Copyright, deals and royalties in the music industry

Tuesday 23 April 2013, 11:44

Alex Mann Alex Mann Musicians' Union

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Copyright, deals and royalties in the music industry.
A few weeks ago we featured a blog post on making the most of touring by Generator's Joe Frankland. For this post we hand over the blog to another industry expert, Alex Mann, regional officer for the Musicians' Union. Read his indepth guide to copyright, publishing deals and royalties. 
What is copyright?
Copyright is basically the right to prevent copying of intellectual property - in this case music, lyrics and sound recordings - so the copyright owner can protect their work and control how it’s used. It’s worth noting that copyright doesn’t exist until an idea is written down, recorded onto a tape or disc, onto a computer. The copyright owner can be the author of the work, or anyone else they’ve assigned the rights to. Copyright exists separately in recordings and songs, which means that recording owners (usually record companies) and publishers can use the rights in different ways. 
With songs, the composer of the music and the writer of the lyrics are the first owners of copyright, and the copyright in musical works lasts for the life of the author plus 70 years. Copyright in a recording is slightly different in that the owner of the recording is the person who arranges for the recording to be made. Often this is whoever books and pays for the studio where the recording takes place, so this could be a record company or it could be the band themselves. Copyright in a recording lasts for 50 years from the end of the first year of release, although this term will be extended to 70 years by November 2013.
How do record and publishing deals work?
Throughout their careers artists and songwriters have to make important decisions about how the copyright in their recordings and songs will be exploited, and this often means entering into complex and sometimes long term deals with record companies and publishers. Record companies pay artists either on the basis of a royalty from record sales, or via a split-profit arrangement. If the contract is long term, a cash advance on account of the artist’s future royalties should be paid which at least allows them a reasonable living wage until initial costs are met and royalties are being received. It’s wise to try and secure some control over things like budgets, producers and choice of material in your contract too. 
Music publishers seek out music and composers whose works may generate an income and their role is generally to promote their catalogue of works to potential music users including in film, TV and advertising.  Publishers may for a smaller share of income offer an administration only deal, which involves collecting royalties due to their writers and identifying income streams that might have been missed. A publishing contract can be just for one song, or cover everything you write for a number of years in which case there may be a ‘minimum commitment’ stipulated which a songwriter would have to meet in order to fulfill their side of the deal. 
It’s not always necessary to assign copyright in your songs for the full life of copyright, or at all, and a shorter term may be preferable as it allows the writer to extricate themselves from the agreement should the publisher not generate as much income as hoped. Like record companies, publishers will often pay a writer an annual advance on account of future royalties, which again should ideally be enough to live on. 
How are royalties paid to musicians and artists?
Musicians and artists receive royalties through different ’streams’ depending on their musical activities and involvement in the creation or exploitation of musical works and recordings. It’s important to know which streams might apply to you, and especially which collection societies you may need to join in order to receive royalties. PRS for Music represents songwriters and publishers, collecting and distributing licence fees when member’s music has been performed or broadcast. MCPS (Mechanical Copyright Protection Society), which is now part of PRS for Music, collects and distributes licence fees to writers and publishers when their music is released or sold on CD or as a download. PPL collect and distribute royalties from recorded music to recording owners and performers when it’s either broadcast or played in public.
 
Artists signed to recording companies receive a separate royalty stream direct from their record company. This can be between 12-18% of the Published Price to Dealers, which is basically the price at which record companies sell the CD to retailers; alternatively this can be between 8-12% of the Retail Selling Price. Alternatively, the profit share model generally means that both artist and record company share profits 50/50 once costs are recouped – this model is quite common with independent labels. 
For published songwriters, royalty income is split between the writer and publisher, often with 70% in favour of the writer. The writer’s share can be as low as 50% in some cases but The MU members to aim for more than that.
Ultimately, the deals that musicians and artists sign can impact on their careers forever, so contracts should always be checked out by a solicitor before signing. 
For more advice on this subject, head to the Musicians' Union website.
There's also more information on the subject in our own advice section which you can find here.
Useful links:
www.theMU.org
www.prsformusic.com    
www.ppluk.com

A few weeks ago we featured a blog post on making the most of touring by Generator's Joe Frankland. For this post we hand over the blog to another industry expert, Alex Mann, regional officer for the Musicians' Union. Read his guide to copyright, publishing deals and royalties. 

What is copyright?
Copyright is basically the right to prevent copying of intellectual property - in this case music, lyrics and sound recordings - so the copyright owner can protect their work and control how it’s used. It’s worth noting that copyright doesn’t exist until an idea is written down, recorded onto a tape or disc, onto a computer. The copyright owner can be the author of the work, or anyone else they’ve assigned the rights to. Copyright exists separately in recordings and songs, which means that recording owners (usually record companies) and publishers can use the rights in different ways.

With songs, the composer of the music and the writer of the lyrics are the first owners of copyright, and the copyright in musical works lasts for the life of the author plus 70 years. Copyright in a recording is slightly different in that the owner of the recording is the person who arranges for the recording to be made. Often this is whoever books and pays for the studio where the recording takes place, so this could be a record company or it could be the band themselves. Copyright in a recording lasts for 50 years from the end of the first year of release, although this term will be extended to 70 years by November 2013.

Rack of CDs

How do record and publishing deals work?
Throughout their careers artists and songwriters have to make important decisions about how the copyright in their recordings and songs will be exploited, and this often means entering into complex and sometimes long term deals with record companies and publishers. Record companies pay artists either on the basis of a royalty from record sales, or via a split-profit arrangement. If the contract is long term, a cash advance on account of the artist’s future royalties should be paid which at least allows them a reasonable living wage until initial costs are met and royalties are being received. It’s wise to try and secure some control over things like budgets, producers and choice of material in your contract too. 

Music publishers seek out music and composers whose works may generate an income and their role is generally to promote their catalogue of works to potential music users including in film, TV and advertising. Publishers may for a smaller share of income offer an administration only deal, which involves collecting royalties due to their writers and identifying income streams that might have been missed. A publishing contract can be just for one song, or cover everything you write for a number of years in which case there may be a ‘minimum commitment’ stipulated which a songwriter would have to meet in order to fulfill their side of the deal.

It’s not always necessary to assign copyright in your songs for the full life of copyright, or at all, and a shorter term may be preferable as it allows the writer to extricate themselves from the agreement should the publisher not generate as much income as hoped. Like record companies, publishers will often pay a writer an annual advance on account of future royalties, which again should ideally be enough to live on.

How are royalties paid to musicians and artists?
Musicians and artists receive royalties through different ’streams’ depending on their musical activities and involvement in the creation or exploitation of musical works and recordings. It’s important to know which streams might apply to you, and especially which collection societies you may need to join in order to receive royalties. PRS for Music represents songwriters and publishers, collecting and distributing licence fees when member’s music has been performed or broadcast. MCPS (Mechanical Copyright Protection Society), which is now part of PRS for Music, collects and distributes licence fees to writers and publishers when their music is released or sold on CD or as a download. PPL collect and distribute royalties from recorded music to recording owners and performers when it’s either broadcast or played in public. 

Artists signed to recording companies receive a separate royalty stream direct from their record company. This can be between 12-18% of the Published Price to Dealers, which is basically the price at which record companies sell the CD to retailers; alternatively this can be between 8-12% of the Retail Selling Price. Alternatively, the profit share model generally means that both artist and record company share profits 50/50 once costs are recouped – this model is quite common with independent labels.

For published songwriters, royalty income is split between the writer and publisher, often with 70% in favour of the writer. The writer’s share can be as low as 50% in some cases but The MU advises its members to aim for more than that.

Ultimately, the deals that musicians and artists sign can impact on their careers forever, so contracts should always be checked out by a solicitor before signing.

For more advice on this subject, head to the Musicians' Union website.
There's also more information on getting the right deal for you in our own advice section.

Other useful links:

PRS for Music 

PPL website

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