Bridging the gap between art and business
Bridging the gap between art and business is an article first published by the author, Darren Rose, on his own website.
Darren is a deep house DJ and lover of electronic dance music. He is also a lawyer and combining his two talents felt implored to write this article called Bridging the gap between art and business to remind music producers and composers of the importance of copyright and royalties. In truth the people making the most money out of music, are those that understand the law and publishing rights, royalties etc. But as a composer it’s in your best interest to educate yourself and, of course to use people you can trust to assist in this field.
Bridging the gap between art and business
South Africa is overflowing with creative energy but the local music industry is young and underdeveloped with little guidance or advice available for aspiring talent seeking to make a career from their art. Some may erroneously believe that they don’t need to worry about the details, contracts and rights as they simply want to create, or haven’t yet reached that point in their career where it applies to them, but regardless whether you’re a bedroom producer or a household name topping the charts, this stuff applies to you and learning the rules of the game is part of excelling at the game.
History is full of examples of musicians and songwriters who have penned hugely successful hits yet ended up dying in poverty, largely due to the terms of the contracts which they signed with record labels, music publishers and managers. The purpose of this article is therefore threefold:
- to demystify the inner workings of the music industry
- to identify the flow of rights and royalties
- to highlight the relationships which need to be contractually governed
It’s all music
Regardless of the genre of music you’re into, there’s one thing common to all music creators and that’s the business of music. Whether you’re making hip hop, house, rock or jazz it’s essential that you are aware of your legal rights to ensure that you and your works are adequately protected.
The music business in a nutshell is that someone creates a piece of work (a copyright), allows someone else to use that copyright and then derives financial compensation for that use. It sounds simple, but as Q-Tip famously said “industry rule number 4080, record company people are shadyyyy! So kids watch your back….” because the reality is your musical works have value and due to the complexities of the music industry it’s not unusual for uninformed individuals to enter into less than favourable contractual agreements, or fail to enter into contracts at all.
South African artists are operating on a global platform, collaborating with overseas artists and signing deals with labels, publishers, managers and live booking agents in other countries. So whether you’re a musician, singer, songwriter, composer, sound engineer or producer, understanding the rights, relationships and revenue streams which collectively make up the web of the music industry will assist you in maximizing your potential to earn money from your art.
Copyright – The basics
Before you can understand the revenue streams which exist in the music industry you need to understand the rights which come into existence when a piece of music is created and who owns these rights, as this determines who can reproduce, distribute, publicly perform and make derivatives of your work.
These ownership rights are collectively called copyright and are a form of intellectual property. In simple terms, the copyright holders receive royalty payments for allowing others to use their intellectual property in various ways so from an artist’s perspective your copyrights are your greatest assets.
2 sides of the same coin
Every piece of music contains two distinct copyrights. One in the underlying composition and one in the sound recording. It is possible that both the copyright in the composition and the copyright in the sound recording are owned by the same person but typically they involve different parties and need to be thought of separately as are separate rights, which generate different royalty (i.e. revenue) streams.
Copyright in the musical composition (Publishing rights)
The underlying composition refers to the notes, chords, melodies, rhythms, lyrics etc. which makes up the piece of music, comes into existence at the moment of creation and is owned by the composer/songwriter and lyricist.
Copyright in the musical composition is commonly referred to as “publishing” and publishing royalties make up a large portion of an artist’s income.
Common terms which you’ll hear: “underlying composition”, “musical work embedded in the sound recording”, “songwriter”, “writer”, “composer”, “publishing”, “publisher”.
Copyright in the sound recording (Master rights)
Also referred to as the “master”, this is the actual final recording which you hear when you play a CD, vinyl, digital file etc. The copyright in the sound recording is owned by the performing artist(s) and the producer but typically these rights are assigned to a record label in exchange for royalty payments.
Common terms you’ll hear: “sound recording”, “master recording”, “master”, “performing artist”, “artist”, “record label”.
The royalty streams
Whenever someone wants to reproduce or distribute a piece of music they need to obtain permission to do so in the form of a mechanical license from the owner of the copyright in the musical composition. This will apply, for example, when music is pressed to CD or vinyl, downloaded from an online store, used as a cell phone ringtone, streamed online or broadcast on TV.
Although composers or their publishers can issue mechanical licenses directly, these rights are typically assigned to and administered by a mechanical right society. In South Africa CAPASSO (Composers, Authors & Publishers Association) issues licenses for mechanical rights on behalf of copyright holders, collects license fees from music users and in turn distributes royalties to composers or their publishers.
Public performance royalties
Whenever a piece of music is broadcast or used in public the music user must obtain permission from both the owner of the copyright in the musical composition and the owner of the copyright in the sound recording. This will apply when music is broadcast on TV or radio, internet radio, performed live, streamed online or played in bars, clubs, shops and other public places.
Writers and publishers generally assign their public performance rights to a performing rights society who administer the rights, police public usage of music and issue licenses. In South Africa SAMRO (South African Music Rights Association) issues licenses for public performance rights on behalf of owners of copyright in compositions within its repertoire, collects license fees and distributes royalties to composers and their publishers.
On the flip side, SAMPRA (South African Music Performance Rights Association) grants licenses to music users for broadcast and public performance of the sound recordings within its repertoire. SAMPRA collects license fees from music users in the public domain and then distributes what is known as needletime royalties. 50% of this royalty is paid to the record labels and 50% is paid to POSA (Performers Association of South Africa) who then distributes the money it receives to the recording artists who performed on the relevant sound recordings.
Whenever a piece of music is used in conjunction with any form of media, for example, an advert, TV show, movie or computer game the music user must acquire a synchronization license from the owner of the composition and a master use license from the owner of the sound recording.
These deals can be extremely lucrative and, depending on the type of usage, they can also lead to great exposure for the artists involved.
This is the royalty which performing artists receive from record companies for sales of physical product and digital downloads and is a calculated as a percentage of sales income.
The music industry is a complex ecosystem within which a multitude of business deals are taking place at any given time. The terms of these deals are crucially important and need to be contractually governed so there is a clear need for sound business affairs and legal advice for artists. The bottom line is that unless you understand and agree with what you’re signing, don’t sign it. Rather get legal advice. It doesn’t need to cost an arm and a leg and you’ll be ensuring that the relationships you enter into are fair, reasonable and in your best interests.
Thanks to John Maclennan (Muzi manager)
Bridging the gap between art and business was written by Darren Rose.
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