preparing my return?
• By what date will my return be completed?
• Will you reimburse me for mistakes that result in penalties or interest charges?
• If my return is audited, will you represent me before the IRS?
Most importantly, as in choosing all professionals, choose someone with whom you feel comfortable. If you live in Missouri or Southwestern Illinois and are looking for an accountant, you can send us an application for assistance. Low-income artists seeking free help are only referred to volunteers between May and December (not during the busy tax preparation season). Artists who can afford to pay for professional services are given a list of accountants who are willing to accept fee-generating clients. Alternatively, you may want to get a suggestion from a friend, particularly an artist, or a reference from another professional, such as an attorney.
It seems like everyone is recording and releasing a CD. That’s the easy part. The hard part is putting together a quality product that will be taken seriously by the industry and your fans. Begin with a realistic production schedule and budget. Then be prepared to attend to many details that having nothing to do with making music.
Home recording studios are convenient. They allow you to gain valuable hands-on experience. But home studios take a lot of time and money to set up. Is this how you really want to invest your valuable resources?
Commercial recording studios are as different as night and day. Call several studios and request rate cards. Visit the studios to get a feel for them. Think about size, ambience, choice of engineer, lounge and/or kitchen, number of tracks, mixing and editing capabilities, end product (DAT, CD) and reputation.
• What does the hourly rental rate include?
• Is there a better rate for booking hours in bulk?
• Are there after-hours rates?
• Can you/must you use the studio’s engineer?
• Is the engineer paid separately?
• Is payment required up front? Can you get a refund?
• Can you use/rent the studio’s piano or other instruments?
• Is your set-up and tear-down time included in the hour?
• Is there a penalty for going over time?
• At what time do you perform best?
• Can the environment support your preference?
• Do you need an environment free of external distractions?
• Are temperature and humidity adequately regulated?
• Can the various spaces accommodate your musicians and equipment comfortably?
• Overall, what is your impression of the facility and its employees?
Most studios use a form agreement. Be sure you read and understand the agreement before you sign it. Be careful. Some agreements contain language that gives the studio an interest in the master recording. Don’t sign away your rights! If the studio does not have a form, or you are not satisfied with the terms of the form, put the details that are important to you in writing. Note: studio forms typically include an indemnification clause, which says that you’ll be responsible if anyone sues the studio for copyright infringement.
Group Members: If the band does not have a band partnership agreement, a simple written agreement outlining how the finances of the recording project will be handled is highly recommended.
Producers: Some unsigned bands hire a producer to work on the album or on one or more songs. The producer agreement should spell out the fee and/or the percentage that the producer will receive from sales and how the ownership of the songs contained on the masters will be divided.
Work-For-Hire Agreements: These agreements are used for studio musicians, background singers, engineers or anyone else who is in the room while the songs are being recorded. They stipulate — up front — that the party has no ownership interest in the song(s) and will not receive royalties. A customary practice is to pay sidemen union scale as set by the American Federation of Musicians. Work-For-Hire agreements also are a useful reference when preparing album credits. The agreement should state whether or not the party is waiving the right to credit. If the party will be credited, be sure to get the correct spelling of the person’s name.
Permission and Licensing
Make sure you have the right to record and distribute the songs you are going to record BEFORE you go into the studio. When you cover a song, you must obtain a license. The license can be a compulsory mechanical license or a negotiated mechanical license.
Because the notice and accounting requirements of the compulsory mechanical license are so cumbersome, most mechanical licenses are negotiated. If you take this route, you should start with the Harry Fox Agency, which is authorized to issue mechanical licenses on behalf of more than 22,000 music publishers. The Harry Fox Agency issues a standard mechanical license. In addition to relaxing the notice and accounting requirements, this license mirrors the compulsory mechanical license, meaning you will pay the statutory rate (currently 8.5¢ per song, per record, distributed for recordings of up to five minutes) and have authorization to make a new musical arrangement.
For songs not handled by Harry Fox, contact the publisher directly. Usually the easiest way to do so is to obtain the publisher’s contact information from the “song indexing” departments at ASCAPand BMI.
If you are including any samples on your record you must obtain sample clearances from the publisher of the musical composition being sampled AND the record label that owns the master being sampled. Most reputable manufacturing companies participate in the Content Delivery and Storage Association (formerly the IRMA) Anti-Piracy Compliance Program, which protects property rights owners from the unauthorized distribution of their content. You’ll be required to submit a completed intellectual property rights form with your order, and, if the rights to any recording on your master belong to a third party, you also will be required to submit a completed audio manufacturing agreement or a contract authorizing you to reproduce the recording.
Preparing a budget is the best way to avoid financial problems in the studio or when releasing your own CD. To determine expenses, make a list of hourly costs and the corresponding hourly rate. Then multiply by a realistic estimate of the number of hours needed. Add fixed costs, such as supplies and manufacturing. Be sure to think about how the CD will be promoted and budget accordingly. A tip from a recent VLAA client: make a budget, double it, and stick to it! Of course, you also need to think about how to cover your expenses, including a realistic estimate of CD sales.
The following budget is intended to provide a basic cost estimate for the recording of a 10-song CD at a professional recording studio. The budget is based on the assumption that the artist(s) will spend an average of 6 hours on each song with 3 hours devoted to recording and 3 hours devoted to mixing and editing, all at a rate of $50 per hour. Obviously, the amount of time spent in the studio will vary. You can save time and money by rehearsing and pre-studio preparation can increase efficiency and keep costs at a minimum.
This sample budget assumes that there will be no producer hired and that the CD will be produced by the artist(s) and the engineer provided by the recording studio. It also assumes that only original songs will be recorded. The duplication and printing costs are based on manufacturing 1,000 CDs, and the duplication includes a jewel case, a 4-panel insert printed in 4 colors, color printing on the CD itself, shrink wrap, a bar code, and a back panel insert. In addition to the duplication, the budget include $500 to be spend on graphics and photos used for the CD artwork. The budget includes a mastering fee. Experts recommend that mastering be done at a different location than the actual recording to provide “fresh ears.”
Releasing a CD involves addressing a long list of package-related details:
Names, titles, and short phrases or expressions are not subject to copyright protection, so you can use a title that has been used before. But stay away from trademarked names. They are the exclusive property of trademark owners who take their rights very seriously.
Properly crediting the performances, the master recording, artwork, photographs, and music, including proper copyright notices (although not technically required under copyright law) is common courtesy and will help avoid legal problems.
• Performances: generally speaking, all performances on the CD should be credited. An exception to this rule occurs when a performer has waived his or her credit line in a work-for-hire agreement. Producer or sideman agreements may contain specific wording or placement requirements that should be followed accordingly.
• Master Recording: who owns the copyright in the master recording? Copyright in a sound recording protects the particular series of sounds fixed in the recording against unauthorized reproduction or distribution. This copyright is distinct from copyright in the actual songs and is usually owned by the record company. A copyright notice is not technically required, but is recommended. Example: © 2009, XYZ Records, Inc. All rights reserved. It is common practice to include the following statement after the notice: “This work is protected under the copyright laws and any unauthorized duplication or distribution is prohibited by law.” Registration with the U.S. Copyright Office is not required. But, like notice, it is recommended.
• Artwork: artwork is copyrighted separately, and you must secure permission to use any artwork not owned by the band. When obtaining permission, the terms of the license or assignment should be put in writing. Artwork is a separately copyrighted element. Putting the copyright notice on both the jewel case and the tray card is recommended. When the owner of the sound recording also owns the copyright in the artwork, the copyright notice for the two properties can be combined: Example: © 2009 XYZ Records, Inc. All rights reserved.
• Music: a single copyright notice may be used if all the compositions are written by the artist (controlled by one publisher). Example: All songs © 2009 XYZ Records, Inc. (ASCAP). For covers (compositions written by other writers), a separate copyright notice should be provided for each song in the same form as above. Writing credits should appear below the title of each song whether original or cover. Each writer’s name should be provided. A first initial and last name is sufficient.
Warning: Rights to record a cover song do not include the rights to print the lyrics. Those rights must be obtained separately from the copyright owner (the publisher or the publisher’s agent).
Notice of Trademarks and Service Marks
Do you have the right to use the name of your band and the name of your label? Prior to registration, the designation TM should be placed on the right hand shoulder of the name or logo. Once a federal trademark is registered, the mark should be changed to ®.
Any recognizable person appearing on your CD has a right to publicity. Therefore, photos and any other images of people should be cleared in advance.
For retail sales, the product must have a UPC Code (also known as a bar code). Most CD duplicators will provide a barcode at no additional cost. If you plan to register with SoundScan, a company that tracks music retail sales, be sure that the barcode is specifically for your album. For more information about barcodes, talk to your manufacturer or check out the Uniform Code Council.
Independent Label Business Planning
So you want to start your own record label? What are some advantages and disadvantages of running an independent label?
• A good way to promote your band and other artists
• Need to sell fewer records to make a profit. Selling 5,000 records is considered “indie gold” as compared to 500,000 records for one of the major labels
• Low overhead costs
• Discover new talent and be on the cutting edge of new music
• Satisfaction of getting music out to the public that would otherwise go unheard
• More artistic control
• Good chance of losing money
• Limited access to traditional distribution and retail outlets
• Frustrating to be in competition with larger labels
• Doing everything yourself
Questions to Ponder
• Can you afford to lose a few thousand dollars (or more)?
• Do you have access to additional money if needed?
• A hit record could sink you. If a record is a hit and you get a large order, you need to be able to meet the demand. Otherwise your label will lose credibility.
• How will you get your product to your customers?
• Do you have physical space available to store records and supplies?
• How will people become familiar with your artists? Live performances? Internet? Radio?
• How will you market and promote your records?
• Do you want the label to be an ongoing enterprise, or is it just for only you, the artist?
• Do you want to be picked up by a larger label or remain independent?
Creating a Business Plan
One of the best ways to tell if you are ready to start your own label is to create a business plan. The business plan serves several purposes: it serves as a guide as you start and run your business; it introduces you to key players, such as lawyers, accountants and artists; and it provides investors with pertinent information. Sources that can help you create an effective business plan can be found at any public library or online. One good resource is the U.S. Small Business Administration.
Selling Your Music on iTunes
iTunes now controls a substantial portion of digital music sales — 25 percent of the overall music market and nearly 70 percent of digital sales.
First, it is important for you to know that if you choose to sell your music online through a service, you won’t be signing away rights to your music or be tied down to any lengthy fixed contract terms. Also, before uploading your music to iTunes, it is a good idea to get your music mastered. You will also need to obtain a UPC code, which is a universal product code widely used for tracking sale items in stores, and an IRSC, which is an international roaming signaling converter necessary to ensure that your music has the correct signaling protocol. There are several services online that can provide you with the necessary UPC and IRSC for free, such as, Nimbit,ReverbNation, SongCast, and TuneCore.
Next, you’ll have to choose a pricing model for your music — flat fee or commission fee. Generally, if your music is not very well-known, you’ll make more money with a commission fee. If you expect to sell a lot of CDs, then a flat fee structure with no commission may be a better option. For information about the various websites that offer the necessary services to get your music ontoiTunes, Rhapsody, Amazon, Napster (which is a legal service now!), e-music, and more, check out: Garage Spin.
Using Online Music Distributors
You may also want to look into sites that will enable you to sell your music online through CDs and digital downloads. Hosting services such as CD Baby and Artistopia are independent online music stores. If you choose to use their services, you have the advantage of having the companies handle both your online physical CD sales as well as the digital sales. Some of the distributors can also be used to manufacture CDs, build a professional website or report all music sales to Soundscan or Billboard.
Using CD Baby as an example, here’s how it works: CD Baby has a one-time $35 setup and digital distribution fee to process a CD. CD Baby allows you to set your own physical CD price, and CD Baby takes $4 per unit sold. For any digital distribution sales made through their partners such as iTunes, CD Baby takes a 9 percent commission from the sale of your download.
For general information about online music distributors, we recommend this site.
These music law pages were developed in 2002 by an energetic group of Washington University and St. Louis University law students: Chris Goddard, Tony Hafner, Dan Hiser, Katherine LeBar, Kate Lieb, Andrew Marek, Justin Mills, Pete Naylor, Vinita Ollapally, Ginny Robbins, Dena Silver and Rochelle Skolnick. The pages were updated in 2005 by Washington University Law School’s Intellectual Property Clinic team of Toby Bulloff, Matt Cohn and Andrew Scavotto. Amy Fry added more information in 2009.