The Waterfront Partnership

Music Agreements

Music Law - A Brief Overview of Relevant Agreements

This note is designed to highlight the main legal aspects of the music business and the various commercial agreements that an artists may encounter before their work can be exploited effectively.

 1.         Agreements

 1.1       Recording agreements

 A recoding agreement is the assignment or exclusive licence of the recording rights in recordings made by an artist (individual or group).

The main terms found in a recording agreement centre around:

• duration of agreement;
• minimum commitment (number of albums, years, etc.);
• amount and structure of advance payment;
• calculation of royalties; and
• obligations on the record company.

1.2       Publishing and song-writing agreements

This type of agreement is very much like a recording agreement, however it concerns the assignment or exclusive licence of the copyright in a musical work composed by one or more composers. If the composers of a song are part of a group, in most circumstances there will be a publishing agreement with each individual member.

The main terms found in a publishing agreement centre around:

• duration of agreement;
• amount and structure of advance payment; and
• calculation of royalties.

1.3       Single song and single album licenses and assignments

These are very similar to the recording agreement, but these are short term agreements - possibly used at the start of an artist's career.  This type of agreement ensures that if the artist is unsuccessful, the record label is not committed to developing the artist further.

1.4       Management agreements

Manager agreements are primarily contracts for services/agency where the manager acts on behalf of the artist (or composer).    

The manger will usually act on behalf of the artist in respect of anything they do in the entertainment industry i.e. singing, acting, public appearance and negotiate and/or sign contracts accordingly. The agreement will state that the manager will receive a percentage of all income received through the artist engaging in such activities as mentioned above 

Again, the main terms found in management agreements centre on:

• the term of the agreement;
• calculation of royalties;
• percentage derived from artist's income for the managers fee
• authority of the manager; and
• expenses.

1.5       Agency agreements

An agency agreement is very similar to a management agreement. Unlike a management agreement which will give a manager the authority to act on your behalf in terms of all aspects of you career (as mentioned above), this type of agreement is often used when the artist hires the same person for specific projects or purposes. An example of this is where an artist may hire the same agent to book and organise tours or promote albums.

Most agents of this kind have relationships with venues, promoters, radio stations etc which some managers may not

Terms in an agency agreement are very similar to management agreements however they will specifically state:

• the services to be provided; and
• the fees for each project or service.

1.6       Band Agreements (Partnership Agreements or Shareholder Agreements)

Although this type of agreement governs the business relationship between band members, they are quite rare. This is due to the fact that when most artists join a band, they do not perceive their union to be a business relationship; they perceive it to be more of a union of creative ideas. This perception results in band members not fully understanding the legal ramifications on how they exploit their work and the remuneration they will receive.

Even if a band does not enter into a formal agreement, the commercial and creative activities that they undertake together will create some legal rights for each member, however it is more prudent to enter into a formal agreement so that it is clear what each band member is entitled to.

A formal band agreement will centre on the following deal points:

• who is in the group;
• how can new members join or how can existing members leave;
• how is income received to be shared;
• the role of each member;
• how will decisions be made; and
• who owns the name of the group.

1.7       Producer and remixer agreements

These types of contracts are usually linked to recording contracts and they will state that the producer will own some of the copyright and recording rights in songs that they produce for an artist. In this instance, the producer will contract with the record company and not the artist themselves.

As the producer will be responsible for creating a commercially and successful product for the record company, the terms within this type of agreement will reflect the high value that record companies place on their involvement in cultivating an artist.

A remixer agreement is in as much the same as a producer agreement and their primary role is to rework recordings.

Typical terms will include:

• That the producer's royalty will be deducted from the artist's royalty;
• services to be provided;
• fees; and
• ownership of Intellectual Property Rights.

1.8       Featured Vocalist agreements

This is very much like a recording agreement but will detail the services provided by featured vocalist and will stipulate fees, and what share of the songs the featured vocalist will own.

1.9       Session Musician agreements

Session players will not normally enter into long term contracts with the record company or the artist, they will normally be hired for touring or specific recording work and as result by paid daily.

1.10     Co-Writer agreements

These agreements will be mainly concerned with the publishing rights of compositions but and will detail the percentage each writer will own of each composition. These types of agreements are needed especially when the writers are represented by different publishing companies.

1.11     Licences and Synchronisation Agreements

A licence is the permission for a third party to use your work in a certain manner. In the case of music, this can be where a record company and/or publisher will give a licence for a song to be featured on different mediums, e.g. compilation albums, Radio, live venues, retailers etc.

Synchronisation Agreements are another form of licence but these cover the use of music on commercials, films, TV, Videos and DVDs, anything where music is used with pictures.

Many of these licences are issued by the Mechanical Copyright Protection Society (MCPS), the Performing Rights Society (PRS) or the Phonographic Performance Limited society (PPL)

Depending on the bargaining power of the artist, the recording agreement or publishing agreement can state that the artist must approve the intended use before the record label/publisher can give permission for a third party to use that work.

A typical licence agreement will include:

• grant of licence;
• restrictions on use; and
• fees.

1.12     Distribution agreements

This is an agreement with a distributor who will manufacture and distribute CDs & records. This normally is a subsidiary company of the record company, however in some instances, it is a totally independent company.

1.16     Sponsorship agreements

A sponsorship agreement involves the right for a sponsor to be associated with an artist e.g. in terms of an artist's concert(s). The sponsor will then use the artist or the artist's concert to promote their goods and services.

This is a very effective way of an artist generating income, however there are aspects within the sponsorship agreement that will need careful consideration:

• the use of Intellectual Property rights (this is needed to exploit the artist's name and likeness and any other indicia which identifies him/her from others)
• territory;
• term ;
• sponsor's right to exclusivity;
• sponsorship fee;
• sponsor's rights;
• artist's warranties and obligations;
• using the sponsor's products;
• sponsor's obligations; and
• termination.

2.         Sample Clearance

2.1       What is Sample Clearance?

Sample clearance involves the process of obtaining permission to use a sample of a previously recorded work in a new recording.

2.2       Finding owner

This simply involves phoning around until you find the person who is able to give permission!

The collecting societies will be able to tell you who owns the copyright in songs you may want to sample.

You must be aware that before you can gain sample clearance, you must get permission from the record label AND the publisher of the song you want to sample.

For the copyright compositions, the MCPS can almost always find the answer (they have a database containing the details of almost every work composed)

For copyright in the sound recordings the PPL also have a database containing the details of every song recorded in the UK.

You may find that the MCPS or the PPL do not have the information you require as a song may not have UK publishers or a UK record label. In this instance you may have to contact the collecting society in the country where the song originates from.

It must also be noted that if you unable to get in contact with the rights holders to gain clearance, this does not automatically mean you can sample the song. It must be remembered that if you do not get clearance, this ultimately means you do not have permission to use that song. If you use a song without permission from the rights holder's you are liable to an action of copyright infringement which can be more costly than seeking permission in the first place.

2.3       Negotiating clearance

There's no specific format for this and no ‘guide price'. Fees for negotiating clearance depend on the artist you want to sample, how much of the song you want to sample and how it is sampled.

3.         Collection Societies

3.1       What Are Collection Societies?

Collection societies are organisations that collect royalties on behalf of publishers and record labels.

The main collection societies in the UK compromise of the MCPS, the PRS (they later merged to become the MCPS-PRS Alliance) and the PPL.

3.2        MCPS-PRS Alliance

The MCPS-PRS Alliance collects royalties when musical works (i.e. the underlying copyright, not the rights in the recording) are used in:

• Background and/or live music licences for all types of business premises (PRS Public Performance Sales)
• CDs, LP's, Cassettes, Mini-Discs (MCPS Audio Products)
• Video, DVD, Novelty Products, Special Music Products, Premium (sponsored) audio products (MCPS Media Licensing)
• TV, Radio (inc. Advertising), Feature Films (Broadcasting)
• Using Music on Websites (background, downloads, streaming), mobile phone ringtones, ringbacks, music 'on hold', premium rate telephone lines (Online & Telephony Services).

The MCPS-PRS will then distribute the royalties amongst their members who are publishers and songwriters.

They also have a vast body of "library music", which is available to license much more cheaply than commercially released music.          

3.5       PPL - Phonographic Performance Limited

The PPL collects royalties when recordings of music are used in:

• broadcast
• performed in public (i.e. anything other than a domestic function)

The PPL also distributes royalties between record companies and artists.

 

© Waterfront Solicitors LLP 2006