Music Law

Traditionally, as a recording artist, getting signed by a record label was the most important step to success in the music industry. However, as streaming music is now the primary way the public consumes recorded music rather than through the purchase of physical product such as CDs, LPs and MP3 downloads, many of the typical deal points in recording contracts have changed and continue to evolve. For example, an artist’s delivery requirements may no longer be tied to the release of an album.

While it used to be common practice that the label would hire the producer, it has long been customary that the artist is now responsible for hiring the producer. This means that any royalty or other payment that is given to the producer will come directly out of the artist’s pocket (or, more likely, the artist’s recoupable advance and future royalties). However, the parties will usually negotiate a letter of direction where the label pays the producer on the artist’s behalf while the artist ultimately remains liable for producer payments. Producer contracts are similar to those of recording artists and the artist’s label may often want the producer contract to reflect many of the deal points in the artist’s contract. As result, many of the industry changes that affect the terms of recording contracts also affect producer agreements.

Side artist agreements are used when a record label, artist or producer hires a musician or singer who is not part of the artist’s group to perform on an artist’s recording. Key provisions to these agreements are (i) whether the side artist will receive royalties from the musical recording or is being paid a flat fee; and (ii) whether the side artist will retain the rights to the percentage of his or her contribution for writing lyrics and/or music for the recorded song. Featured artist agreements are a form of side artist agreement where another recording artist will perform a solo or perhaps sing a duet with the primary artist. Featured artist agreements often must be negotiated with the featured artist’s own label.

Because sampling is so commonplace in so many genres of music, all recording artist, producer, side artist, and even songwriter agreements, will have a provision that all the music supplied is either wholly original or properly “cleared,” meaning licensed.

For developing artists, 360 deals have become the norm in the music industry as record labels try to offset the costs of developing and promoting the artist by sharing in all of his or her revenue streams in the entertainment industry. Under a 360 deal, record labels collect on an artist’s traditional sound recording rights, as well as on any revenue the artist earns through publishing, touring, songwriting, merchandising, fan clubs, sponsorship money, motion picture acting, modeling and so on.

In negotiating 360 deals, artists should pay specific attention to whether the record label’s interest in publishing and merchandising is passive or active. A passive interest is more favorable to the artist since the artist has more freedom to make deals without the record companies’ participation – other than receiving a percentage of the artists payments. A record companies’ active interest can limit the artists freedom to contract, for instance, by requiring the artist to make certain deals with specific publishers or merchandisers.

Promoting and selling your own music can be a major obstacle for developing artists. Distribution agreements remedy this issue by connecting artists with established networks of consumers and negotiating favorable rates with retailers.

Distribution agreements typically define the rules under which an artist can have his or her albums manufactured and/or distributed by a distribution company, or the distribution arm of a large record label. These agreements also set forth how the manufacturing and distribution will be funded and the manner in which a record label will earn revenue from sales of the album.

Promoting and selling your own music can be a major obstacle for developing artists. Distribution agreements remedy this issue by connecting artists with established networks of consumers and negotiating favorable rates with retailers.

Distribution agreements typically define the rules under which an artist can have his or her albums manufactured and/or distributed by a distribution company, or the distribution arm of a large record label. These agreements also set forth how the manufacturing and distribution will be funded and the manner in which a record label will earn revenue from sales of the album.

A songwriter or composer will write a song, but most don’t have the means or knowledge to market their music for distribution or licensing. This is where music publishers come in.

There are three basic types of music publishing agreements. The oldest and still quite common, is the “traditional songwriter” or “copyright” agreement. Here, in exchange for the songwriter assigning 100% of the worldwide copyright to the music publisher, the publisher handles all the promotion, introducing the writer to potential co-writers and recording artists, licensing and collecting of income for the writer’s songs. In exchange, the music publisher and the writer split the income 50%/50%, with the publisher’s half going to overhead and profit.

At the other end of the spectrum is an “administration” agreement. In administration agreements, the artist does not assign any publishing or ownership rights from their artistic work to a publishing company, rather they retain 100% of their copyrights but grants the music publisher “administration” rights so that they act as if they controlled the copyright to the song. Depending upon whether the administrator is acting as a true publisher or merely a licensing and royalty processing agent, the administrator typically would take between 10% and 20% of the songwriter income for their services. However, unless a writer has already achieved a certain level of success, it’s unlikely that a publisher would offer an administration agreement.

The third type of music publishing agreement is a hybrid of the first two. Under a “co-publishing and administration” agreement, the songwriter will retain a portion of the copyright to the song (and the income associated with that share). The publisher would also be granted a portion of the copyright (and the respective copyright shares between writer and publisher is a matter of negotiation) as well as 100% of the “administration rights” for which the publisher may also take a commission in addition to the income attributable to its copyright interest in the song.

When making a song, two or more songwriters often collaborate to write the musical composition.  This is where a collaboration contract comes into play.  Collaboration contracts can take the form of a basic “split sheet” or they may be more elaborate.  At a minimum, the collaboration agreement should identify all the co-writers and music publishers and what each party’s percentage of the they control.  The agreement may also spell out which publisher(s) have administration rights to the song, meaning which publishers have the right to issue licenses for the song and whether permission needs to be obtained from each co-writer (or their music publisher) for particular uses of a song, such as a license for a TV commercial. 

If anyone wants to use a piece of music in sync with an audio-visual work (in a film, TV program, commercial, music video,  video game, etc.), the copyright holder of the music needs to be asked for permission.  This permission usually comes in the form of a synchronization or “sync” license (as in synching audio to picture) that lays out, among other things: how much of the music can be used, in what context the music can be presented, where the audio-visual work incorporated the music may be exploited (e.g., worldwide or US only) and for how long.

Just remember, a sync license will be required for both the composition (from the music publisher(s) and the master recording (from the record label) if the user doesn’t intend to record their own version of the song.  If the user does record their own version, permission from the music publisher(s) for use of the song is still required.

A manager can help an artist shape the trajectory of their career.  Unlike an agent, though, a manager without the proper licensing cannot obtain work for their client, so they serve more of an advisory role.

Some common terms to be included are how the manager will get compensated (usually a percentage of a defined set of earnings made during the term of the contract), a sunset provision that allows the manager to continue collecting their commission on earnings that were initiated during the term but were received after the term of the contract and an exclusivity (or lack thereof) provision.

For artists setting up a concert tour, the first step is signing a contract with a tour promoter. Tour promoters organize the live music tour and often take control of advertising, marketing and ticket sales.

While payment, allocation of profit, dates and locations are standard touring agreement provisions, artists should also pay special attention to the promoter’s expenses, ticket selling policies, the equipment and crew breakdown and cancellation policies. Tours play a pivotal role in publicizing an artist’s name and brand, so ensuring that the touring agreement is in line with the artist’s goals should be of utmost importance.