Table of Contents
Controlled Composition Clause
Copyright Royalty Board
Digital Phonorecord Delivery (DPD)
Digital Millenium Copyright Act (DMCA)
Harry Fox Agency HFA
Key Man Clause
Master Use License
Most Favored Nations Clause (MFN)
Net Artist Rate
Net Publisher's Share
Performing Rights Society (PRO)
Power of Attorney
Royalty Base Price
Statutory Mechanical Rate
Suggested Retail Price
Work Made For Hire
A 360 deal is found in many of today’s contracts between a record label and a recording artist and refer to the label’s efforts to obtain a share in all other rights and revenue streams related to the artist, in addition to the exclusive recording rights. Additional rights in a 360 deal may include name and likeness rights, touring rights, music publishing rights in songs written by the artist, and more.
In administration deals, the songwriter retains full ownership of their copyrights. Though the music publisher does not have any ownership in the work, the duties of the publisher remain the same. The publishing administrator takes a percentage off the top of the song’s earnings as the fee.
An advance is a type of loan that serves as income for the artist or songwriter as they record or write songs and wait for royalties to generate revenue. These advances are essentially investments. In the case of recording artists, the label is investing in the artist by paying upfront so the artist can record and tour yet still pay their bills. Advances can also include the costs incurred by the artist before royalties begin rolling in. These advances must be paid back to the label. (see: Recoupment)
An album cycle refers to the period of the time between an artist’s albums, usually measured from the start of the recording of one album to the end of marketing activities for that album or the start of the artist’s next album.
The Artist and Repertoire (A&R) department of a record label is the portion of a record company that is responsible for finding new talent and convincing them to sign with their label. When A&R representatives find talent deemed worthy of a record deal, they lead negotiations between the label and the prospective artist. A&R employees usually develop a relationship with the particular artist or band they sign and serve as the primary liaison between the artist and the label.
Black Box royalties refer to money that is earned but never paid out to any copyright holder, due to any one of several reasons.
Blanket licenses are a type of license allowing one to use all the compositions covered under the agreement with no limit on use for one payment (usually annual). most commonly refer to licenses issued by performing rights organizations (PRO) to licensees (restaurants, bars, clubs, etc.) who wish to use the entire catalog of a PRO.
A DSP user can access one or more services “bundled” together for the same price.
A music business manager handles an artist or songwriter’s finances and other logistics, typically without touching their personal lives.
A catalog is a collection of works by one songwriter or one artist, or a group of songwriters or a group of artists.
A record will be deemed by a record label to be “commercially satisfactory” when it has been judged to have a realistic potential to sell a reasonable amount of records.
A compilation album contains various recordings featuring multiple artists.
Free tickets offered for an artist’s concert.
Controlled Compositions Clause:
A controlled composition clause affects the mechanical royalties paid on a composition that is co-written by the recording artist. The controlled composition clause in a recording contract places a limit on how much the label is required to pay for songs in which the artist is also the songwriter.
A co-publishing agreement means that while the music publisher has ownership in the copyright and administers its exploitation, another publisher (possibly a songwriter’s own company) controls the other piece of the publisher’s share of ownership. This type of agreement often happens when established songwriters who have a lot of power within the industry establish their own publishing entity and enter in an agreement with another publisher.
A copyright grants protection under the law for original works of authorship fixed in a tangible form of expression. Copyright protection affords the composer six exclusive rights which roughly correspond to various licensing processes and revenue streams:
- The right to reproduce the work
- The right to create a derivative work, meaning an adapted work that is directly based on the copyrighted work
- The right to publicly distribute copies of the copyrighted work through sale or for free
- The right to publicly perform the artistic work
- The right to publicly display the artistic work
- For sound recordings: the right to publicly perform the recording through digital audio transmission (not applicable to compositions)
Copyright Law of the United States, Title 17 of the United States Code. (See: http://www.copyright.gov/title17).
Copyright Royalty Board:
The CRB is a three-judge panel appointed by the Librarian of Congress to determine compulsory rates under the Copyright Act, among other responsibilities.
When used as a noun, cover refers to a recording by an artist who is not the original songwriter. When used as a verb, cover refers to the act of recording the song.
A crew is a group of people besides those on stage hired by the artist or record label to work on a concert tour and travel with the artist from venue to venue.
Cross-collateralization refers to the recoupment of advances from multiple sources. It is typically included in a recording contract to reduce risk imposed on the record label.
Delivery refers to the specifications in a recording contract by which an artist may submit masters to a record label for potential release.
A demo deal occurs between a record label and an artist in which the label agrees to advance the costs of a certain number of demo recordings.
Digital Phonorecord Delivery (DPD):
A DPD is another name for a digital download and refers to a transmission to the purchaser that allows them to download music to use repeatedly and indefinitely.
Many independent artists agree to allow independent distributors to distribute their music according to a distribution agreement between both parties. Major distribution deals also exist in which the label agrees to manufacture and distribute a release.
Digital Millenium Copyright Act (DMCA):
Passed by Congress in 1998, the DMCA, in broad terms, heightened the consequences for copyright infringement on the Internet. Notably, the Act also revised public performance rights for digital audio transmissions to provide compulsory licensing for digital audio transmissions over non-interactive websites.
See Digital Phonorecord Delivery.
Despite the evolution of music technology, EPs are generally considered the middle ground between a standard album and a single, both in cost and length.
A copyright owner has the right to determine who will be the first artist to record a song.
An album which has sold 500,000 copies is certified by the RIAA as “gold.”
Harry Fox Agency (HFA):
The Harry Fox Agency is a mechanical license administrator. In short, HFA issues mechanical licenses for reproductions of musical compositions embodied in sound recordings that are manufactured and distributed in the U.S.
Independent distributors provide distribution services for both independent artists and record labels. Some independent distributors are affiliated with a major label or a major artist.
A joint recording features more than one recording artist.
A work prepared by two or more authors with the intention that each contribution will merge into one inseparable whole. If one songwriter writes all of the music to a joint work and another songwriter writes all of the lyrics to the joint work, each songwriter will own 50% of both the music and lyrics.
Key Man Clause:
This section of a contract gives a party the ability to terminate a contract if a particular person, or “key man,” no longer works for the other party.
Occasionally, two or more labels will form an agreement, known colloquially as a “label deal,” with each other for the rights and royalties of (typically) multiple artists.
Songwriters are often required to submit lead sheets, which is a written piece of paper containing the lyrics and music to a song.
A licensee is the recipient of rights under an agreement.
A licensor is the grantor of rights under an agreement.
A master is a term used by a record label to refer to a sound recording fixed in tangible form and from which all subsequent copies of the sound recording are made.
Master Use License:
A master-use license permits the licensee to use a copyrighted sound recording in a new project. Typically, licensees are seeking to use recordings in audiovisual projects, as a sample in a new audio recording, or for distribution. By obtaining a master-use license, the only rights being granted are to the sound recording. This means that any copyrighted composition embodied in the recording must be licensed separately.
A matching folio is a collection of printed sheet music for a particular album, i.e. the folio “matches” the album.
According to the Harry Fox Agency, a Mechanical License grants to the user the rights to reproduce and distribute copyrighted musical compositions on CDs, records, tapes, ringtones, permanent digital downloads (DPDs), interactive streams, and other digital configurations supporting various business models. In exchange for the permission to do so, licensees pay a statutory rate to the copyright owner(s) per reproduction.
Mechanical royalties are paid to the owner or administrator of the composition whenever a copy of one of their songs is made. Each time a consumer purchases a sound recording or streams a recording on demand, music publishers are owed a mechanical royalty, which is then passed on to the songwriter.
Merchandising rights allow the reproduction and distribution of merchandise with the name and likeness of an artist or material about the artist.
Mixed folios are printed books with sheet music from multiple songwriters.
Most Favored Nations Clause (MFN):
The MFN Clause in a music industry contract specifies that one party must give the other party equal or better terms than the ones they have with any outside party.
A music supervisor works with motion picture or television producers and directors to recommend what music should go into the soundtrack for the movie or program. Music supervisors often are also tasked with negotiating and acquiring all the necessary licenses for use of the music in the production.
Net Artist Rate:
This royalty amount is equivalent to all royalties payable to the artist minus all the royalties owed to various producers for a given master.
Net Publisher’s Share:
When an artist’s catalog is up for sale, the Net Publisher’s Share plays an important function in determining the monetary value of the catalog. Net Publisher’s Share typically refers to the gross income collected by or credited to the publisher who controls the catalog minus songwriter royalties and co-publishing royalties.
Net Receipts refer to the royalties earned by the record label that are solely attributable to the Masters minus all expenses incurred by the label. In the case of publishing deals, net receipts can also refer to royalties earned by the publisher and owed to the songwriter minus incurred expenses.
A rider is an additional provision attached to a contract. A performance rider is a set of requests that a performer sets out as requirements for a performance.
Performing Rights Society (PRO):
According to the Copyright Act, a Performing Rights Society (PRO) is an association that licenses the public performance of nondramatic musical works on behalf of Copyright owners of such works, such as the American Society of Composers, Authors and Publishers (ASCAP), Broadcast Music, Inc. (BMI), and SESAC, Inc.
A personal manager in the music industry works on behalf of a songwriter or artist to handle almost every aspect of their life—both personally and professionally—and act as a guide for their career. The personal manager might seek out professional opportunities for the songwriter or artist, help them with decision-making, oversee their day-to-day schedules, and represent them in negotiations.
A phonorecord is a material object that embodies sound.
Sound recordings sold through a tangible medium which takes up physical space and not through a digital audio transmission. Examples include CDs, vinyl, cassettes, etc.
An album which has sold 1,000,000 copies is certified by the RIAA as “platinum.”
Power of Attorney:
Power of Attorney gives a party the right to sign documents in place of another party.
Used as a basic figure for establishing royalty shares in recording contracts, the Published Price to Dealers, or PPD, is the wholesale unit price of a sound recording.
A print license is an agreement between a copyright owner (music publisher) and the user of the copyright. It gives permission to rearrange, display, and/or print the sheet music, notes, and/or lyrics of a composition.
A producer is someone in charge of the recording process in the recording studio. Producers will have varying levels of creative input depending on the recording artist.
The producer agreement usually occurs between a producer and artist, though sometimes it can form between a label and a producer. The producer is often entitled to a 50% fraction of the label’s net receipts for a given sound recording.
Promoters work alongside publicists and other marketing professionals in order to create promotional opportunities for an artist or project.
When an artist, songwriter, producer, publisher, or label is not entitled to royalties for every song on an album, the royalties will be “prorated,” meaning they are divided between songs according to who is owed what.
A music publisher is responsible for licensing and administering composition copyrights of songwriters. Typically, they secure the placement of songs in the publisher’s catalog where royalties and other revenue will be generated. These revenue streams range from royalties obtained through the licensing of compositions for the purposes of sound recordings, to digital streaming and synchronization in film, commercials, or television.
Songwriters sign publishing deals for a variety of reasons, and the types of deals they can sign are multifaceted. A publishing deal can give the writer’s songs a pipeline to being recorded by a successful artist, and can provide them with other avenues to get their compositions out into the world where they might be monetized.
A record is any medium on which recorded sound is transferred. Typically, the term is used to refer to a vinyl disc with recorded sound on it.
Recording costs are the costs incurred by an artist during a recording session.
Record labels are companies, large or small, that manufacture, distribute, and promote the recordings of affiliated musicians. Essentially, record labels work to sell the brand of the artist and the products they create. There are various different departments within a record label that work together to best sell and market their products and artists.
The concept of recoupment allows the record label to apply artist royalties against the advance until the royalties equal or “recoup” the advance. Recoupment can also occur in publishing agreements in which a songwriter receives a recoupable advance.
Reserves are a certain amount of records or royalties which are withheld “off the top” from the artist by the record label to guard against the label paying royalties on physical records that are subsequently returned by retailers.
The retailers to which a distributor sells records sometimes have the right to “return” any unsold physical records to the distributor for full credit. The distributor allows this so that these retailers stock more physical records than they otherwise would.
RIAA stands for Recording Industry Association of America, a trade association that represents major record labels and distributors in the United States.
A ringtone is a sound recording that someone hears when called on a mobile device instead of the typical mobile phone ring. Typically, ringtones are clips of commercially-released masters and therefore subject to copyright protection.
Royalty Base Price:
Royalty Base Price is a term used by record labels typically referring to the wholesale price (PPD) less any distribution or packaging fees.
Samples are pre-recorded sound recordings subject to copyright protection which are incorporated into a new sound recording with different copyright owners. Samples also include the underlying composition, and both the owner of the sound recording and owner of the composition must license their applicable rights for a legal sample.
The term “score” is used as a common alternative for “sheet music.” Several different types of scores exist: a score can refer to sheet music or to music written specifically for a play, musical, opera, ballet, television program, film, or other production. A “film score” refers to original music written specifically to accompany a film.
Sheet music is the printed music of a single song with notes, arrangement, lyrics, chords, and other annotations used by composers to communicate notes, pitch, tempo, rhythm, chords, and other musical details.
A single is the shortest type of song release in playing time.
SoundExchange collects and distributes digital performance royalties from the use of sound recordings on behalf of more than 155,000 recording artists and master rights owners (typically the record label) and administers direct agreements on behalf of rights owners and licensees. It is the only organization officially designated by the U.S. Congress to do so. SoundExchange pays featured and non-featured artists ( background vocalists, session musicians, etc.) and master rights owners for the non-interactive (you don’t choose which song plays) use of sound recordings under the statutory licenses set forth in 17 U.S.C. § 112 and 17 U.S.C. § 114.
A sound recording is the reproduction of sound waves into fixed form from which the contents can be heard or communicated again. The Copyright Act of 1976 defines sound recordings as “works that result from the fixation of a series of musical, spoken, or other sounds but not including sounds accompanying a motion picture or other audiovisual work.” A sound recording is a separate intellectual property from any lyrics, compositions, poetry, script, or speech that may be embodied within it.
Soundscan is a company that tracks and publishes data from the sales of music and music video products throughout the United States and Canada. Billboard uses SoundScan to create its album charts each week for album sales in the U.S.
Statutory Mechanical Rate:
In the United States, the Copyright Royalty Board issues compulsory Mechanical Royalty rates, known as “statutory rates.” For physical sales/downloads, this rate is 9.1 cents for songs that are under five minutes. For pieces over five minutes in playing time, the rate is 1.75 cents per minute. The rate for ringtones is 24 cents per ringtone.
A sub-publishing deal occurs when a publisher enters into an agreement with another publisher to administer and license copyrights from their writers in a foreign market. European music publishers can sub-publish American music and vice versa. Usually these deals are done company-to-company. A very small publisher in the U.S., for example, may sign a sub-publishing deal with one of the majors to cover administration in foreign territories.
A subscription service offers certain content in exchange for a periodic recurring fee (subscription). However, if the user stops paying the subscription, the content may be no longer available. The subscription model is used by Spotify and other digital streaming services offering music on-demand over the Internet.
Suggested Retail Price:
The Suggested Retail Price of a CD or vinyl album is the price a Distributor “suggests” its retailers use when selling the music to an end consumer. As the name implies, businesses are not required to sell the music at the Suggested Retail Price, though contract terms nearly always bind the retailer to a minimum price. Record companies have traditionally used Suggested Retail Price to calculate the Royalty Base Price for artist royalties, though wholesale price (PPD) is used more often today.
Synchronization licensing is the process by which production companies of audiovisual works clear the rights for outside music to be used in their productions. Both the sound recording copyright and the underlying composition copyright must be cleared in order to use the work in synchronization. Synchronization licenses (“sync,” for short) refer to the “synchronizing” of a musical work with a visual work. Sync deals give the licensee the right to use a composition copyright and sound recording in an audiovisual work such as a movie, TV show or commercial, video game, or other similar work.
Tour managers are responsible for ensuring that an artist’s tour runs according to plan.
Tour merchandising refers to the sale of an artist’s merchandise at a concert venue.
A record company will cover the expenses of a tour that exceed a tour’s revenue. Note, however, that tour support is almost always recoupable from artist royalties.
A trademark is any word, name, symbol, device, or any combination used to identify and distinguish between sources of a good/service.
Venue refers to the place where a live performance occurs.
Work Made For Hire:
A work made for hire occurs when Party A employs Party B to create something, but Party A becomes the legal author of the work. In the eyes of the law, Party B will no longer have any rights to the work whatsoever.
This guide was composed by Luke Evans, Mamie Davis, Jacob Wunderlich, Rene Merideth, Jeff Cvetkovski, & Aaron Davis.
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