Music Industry Contracts

Contracts are the primary tools that entities in the music industry use to enter into business relationships with one another. This makes it important for musicians and business-people alike to have a general sense of how they work.

The purpose of our guide is to provide a basic overview of important principles in contract law, as well as to paint a more detailed picture of the specific agreement types and clauses that are more relevant in the music industry.

Check out some of our other guides on music industry topics at Exploration Learn, or subscribe to our YouTube channel for more information.

In this newsletter:

A number of organizations representing artists and songwriters in the US have praised the US Copyright Office’s ruling on termination rights under the Music Modernization Act.

Streaming giants are taking legal action against Canada’s new 5% streaming levy. The music industry welcomes the cash injection, but platforms argue it’s “unsustainable” and may hike prices.

UK mechanical rights collecting society MCPS is celebrating its 100th anniversary. Speaking at an event in London, Chair Jackie Alway discussed all the changes in the mechanical rights business over the last century, but said the aim of MCPS remains the same, standing up for copyright.

Now, the details...

Exploration Weekly - July 12, 2024
Compiled by Ana Berberana

Songwriter Groups Hail ‘Landmark Victory’ as US Copyright Office Issues Rule Confirming How Termination Rights Apply to Streaming Royalties

A number of organizations representing artists and songwriters in the United States have applauded the US Copyright Office’s ruling reaffirming termination rights under the Music Modernization Act (MMA). The rule clarifies that songwriters are entitled to collect mechanical royalties generated from streaming platforms like Spotify, Apple, and Amazon after their termination rights have been invoked (i.e., when they reclaim their rights from another party, in this case, a music publisher). In the US, songwriters have the right ‘to terminate the exclusive or nonexclusive grant of a transfer or license’ after 35 years for works written after 1978 (or 56 years for works written/copyrights granted prior to 1978). The ruling, which was published today (July 9), confirms that the so-called “derivative works exception” does not apply to the blanket license under Section 115 of the Copyright Act. The compulsory license in the US, is administered by the US-based Mechanical Licensing Collective (The MLC), which is the sole entity authorized to develop and administer a mechanical licensing system in the US. According to US copyright law, “a derivative work prepared under authority of the grant before its termination may continue to be utilized under the terms of the grant after its termination.” As explained by the Authors Alliance back in 2022, the policy adopted by the MLC was that, “as long as a publisher had actively licensed the work and used it at least once before the termination date, the publisher would forever receive royalties from the MLC, and not the creator who terminated rights”. The ruling published today stipulates that songwriters who terminate their rights are entitled to be paid for post-termination uses of their works under the blanket license. The Music Artists Coalition said that today’s decision is a “significant victory for songwriters and creators, ensuring they receive fair compensation when reclaiming their copyrights”. In a statement issued to MBW, an MLC spokesperson said: “We welcome the Office’s guidance on this important topic for rightsholders. “With the long-awaited final rule now issued, The MLC can begin working to implement its requirements, including the release of monies we previously placed on hold pending the rule, in accordance with the timelines the Office provided.”

Streaming Giants Sue to Block Canada's 5% Revenue Levy

Spotify, Apple and Amazon have launched legal challenges against Canada’s new 5% streaming levy through the country’s Federal Court Of Appeal. The Motion Picture Association Canada has also begun legal proceedings on behalf of its streaming service members, including Disney+, Paramount+ and Netflix. The levy, introduced by the Canadian Radio-Television And Telecommunications Commission, or CRTC, requires digital services to contribute 5% of their revenues to support Canadian music and content creation. The music industry has welcomed the measure, but the streaming services oppose it Graham Davies, CEO of the Digital Media Association, speaking for the music services as they filed their legal action, criticized the CRTC's approach as “backward-looking” and “unsustainable”. He warned that it “risks raising costs for Canadians” and urged the CRTC and the Canadian government to reconsider the plan which, he says, “fails to acknowledge streaming’s existing contributions to music production”. The legal framework for the streaming levy comes from Canada’s Online Streaming Act, which left it to the CRTC to sort out the specifics. It announced a plan for how the levy would work last month, including who the beneficiaries would be. Of the money paid by audio services, half will go to organizations supporting the music community, with the other half supporting local radio news production, community radio and indigenous content. While the streaming services oppose the levy, the music industry has welcomed it, with the Canadian Independent Music Association stating that the CRTC's plan was “good news for the Canadian music sector”.

MCPS looks back at a century of music licensing as it celebrates its 100th anniversary

The UK music publishing sector gathered in London yesterday to celebrate the 100th anniversary of the Mechanical Copyright Protection Society, or MCPS to its friends. Current chair, Jackie Alway, revealed she had delved into the mechanical rights collecting society’s archives when preparing her speech for the event. While we might think of format shifts as a relatively modern challenge, Alway highlighted the constant changes in how the mechanical rights in songs make money for songwriters and music publishers over the hundred years MCPS has been around, as music moved from wax cylinders to shellac-based discs, from vinyl to cassette to CD and back to vinyl, from downloads to streaming to TikTok. However, Alway said, “I was struck by the similarities between the MCPS of yesterday and the MCPS of today”. When MCPS was founded in 1924 by the merger of two earlier earlier licensing companies, the organization’s mission was threefold, “to help songwriters and composers make money legitimately; to prevent money being made from music illegitimately; and to lobby for improved copyright legislation to keep up with the technology aimed at evading it”. “A century later, this three-pronged purpose remains central to MCPS’s mission”, she added. “More simply put, we are here to protect the value of the song and return the maximum value possible to those who create it”. As well as running through the various new technologies that have totally changed the mechanical rights business over the decades, Alway also talked about changes at MCPS itself. That included its acquisition by the Music Publishers Association in 1976, its alliance with performing rights society PRS in 1997, and the 2013 restructure that put in place the current business model, in which PRS became a service provider to MCPS. She then finished her speech by returning to the fundamentals of the society’s mission statement: standing up for copyright. “Amongst all the jargon, court cases and negotiations”, she declared, “it is easy to lose sight of the real power of copyright: to get people paid for the art they create. It is the principle that sustains the cultural ecosystem, protecting music from Bowie to Winehouse, and Marley to McCartney”.

Cardi B, Warner Music, and Others Face Copyright Infringement Lawsuit Over ‘Enough (Miami)’

Two Texas-based plaintiffs just recently fired off the allegations, naming as defendants the mentioned Cardi B and WMG as well as Atlantic Records, “Enough (Miami)” producers OG Parker and DJ SwanQo, and Celebrity Booking Agency. Overall, the to-the-point complaint, contrasting so many others, doesn’t dive into an all-encompassing comparison of the appropriate efforts’ technical characteristics or a convoluted description of how exactly the defendants may have had access to the allegedly infringed composition. Instead, the legal text notes that this allegedly infringed work, written by plaintiffs Joshua Fraustro and Miguel Aguilar in 2021, has been made available via platforms including Spotify. Furthermore, the song in question, “Greasy Frybread,” was recorded by one Sten Joddi, released via Tattoo Muzik Group Studios, and synced in FX’s Reservation Dogs. The series featured “Greasy Frybread” in season one’s fourth episode, according to FX’s website. The television network isn’t a party to the suit. “Defendant Cardi B, along with other Defendants, has used the song in her new album without permission,” the 10-page document indicates of the alleged infringement. Beyond that concise description of the actual alleged infringement, the suit provides a detailed account of the plaintiffs’ sought relief. Alleging vicarious and contributory infringement, unfair competition, and misappropriation, the complaint is seeking temporary and then permanent injunctions as well as a temporary restraining order “to prevent further distribution and public performance of” Cardi B’s “Enough (Miami).” Plus, Cardi B, Warner Music, and the additional defendants should be made to cough up damages, attorneys’ fees, and more, according to the plaintiffs.

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