| The rights for copyright holders |
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| Reproduce the work, Distribute copies of the work, Perform it publicly, Create Derivative works, Display the work publicly |
|
| Basic history of copyright law. Where it originated and the major copyright legislation milestones in the USA |
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1710 British pass the Statute of Anne – protects copies of writings for 14 years, renewable for 14 years
1791 and 1793 – french laws for fine arts grant authors control of copying, distributing, and sale of their works plus a fixed term of rights after their death
1787 U.S. Constitution under Legislative Branch |
|
| What section of the USA Constitution does copyright come under |
|
Article 1, section 8 in 1787
“To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors, the exclusive Right to their respective Writings and Discoveries.” |
|
| What other items are addressed in that section 8 |
|
powers of congress, legislative
borrow money/regulate commerce
rules of naturalization
established the post office
form armies/navies and declare war
make laws to enforce the constitution
promote science and useful arts |
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| The main points and copyright term in the Copyright Act of 1790 |
|
first ever FEDERAL copyright law (States had already adopted copyright laws)
term = 14 years “from the time of recording the title thereof”
performance and mechanical rights not included |
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| The main points and copyright term in the Copyright Act of 1831 |
|
first general revision to US Copyright law
term = 28 years with option to renew for another 14 years (42 years total) |
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| The main points and copyright term in the Copyright Act of 1909 |
|
allows the right to perform work publicly (first protected in 1889)
translate the work into other languages
the right of mechanical reproduction
first term = 28 years from date of first publication with option to renew for additional 28 years within 1 year of expiration of first term (56 years total)
Established requirement of copyright notice on work |
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| The main points and copyright term in the Copyright Act of 1976 |
|
Defined sound recordings as “original works of authorship comprising an aggregate of musical, spoken, or other sounds that have been fixed in tangible form”
phonorecords as “physical objects in which sounds are fixed” (records, tapes, cds)
Finally addressed TV, cable, movies, records
Defined publication as “distribution to the public”
Spelled out “Fair Use”
Term = life of the composer + 50 years
broadened to works not published but in “fixed” form and those without copyright notices
Right of Termination (35 years after transfer, begins in 2013)
Law went into effect January 1, 1978
Juke Box Performance Royalties covered
covered Cable & Satellite Royalties
Copyright Royalty Tribunal established |
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| The outcome of the Berne Convention Implementation Act of 1988 |
|
No longer necessary to have copyright notice on the work
Work does not need to be registered, but you must register in order to file an infringement claim
Transfer of copyright ownership not required to be registered with Copyright Office
Public Domain songs in the USA could become protected |
|
| What was changed in the Copyright Term Extension Act of 1998 (Sonny Bono Act)? |
|
CTEA increased the total term of all works under copyright protection as of January 1, 1999 by 20 additional years
Aligned USA terms with European Union terms
Works published after December 31, 1977 are protected for 70 years after the death of composer |
|
| What is the duration of a copyrighted work published since 1/1/78? |
|
| 70 years after the death of the composer |
|
| What is the duration of a copyrighted if there is more than one writer? |
|
| 70 years after the death of the last living composer |
|
| How long is work for hire works covered in the USA? |
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| 95 years from publication or 120 years from creation (whichever comes first) |
|
| What’s a mechanical license? |
|
| payments for devices “serving to mechanically reproduce sound” |
|
| Why is mechanical license compulsory? |
|
Congress was concerned that the music industry was going to develop into a gigantic monopoly
The copyright owner must license to anyone who wants to use it in a phonorecord |
|
| What is the current statutory mechanical royalty rate? |
|
9.1 cents per composition up to 5 minutes
or 1.75 cents per minute over 5 minutes long |
|
| Who sets the current statutory mechanical royalty rates? |
|
| Copyright Royalty Board (CRB) |
|
| Are jukebox licenses compulsory? |
|
|
| Are broadcast licenses compulsory? |
|
|
| Are cable re-broadcast licenses compulsory? |
|
|
| Explain what a synchronization license is? |
|
license to use music in “timed synchronization” with visual images
includes motion pictures, tv, tv commercials, and home video devices, but not radio commercials |
|
| Know the difference between the master rights and the publishing rights |
|
Master recording : The right to license the actual sound recording of a song to users.
owned by labels, publishers or Artists, it is separate from the song license.
Publishing rights: The right to license a songwriter’s copyrighted musical composition or words to users. |
|
| Know all the Performing Rights organizations in the USA |
|
ASCAP
BMI
SESAC
Global Music Rights
SoundExchange |
|
|
|
SoundExchange is a nonprofit organization whose board is made up equally of record company and artist representatives. SoundExchange collects for performances of masters instead of songs.
includes satellite/internet radio and digital performance royalties paid to soundexchange |
|
| Is there performance income in movie theatres |
|
a. In the USA? No
b. Outside the USA? Yes |
|
| Royalty rates for different types of print music |
|
Sheet Music : 20% of marketed retail price
Folio : 10-12.5% on marketed retail price
personality folios: additional royalty of 5% for using name and likeness of the artist
Educational : 10% of SRP |
|
| Who is performance income outside the USA paid to? |
|
The foreign subpublishers
publishers make deals with local publishers in each territory to collect on their behalf (subpublisher)
The local performance right society of the foreign country pays the publisher’s share to local subpublishers (who then pay the US publisher) and the writer’s share to the US PRO (who then pay the writer). |
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| How much do subpublishers normally keep? |
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| Can keep 10-50%, but normally they keep 15-25%, that is why they’re called 75/25 or 85/15 deals |
|
| Who usually owns the masters? |
|
Labels, publishers, artists
Protected by Federal law since 2/15/1972 |
|
| Another name for a production music house? |
|
|
| What publisher owns most of the Beatles songs? |
|
Sony/ATV
Side note – Michael Jackson owns half the masters |
|
|
|
| A limited duration monopoly |
|
|
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| Original works of sufficient materiality fixed in tangible form |
|
| When does something become copyrighted? |
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| As soon as you make a tangible copy |
|
| Are you required to register your copyright with the Copyright Office? |
|
|
| What are the exceptions to the copyright monopoly? |
|
| Cable t.v. rebroadcast, Public Broadcasting System, Jukeboxes, Digital performance of records, Phonorecords and digital downloads of non dramatic music compositions. |
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|
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| Any work intended to be performed dramatically and tell a story. Includes plays, scripts, choreographic notation, choreographic shows, and scenarios for a film (but not the film itself). |
|
| When did mechanicals first appear in the copyright law? |
|
|
| What does “mechanical” mean? |
|
| working or produced by machines or machinery; digital is considered mechanical for royalties in the music industry. |
|
| Under what conditions is a copyright owner required to issue a mechanical license? |
|
The song is a non-dramatic musical work.
It has been previously recorded and previously distributed in phonorecord form.
The new recording doesn’t change the melody or fundamental character of the song.
The new recording is only used in phonorecords.
Once a song has been recorded and released to the public, the copyright owner must license it to anyone who wants to use it in a phonorecord (defined as such in the Copyright Act) for a specific payment established by law. |
|
| Are mechanicals paid on free goods? |
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| Passman page 229, Paragraph 3, line 2: “The controlled composition clause will say you get no mechanicals on free goods” and page 75, “The record company doesn’t get paid for them so they don’t bear royalties” THIS IS FOR ARTISTS. FOR PUBLISHERS, mechanicals ARE paid on free goods because they are paid on goods DISTRIBUTED, not SOLD. (pg 224) |
|
| What is the makeup and function of the Copyright Royalty Board? |
|
Three judge panel that sets the:
Mechanical Royalty Rates
Cable TV Secondary Transmissions
Non-commercial Broadcasts for Non-dramatic Works
Digital Performance of Sound Recordings
Digital Delivery of Phonorecords |
|
| What are foreign mechanicals based on? |
|
| Paid as a % of the wholesale price |
|
| What are the main functions of a publisher? |
|
Music Publisher Functions:
Administrator
Exploit/License (Song plugger)
Creative Staff Person (A&R) |
|
| How do publishers normally split the money with their writers? |
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| 50/50 unless otherwise stated in the contract. |
|
| What are the various types of music publishers? |
|
Majors
Major Affiliates
Independents (Stand-Alones)
Writer Publishers |
|
| What are the major sources of music publishing income? |
|
Royalties: (PMPS)
Performance
Mechanicals
Print
Synchronization |
|
| What are the names of the companies that issue mechanical licenses in the USA and Canada? |
|
Harry Fox Agency (USA)
Canadian Musical Reproduction Rights Agency (Canada) |
|
| What fees the companies that issue mechanical licenses in the USA and Canada take for their services? |
|
|
| What else do mechanical licenses organizations do? |
|
|
| How often do mechanical licenses companies pay? |
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| Quarterly, 45 days after the close of the quarter |
|
| Do record companies normally pay the full statutory rate? |
|
|
| what rate do record companies normally pay? |
|
| Normally in the 75% of the statutory rate range |
|
| Understand what a Controlled Composition Clause is and the various rates paid under it |
|
Puts a limit on how much the record company has to pay for each controlled composition
Controlled composition: song that’s written, owned, or controlled by the artist in whole or in part.
Normal rate for Controlled Compositions: 75% of the statutory rate
Record clubs or budget records: 50% of statutory rate
Albums: Usually 10 times the single song rate per album
Mechanicals for free goods: No
Mechanicals paid for multiple uses: No
Paid on Public Domain songs: No or 50% of the normal royalty |
|
|
|
| Digital phonorecord delivery |
|
| When was DPD added to the copyright law? |
|
|
| How are licenses with venues normally issued? |
|
Blanket licenses
depends on square footage and max occupancy |
|
| Can a writer affiliate with more than one PRO? |
|
|
| Can a publisher affiliate with more than one PRO? |
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| Yes, but must be registered under different names. [ASCAP 1yr, BMI 2yrs, SESAC 3yrs] |
|
| What are the ranges of synch fees for use in different parts of a movie? |
|
Major studio : 10,000-100,000
Main Title : 50,000-250,000
End title : 35,000-100,000 |
|
|
|
Most Favored Nations = everyone is paid the same rate
Rates go up if anyone ever gets more.
pg 252, “they pay the same amount for every song, no matter what” – regarding license fees |
|
| What are the normal fees for video game synch? |
|
Major Hits: 50K
normal rates : 8K-10K
commercial : 10k-30k
No royalties except for music-based games. |
|
| Know the difference between interactive and non-interactive radio |
|
Interactive : Spotify (you decide what music you want to hear)
Non- interactive : Pandora (someone else decides what you hear) |
|
| What are the royalties based on? |
|
| performance royalties; performing rights. “each user needs your permission to play the song on the radio, TV, night clubs, amusement parks, etc.” |
|
| What is a Mixed Bundled Service? |
|
| One that includes one music product with one or more non-music products or services together |
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| What’s a Paid Locker Service? |
|
| You store music you personally have access to on another server – aid services to upload and save your music in the cloud and access it from any device you own. They can scan and match your music to theirs. |
|
| What’s a Purchased Content Locker? |
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| Requires you to upload your own music to their server (Amazon and Google), then allow you to access it from your device(s). |
|
| What fees do foreign subpublishers normally take? |
|
Monies earned: 15%-25%
Printed music : 10%-15% |
|
| What does “At Source” mean? |
|
| This means the percentage remitted to the original publisher from the subpublisher must be based on the earnings in the country where earned, which is the source. |
|
| Know about DART and the Audio Home Recording Act of 1992 |
|
Digital Audio Recording Technologies
The Audio Home Recording Act of 1992
Gives permission to copy records at home for private non-commercial use
Imposes a tax on digital audio recorders and digital audio tapes. |
|
| What is included in the DART act? |
|
Money is paid to: Record Companies, Featured Artists, Musician Unions, songwriters, and publishers.
Computers are NOT covered! |
|
| What is the most important thing to do when setting up a publishing company? |
|
| Register the name with a PRO! |
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| What other things do you need to do when setting up a publishing company? |
|
Eventually set up three publishing companies with the three US PROs, if working in the USA.
Affiliate as a writer
Fictitious Business name Published
Register the copyrights
Register the songs |
|
| Who normally pays royalties to songwriters? |
|
|
| What are the exceptions in paying royalties to songwriters by publishers? |
|
| Performance money and DART money |
|
| What does “co-terminus” mean? |
|
| Two or more deals with the same term |
|
| What is a “Passive 360 Deal”? |
|
The record company has no control over the rights involved.
They just collect the money. |
|
| With one songwriter writing the music and another one writing the lyrics, who controls each part of the song? |
|
| Both control the ENTIRE song and it does not matter who wrote lyrics and who wrote music |
|
| What is “Net Publisher’s Share” or NPS? |
|
The amount that is left over to be paid to the publisher once all the obligations are met
Admin cost – writer’s share = net publisher’s share |
|
| What does “Co-publishing” mean? |
|
| Two or more people share the copyright to a song |
|
| What is the normal range for publisher administration fees? |
|
| In the 10-25% of gross income range deducted first before anything else |
|
| What are some of the direct expenses that are deducted before the publisher receives their NPS? |
|
Copyright Office
Demo Costs
Collection fees
Legal Costs
Preparation of Lead Sheets |
|
| Know the different types of publisher admin deals? |
|
One Administrator
One Administrator with Restrictions
One Administrator with Direct Payment to other Parties
True Co-administration
Co-administration with Exceptions: Controlled compositions, Statutory Rate Licenses |
|
| What is a “cover record”? |
|
| Recording of a U.S. composition by a local artist in the local territory, obtained by the administrator |
|
| What is the technical definition of “Work for Hire”? |
|
| If it is made by an employee within the scope of employment, it’s a work for hire. If the employer is “directing” or “supervising” the creation of the work. |
|
| What are the criteria that define a Work for Hire piece? |
|
Commissioned
Created under a written agreement
Created for use in one of the following:
A motion picture or other A/V work
A collective work
A compilation
A translation of a foreign work
A supplementary work |
|
| Understand Termination Rights |
|
Added in the 1976 Copyright Act
You can get your copyright back 35 years after you transfer the rights to a publisher |
|
| Does Termination Rights apply to Work for Hire? |
|
| No, because there was no transfer in the first place |
|
| What did the Fairness in Music Licensing Act add to the copyright law? (1998) |
|
This act states that stores under 2,000 sq.ft. or restaurants and bars under 3,750 sq.ft. don’t need a license to perform music.
Advocated by the National Restaurant Association, National Licensed Beverage Association lobbied heavily for the bill (WTO was not happy). |
|
| What are the negatives for not registering a copyright with the Copyright Office? |
|
Can’t collect Compulsory License Royalties
Can’t file an infringement action
If you don’t register within five years after first publication of the work, you lose the legal presumption that everything in the registration is valid.
(can’t stop someone from using your song)
you can’t recover Attorney fees nor can you get statutory damages unless you registered before the infringement happened. |
|
| What are the legal remedies for copyright infringement? |
|
You get the fair market value of the use the infringer made.
You can recover the infringer’s profits.
You can get an injunction. (not using song)
You can recover statutory damages (if registered).
The court can order destruction or seizure
If the infringement is willful, there are criminal penalties.
You can get your court costs (if registered). |
|
| Know where the music fits in during the movie production process |
|
Music is left until the last possible moment when the film is locked and the amount of money spent on music pales in comparison to the other production costs
It must meet a critical release date, so recording and editing need to be completed in time for distribution.
Composer has 8-10 weeks to score and record the music. Sometimes even less. |
|
| Know the three types of music primary to most films |
|
Original Underscore
Original Song
Licensed preexisting Song |
|
| What are the deals involved in Motion Picture Music? |
|
motion picture deals:
The Performer (singer/instrumental)
The record company to whom the performer is signed
The record producer
The songwriter
The publisher to whom the songwriter is signed
The owner of a Master Recording that’s sampled in the song
The publisher who owns a song that’s being sampled
The record Company putting out the soundtrack album |
|
| What are the rights involved in Film Music? |
|
Acquisition of rights for the picture
Performing artists:
Songwriters, composers and publishers
Record producers
Record companies (both for use of existing masters or samples in the film, and for clearing rights to put new recording of their artists in the film.
License of Rights from the picture company to others:
A deal with a record company to release a soundtrack album
Licensing film clips for music videos
Possible a publishing administration deal |
|
| What are the two types of Film Music Performer Deals? |
|
to perform in the picture
to use the performance in a soundtrack album or single |
|
| How are artists usually paid to perform in a film? |
|
|
| What are some standard fees artists usually are paid to perform in a film? |
|
Up to 400K + for major artists
Norm is:
200K – 400K for superstar
15K-25K for mid level artist
5K-10K for minor artists
10K-20K for featured instrumentalists
100K for big names |
|
| Explain All-in Deals for Film Music |
|
When the artist prefers to negotiate a deal with the film company to record and deliver a track in exchange for a set fee, but the artist pays the recording cost and keeps the difference.
Not as beneficial, because the artist doesn’t know if the director will make them re-record until they (the director) likes it, all at the artist’s expense. |
|
| What are the important aspects of the soundtrack record album? |
|
What’s the royalty to the artist?
Who is the royalty paid to?
For the distributor what can be recouped against your royalty?
What can your record company recoup?
What rights does the film company have?
Roles in the release of music videos |
|
| What are the royalty amounts for soundtrack albums? |
|
12-14% all-in, pro-rated
16-18% for major artists
both of the above could include escalations based on record sales
Record companies want to collect the royalties and keep 50% before paying the artists |
|
| What is recoupable in soundtrack albums? |
|
recording costs (negotiable to be non-recoupable)
artist’s performance fees (negotiable to be non-recoupable)
conversion costs
re-use fees |
|
| Understand the rights to artist film recordings |
|
artist can use recordings on their own record
restriction on re-recording (usually 5 years)
right to release singles and music videos
film shares cost of music video split 50/50
limited film footage allowed on the music video |
|
| Understand about licensing of the master for motion pictures |
|
song licensing, not the score or underscore
deal between the film company and record company
right to use the master is only for the physical recording, not for publishing rights
artist may or may not have approval rights from the record company
artist can block a deal if they own the publishing on the song |
|
| What are the two main elements of the record company/film company master license? |
|
how much is the synch fee?
what is the royalty if the master is going to be used on a soundtrack album? |
|
| What determines the fee the record company will charge? |
|
The popularity of the artist
How the music will be used in the film |
|
| What are the royalty ranges for the fee the record company will charge? |
|
| 11-14% prorated with the Most Favored Nations (MFN) Clause |
|
| How is the money split between the record company and the artist? |
|
50/50
if the record company is releasing the soundtrack album or single, the artist would get their normal royalty rate |
|
| What are the two types of soundtrack albums? |
|
Score Albums (consist of only underscore music)
Song Albums (songs from major artist. Consists of pre-written material or songs specifically for the film) |
|
| What are the advances and royalty rates for both score albums and song albums? |
|
Score: Usually just the re-use fee (these albums don’t usually sell too well), 17-18% royalties
Song: $100k-$300k, some up to $500k, royalties up to 18-20% with escalations up to 22% if sales reach over 1M copies |
|
| Who pays a majority of the costs to release soundtrack albums? |
|
|
| What is the background music of a movie called? |
|
|
| What are the fee ranges for film songwriters? |
|
$0 to $100,000 for established writers
A majority of the deals fall in the $25,000 to $50,000 range for major films
It depends on whether the writer gets a part of the publishing |
|
| What is it called when they get paid more money based on higher revenue from the film? |
|
| Kickers (additional money based on the success of the film) |
|
|
|
Meaning the deal is done over a series of “steps”
Writer creates the song and gives the company a demo recording for a small amount of money.
If the film company doesn’t like it, the writer is required to re-write the song.
Once the film company is happy it goes forward with the deal; if not, the deal is off. |
|
| What does “on spec” mean? |
|
“On Speculation” – write the song without a commitment from the film company to pay a full fee.
Meaning film company pays nothing or sometimes a few bucks for the cost of a demo. |
|
| Are film songwriters normally paid royalties or work for hire? |
|
| They are almost always treated as Work for Hire. |
|
| What rights will film companies ask for in their film songwriter deals? |
|
| To use the song in sequels, prequels, trailers, co-promotions, studio tours, theme parks, live entertainment, and etc. |
|
| What is a single card credit? |
|
No one else is on the screen at the same time
However, the writer usually doesn’t get a single card-at best, they share credit with the performer. |
|
| What is the billing block of a movie ad poster? |
|
| It is that microscopic box of credits down at the bottom of movie ads. |
|
| Do composers normally get a share of the publishing for film scores? |
|
| No, with exception of low budget films where the producers let the composer keep the publishing in exchange for a lower fee to write the music. |
|
| What are typical film composer fees? |
|
| 50K to 1.5million+, Normal range is $300K to $700K |
|
| Instead of exclusivity, what will film companies normally ask for from a composer? |
|
| First Priority, which means you can take other work as long as you perform on time. |
|
|
|
| Where the composer and director sit down with a final cut of the film and determine exactly which “spots” need music, and exact length of each. |
|
| How much do orchestrators get paid and what are they paid based on? |
|
$80 – $85 per page of score, varies based on size of the orchestra and number of pages of music, as well as complexity of orchestration .
As a rough guideline: simple orchestrations is about $400 per minute of music. |
|
| What kinds of royalties are paid to composers, producers and conductors on soundtracks? |
|
Conducting: 6 – 10%
Producing: 3 – 4%
Floors – For major composers |
|
| What is the one thing that the record company normally recoups in a soundtrack deal? |
|
| Conversion costs (converting a film recording to a master that can be used in a record) |
|
| What is a composer package deal and what is the normal pricing? |
|
Package deal = the music including recording costs.
Pricing:
$50K for budget to $2million for major films
Purely electronic: $100K – $400K
Hybrid of electronic and real instruments: $50K – $250K (Orchestra and Studio are both paid)
Low budget: $5K to $10K (Composers will want the publishing and soundtrack) |
|
| What are the normal exclusions from composer deals? |
|
Licensing of outside music
Recording costs of outside music
Re-use fees
Re-scoring
Lyricist expense
Vocalist expense
Music Editor fees
Mag stock (soundtrack imprinted on the film) and transfer cost
Pre-records
Sidelining
Excess Musicians
Library Music |
|
| What will a composer usually ask for on low budget films? |
|
Back-End participation or bonus when the box office reaches certain levels.
A percentage of the publishing
Soundtrack record extra royalties
Adding the advance that the film company gets for the soundtrack album. |
|
| What are the normal fees for TV composers? |
|
(Almost all TV packages) Background Score $5-$10 K for 30min, $9-$20 K for 1 hour, $10-$60K for 2 hours
TV Themes $10-$25 K or up to $40K+ |
|
| How are video game composers paid and the normal rates? |
|
Work for hire and package deals
Normal rates are $1K to $1,500 per minute of music, $1.5K-$2.5K for package deals |
|
| What are the roles of the Music Supervisor? |
|
Coordinates the music for the film
Focuses on the choice of songs
May be involved in the underscore as well
Works with the Producer and Director to work out the type of music needed before production. (Songs on camera must be pre-recorded; they are lip-synched or danced to on the film.) |
|
| What are typical film music budgets? |
|
| $500K – $1.5 million of total $40 million – $100 million film budget. |
|
| How are Music Supervisors paid? |
|
$25K to $100K per picture
Top Supervisors also have royalties on soundtracks of 1 – 2% non-pro-rated.
They may also get escalations of .25% or .5% at 500,000 and 1 million units.
Royalties are paid after recoupment of costs
Sometimes box office bonuses are included. |
|
| Are Music Supervisors used in television? |
|
Used when TV shows have to license a lot of music
Rush productions
Smaller budgets
TV production departments not equipped to deal with complex clearance issues
Fees are $3,500 or so per episode with 1% royalty with records or downloads + sales escalations
They search indie record labels, YouTube and similar sites looking for unknown artists with cool material to put it on a TV show (pay is very little but placements promote artists career) |
|
| Know the big mistakes in the downfall of the record industry and the historical significance of each one. |
|
CD Longboxes
Decentralized record industry’s inability to move quickly
Innovativeness of initial solution was not projected to scale
Illustrative of record industry’s reliance on record retailers
Independent radio promotion
Plugola (derivative of Payola) – product or service endorsed on TV or radio for personal gain without consent of networks or stations. Accepted bribes for free “plugs” for endorsements on air
4 major broadcasters in 2001
iHeart Media
CBS Radio
Citadel (owned by Cumulus)
these controlled 60% of the market
Entercom
Digital Audio Tape (DAT)
developed by Sony Corp. in mid-1980s
replacement of cassettes
tried to make a copy protection (copy-code) to prevent piracy but the electronic developers were angry at the record industry’s request to make their product inferior so the record labels refused to license to DAT.
should have worked together with the consumer tech community to establish a “best practices”, which could have laid better groundwork for later battles on digital media and consumer technology. Nothing was solved – instead the market shifted the burden to another segment of the tech community: computers.
The single was killed
record industry sales relied on singles until commercialization of LPs in 1948.
singles were used as a way to sample the album before purchase.
80s-90s phased out the single because it cost to much to produce for profit margin
Discontinued to drive further album sales
Industry had not built or sustained a commercial consumer interest in their singles’ products. It completely undercut the revenue stream.
Inflated margin of CD album sales because industry relied too much on physical distribution and retailing, so they couldn’t survive off lower profit margins.
Pumping up the Big Box Retailers
Retailers like Best Buy and WalMart would sell their CDs for an extremely low profit margin or at a loss, which drove competition of local/national record stores out of the market
In 1996 these retailers accounted for 25% of all CD sales in the market
Co-promotion schemes (a form of payola)
MAP – Minimum Advertised Price
marketing funds based on price at or above specified level. Support for stores selling CDs above a certain price
consumers paid $480M more than they should have due to MAP
2000 – Record labels accused of price fixing
Drove Tower Records and Musicland into bankruptcy
Devalued music to consumers
Consolidated retailing power to few big chains
SDMI – Secure Digital Music Initiative
Purpose was to develop technology specifications protecting digital music
Goals: convenient access to music online, apply DRM restrictions to work of artists, and promote new music related business and technologies
Consumers tried to hack SDMI encryption
Instead of monetizing new market, group just sought copyright protection
RIAA (Recording Industry Association of America) Lawsuits
sued its own customer base 5 months after iTunes surfaced
ended 5 year lawsuit campaign in 2008, which targeted 18,000
Record labels lost money
There was little impact from the lawsuit and it martyred those actually prosecuted.
Sony BMG’s Rootkit
A software on CDs sold, which would illegal copying and online piracy, but was automatically installed on Windows desktop computers when consumers tried to play the CDs
Software was too illegitimate, consumers outrage at Sony’s lack of empathy, which pushed Sony into losing $2-4M in recalls, and customers exchanging CDs without software
Reinforced Napster’s belief industry was too focused on punishing consumers than catering to them
Record label was forced to dissolve their R into copy protection |
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| What companies jointly developed the CD and is still paid a royalty for this? |
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| Sony and Philips worked jointly on their own versions of technology and used lasers developed at MIT and Bell Labs in the 1960s. |
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| When did the Longbox retire? |
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| The longbox retired in April 199,3 |
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| Which four companies today control more than 60% of radio? |
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| By 2001 iHeart Media, Citadel, Cumulus and Entercom controlled more than 60% of radio. |
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| What were the big changes in the Telecommunications Act of 1996? |
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| This Act removed the caps that a single entity could own no more than 2 broadcast stations per market and no more than 40 total. This resulted in Massive industry consolidation. |
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| How many radio stations can an entity own in various size markets? |
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Restrictions are based on a sliding scale. In a radio market of 45 or more stations, an entity may own up to 8 radio stations. No more than 5 on the same service (AM or FM)
radio markets between 30 and 44 radio stations may own up to 7 no more than 4 on the same service.
radio markets between 15 and 29 radio stations may own up to 6 no more than 4 on the same station
Radio markets 14 or fewer may own 5 stations no more than 3 in the same station
the entity doesn’t own more than 50% of all the radio stations in that market. |
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| Payola is the illegal practice of payment or inducement by record companies for the broadcast of recordings on radio. |
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| What was excluded from the Audio Home Recording Act of 1992? |
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| Excluded professional audio equipment and computers from having to include the Serial Copy Management System. |
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| Who collects and pays out DART royalties? |
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Royalties are collected by the Copyright Office (Quarterly).
Distributed according to statute. |
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| Who does the DART royalties money go to? |
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Sound recording fund
(? of royalties collected) divided as follows:
60% for the copyright owners of the sound recording.
40% for the featured recording artist with a small percentage going to AFM and AFTRA non-featured artists.
Music works fund
(? of royalties collected) divided as follows:
50% to publishers
50% to writers |
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| When was the first CD released? |
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| Billy Joel’s album 52nd Street released on October 1st, 1982 |
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MAP – Minimum Advertised Price
marketing funds based on price at or above specified level. Support for stores selling CDs above a certain price |
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| Who was the founder of Napster? |
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| What was “Fair Play” encryption? |
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| Prevented users from playing the Advanced Audio Coding (AAC) music files on more than three computers. |
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| When did the iTunes store launch? |
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| What is the most important asset to a performing group? |
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| What can the group name be protected by? |
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|
| What’s the difference between a Personal Manager and a Business Manager? |
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Personal manager = The most important person to help your career
Helps make major business decisions
Decisions on recording and record companies
Decisions on publishing and publishers
Helps with the creative process
Promotes the artistic career
Assembles and heads the team
Coordinates concert tours.
Business Manager = Handles money |
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| Who is the first person an artist should sign for their personal team? |
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| Personal manager or lawyer |
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| What fees do Personal Managers charge? |
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15% to 20% of earnings (what you bring in)
Majority get 15% |
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| What does Power of Attorney mean? |
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The power to act for you
right to sign your name to contracts
hire and fire your other representatives
cash checks |
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| What kinds of functions does a Business Manager perform? |
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(Handles the money)
Collects it
Keeps track of it
Pays the bills
invests funds
Files tax returns
(Does not need to be licensed!) |
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| What fees are paid to Business Managers? |
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5%
Hourly
Flat Fee
Monthly Fee |
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| What kinds of fees do Lawyers charge artists? |
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Most in the music industry don’t charge hourly
Those that do charge between $150-$600 per hour
Some charge a 5-10% fee
Monthly retainer
Value billing (based on the deal) |
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|
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| UNIONS – AFM, SAG-AFTRA, Actor’s Equity |
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| What is the market share for the top three record companies? |
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Universal-19.7% (including EMI)
Warner-19.4%
Sony-15.5% |
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| What are the departments in a normal label? |
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A
Sales
Marketing
Promotion
Product Management
New Media
Production
Finance
Business Affairs/Legal
International |
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| Who are the major record distributors? |
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EMI distributes (Capitol and Virgin)
Sony distributes (Columbia, Epic, Jive, and RCA Records
Universal distributes (Universal/Republic, Interscope/A/Geffen, Island/Defjam, Motown
WEA distributes to Warner Bros., Elektra, Atlantic |
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| What are the two types of Independent Labels? |
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Major-Distributed Independent
True Independent |
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| What is the Artist Royalty based on for record sales? |
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| % of wholesale price (PPD) |
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| Are artist royalties paid on free goods? |
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| What is the packaging deduction for CDs? |
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| What are unrecouped royalties called in an artist’s agreement? |
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|
| Explain Cross Collateralization? |
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Part of every record deal
Advances from different records all go into one pot of recoupable advances
Can also apply to different agreements (such as recording and publishing)
Record companies try for cross collateralization sequentially. Current advances cross collateralized with past and future recordings. Recoup advances “under this or any other agreement.” |
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| A Gold Record means what level of sales? |
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| A Platinum Record means what level of sales? |
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| What are normal artist royalties on records? |
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New Artist : 13%-16% of PPD
Middle level : 15%-16%
Superstar : 20% + |
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| What are producer royalty ranges? |
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| What if a mixer gets a royalty? |
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| It is deducted from artist’s royalty |
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| What does Pay or Play mean? |
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| Record label either pays for you to play or pay for you to go away (buy you out of record deal) |
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| What does Exclusivity mean in a record deal? |
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| You can’t make records with anyone else during the term of agreement. |
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| What are normal royalty rates for sales of a USA artist’s record in Canada? |
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| 85% of the USA Rate (ex: 10% USA Rate = 8.5% in Canada) |
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| What about in other “major” territories such as the UK? |
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| 70% to 75% of the USA rate (ex: “10% of USA rate = 7%-7.5% of PPD) |
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Rest of World (the grab bag of countries left over)
Royaltys run around 50% to 66.66% of the U.S. basic rate
5% to 6.66% of PPD |
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| What are normal reserves for mid-level artists? |
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| 35% to 50% of the records shipped |
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| What is the name of the service that tracks record sales? |
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|
| Understand the difference between non-interactive and interactive webcasting |
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Non-Interactive: users don’t have control over what they hear (Pandora, iTunes Radio)
Interactive: you do have control – (Streaming on Demand) |
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| What are some examples of streaming on demand? |
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“Celestial Jukeboxes/Cloud servers”
Spotify
Rhapsody
Rdio |
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| What is the largest satellite radio company? |
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| Sirius XM – (monthly or annual fee – non-interactive) |
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| For permanent downloads how much does the digital service provider usually keep? |
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| 30% = Digital Service Provider |
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| How much do record companies get on ringtones? |
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| 50% of retail price for mastertones |
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| How much do record companies get on interactive streaming? |
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| 60% of ad revenue and/or subscription fee prorated for each master |
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| How much do record companies get on full lockers? |
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| How much do record companies get on bundled service? |
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| How much do record companies get on video streaming? |
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| How much do record companies get on apps? |
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| Apple and others usually keep 30% |
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|
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| Putting your performances on records with performances of other artists |
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| What are the royalties on mid-priced records? |
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| 66.66% to 75% of the US basic rate (6.66% to 7.5% if you have a 10% royalty). |
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| What are the royalties on budget records? |
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| 50% of the tip-line royalty rate |
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| What are the royalties on record clubs? |
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Lesser of: Half of your top line royalty rate or
50% of your company’s net licensing receipts from the record club. |
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