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Nashville Mayor Announces “Country Radio Week”

Nashville Mayor Karl Dean issued a proclamation declaring the week of March 3, 2008 “Country Radio Week.”  The mayor will present the official proclamation to Country Radio Broadcasters, Inc.’s Executive Director Ed Salamon and President Becky Brenner whenCRS39 he officially welcomes attendees to the 39th Country Radio Seminar (CRS-39) on March 5th.

The mayoral proclamation recognizes that “Country radio promotes Nashville tourism daily by broadcasting information about [Nashville] and its attractions. Country radio is the primary medium for exposure of Country music, an endeavor that employs many Nashvillians as artists, writers and producers. “

The 39th Country Radio Seminar takes place from March 5th through the 7th at the Nashville Convention Center.

Ed Salamon, Executive Director of the CRB stated, “We are gratified that Mayor Karl Dean recognizes the considerable economic impact that country radio has on Nashville and Davidson County and has given radio its own week”

This honor reinforces the reputation of the Country Radio Seminar  as the premier forum for education and information for members of the country music industry. Along with continuing education panels for industry professionals, the 39th Annual Country Radio Seminar agenda includes research presentations, artist showcases and discussion forums. Issues that impact country radio sales and programming, as well as the record industry in general, will be covered during the three-day event.

Agenda and registration details are available at www.crb.org or by calling the CRB office at 615-327-4487.

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Copyright Royalty Board begins critical hearings

On Monday, January 28th, the Copyright Royalty Board (CRB) began what will be four weeks of hearings.  The CRB will hear testimony from interested parties on both sides of issues which will ultimately determine the statutory mechanical rates for songwriters and music publishers. The CRB sets these rates periodically, but these particular hearings are more critical than usual because, in addition to setting rates for physical products, rates will be set for the first time ever for digital products such as digital downloads, subscription services and ringtones.

On one side of the issue is the Recording Industry Association of America (the “RIAA”), which represents the major record labels’ interest,  is proposing that the current rate of 9.1 cents per mechanical copy produced be reduced to 6 cents!  That reduction would roll back the rates to, well, let’s just say to well before the birth date of most of the college students the RIAA is prosecuting across the country for downloading.  For digital reproductions, the RIAA is proposing an even lower rate of 5 to 5.5 cents per track.

On the other side of the issue, representing the publishers and songwriters, is the National Music Publishers Association, the NMPA.  In contrast, the NMPA proposes increasing the statutory rate to 15 cents, and for digital reproductions, a rate of the greater of 12.5% of revenue, 27.5% of content costs, or a micro-penny calculation based on usage.

This are important issues, and I’ll try to keep you posted here on Law on the Row as developments happen.

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Don’t Mess around with Jim!

You don’t tug on Superman’s cape,

You don’t spit into the wind

You don’t pull the mask off the old Lone Ranger

And you don’t mess around with Jim

These lyrics from Jim Croce’s classic pop song You Don’t Mess Around with Jim have evolved into pop culture expressions used by people the world over.  Before his life was tragically cut short in a plane crash in September 1974, Croce wrote many other memorable compositions, including Bad, Bad Leroy Brown, Operator (That’s Not The Way It Feels), I’ll Have To Say I Love You In A Song and my two personal favorites, I’ve got a Name and Time In A Bottle.  

Just a few days prior to the holidays, EMI Music Publishing announced that it  entered into an exclusive publishing agreement with Croce’s heirs, wife Ingrid and son A.J., for the songwriting catalog of Jim Croce. This importaJim Crocent deal gives EMI the North American administration rights to the compositions of the late singer-songwriter.

A South Philadelphia native, Croce began his recording career in 1966 when he recorded his debut solo album, Facets in a Camden, New Jersey studio.  He also recorded a 1969 duet album with his wife Ingrid, self-titled Jim & Ingrid Croce which was released on Capitol Records.   His career did not really began to sky rocket, however, until he signed with ABC Records, and released You Don’t Mess Around with Jim and Life and Times, both of which featured many of the songs for which Croce is best known.  His third solo album on ABC Records was I’ve Got a Name, which was released shortly after his death.  ABC later distributed a greatest hits album entitled Photographs & Memories.  Jim Croce was inducted into the Songwriter’s Hall of Fame in 1990.

In the announcement on EMI’s website, Ingrid Croce is quoted as saying that she and A.J. were “encouraged that EMI will help us reach a new and diversified audience for Jim’s music. . . .” 

For his part, EMI Music Publishing chairman and CEO Roger Faxon is quoted as summarizing: “Jim Croce had that rare ability to write and perform both upbeat and heartfelt

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songs, and his music is still as engaging and memorable today as it was more than thirty years ago. We are very pleased to have the opportunity to work with Ingrid and AJ Croce to connect his timeless songs with the music users of today.”

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Music Publishing 101, Part 3: Pieces of the Publishing Pie

Once a music publisher begins to receive income from the exploitation of the copyrights it has acquired, it must begin to distribute the income to the appropriate writers.  Understanding the basic principles of copyright ownership and royalty splits is fundamental to performing the task of distribution of income.  One device image that is often used to illustrate the concepts involved is a “pie” that represents the split of income as between the publisher and the songwriter (this diagram is borrowed from the Berklee School of Music).  To fully understand this illustration, however, it is necessary to overlay the ownership of copyright which, in a typical arrangement, belongs 100% to the music publisher.

In simple terms, when a songwriter signs an exclusive songwriting agreement with a music publisher, the songwriter is agreeing to give up one hundred percent of the copyright (represented by the yellow circle in my illustration), for which the publisher agrees to pay the songwriter an equal share, usually 50%, of the royalty income stream (the dividing line in the illustration) for the duration of the copyright.   So, for every dollar the publisher receives in net income from the exploitation of the copyright (the publisher will recoup certain expenses, such a dePublisher Split copymo costs, advances and administration fees — all of course subject to negotiation), it pays the songwriter fifty cents.  The only exception to this concept is that performance royalties, paid by ASCAP, BMI & SESAC, are paid by these organizations directly to the songwriter and publisher respectively, so that this income stream does not get filtered through the publisher.  The portion of the royalty stream paid to the songwriter is often referred to in the music industry as the writer’s share, while the portion the publisher keeps is called the publisher’s share.

If a songwriter has enough clout to negotiate a partial participation in the publisher’s share of income, he will attempt to negotiate what is called a “co-Publishing” deal.  In this type of deal, the songwrimageiter actually owns half of the copyright (half of the yellow circle in the above-illustration), and is entitled to received 50% of the publisher’s 50% share of the income, or an additional 25%.  This equates to 75 cents for every dollar of publishing income received (the songwriter’s share of the royalty pie, plus half of the publisher’s half  of the pie).

These principles begin to get even more convoluted when songs are co-written by myriads of songwriters, which happens all too often in Nashville.  Take, for example,  the song More than a Memory, recorded by Garth Brooks, currently climbing the Billboard Country charts.  That particular song has three (3) co-writers and six (6) publishers listed in the credits (incidentally, if you want to gain a good understanding of music publishing, buy yourself a recent copy of Billboard magazine and study the “Singles & Tracks Song Index” that details the publisher information).  So, assuming for illustration purposes that the three writers have participation deals with their publisher (this appears to be the case since there are six publishers), then each writer would own 16.666% of the copyright and would each be entitled to 25 cents of each dollar received.  Three of the six publishing companies likely belong to the songwriters themselves (and one-third of the income just described would be paid by the entity through which they self-publish), and the remaining three publishers would split the remaining 25 cents, entitling them to about 8.5 cents each.  To further complicate matters, any portion of the royalty stream can be sold and/or encumbered, as can the publishing interests.

In addition, both music publishers and songwriter are often the party to an administration deal in which an administrator issues licenses and collects royalties for the copyright owner in exchange for a percentage of the income, usually 10-15%.  So, to continue using the example in the previous paragraph, if one of the co-writers of More than a Memory has an administration deal in which she pays 10%, then her share of the $1.00 would be 22.5 cents, because she paid her administrator 2.5 cents. 

One thing is certain, the music publishing industry most often applies the converse of Occam’s Razor, i.e., the principle that, all things being equal, the simplest solution is best! 

This article is not intended as legal advise.  Should you require advise regarding an music publishing issue, you should consult with a competent entertainment attorney.

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Music Publishing 101, Part 2: Forming a publishing company

From a legal perspective, the formation of a music publishing company is, in most respects, very similar the formation of any other type of company, except that the documentation is tailored specifically for the business of music publishing. 

The first step in the formation of any business, including a music publishing company, is to determine what type of business entity you desire to form.  There are four basic forms any business can take:

  1. Sole Proprietorship
  2. Partnership
  3. Corporation
  4. Limited Liability Company

With the exception of a sole proprietorship, these entities can take on several forms, such a a limited partnership as opposed to a general partnership, an S-Corporation as opposed to a C-Corp, and a member managed LLC as opposed to a manager managed LLC, just to illustrate a few of the iterations.  You are strongly advised to seek the counsel of a qualified entertainment attorney and a music business accountant prior to establishing your company.

The decision as to which type of entity to create impacts the liability to which the individual members of the entity can be exposed.  In a partnership, for example, each individual member of the partnership is liable for the actions 331466_pianoof the other partner or partners.  Of course, a sole proprietor is liable for his or her own actions as well.  Only corporations and limited liability companies shield the indivudal members from liability impacting their personal assets.  For this reason, when forming a music publishing company, it is most frequently advised that one of those two entities be used, as publishers are often the subject of copyright infringement actions, among other things.

The choice between a corporation and a limited liability company is frequently a personal one.  The corporation is a more formal structure than the the LLC, involving the selection of a board of directors, a president, sometimes a vice president, and a secretary and treasurer.  The limited liability company, on the other hand, can take many forms.  It can be member managed, similar to the management style of partnership or it can be manager managed, either in simple arrangement where one person acts as a manager, on in a configuration more like the corporation, where there are individuals serving in the various roles of president, vice president, secretary and treasurer.  It is this greater flexibility of management that spawns the popularity of the limited liability companies in today’s culture.  One should not be so quick to decide, however, without the input of a good tax consultant and/or attorney.

Once a decision is reached as to the type of business entity the music publishing company will take, it will be necessary to determine a name for the publishing company.  This is where forming a music publishing company differs somewhat from other businesses, because of a music publishing company’s interaction with the major performing rights organizations (PRO’s), primarily ASCAP, BMI and SESAC.  Whereas a songwriter can only affiliate with one PRO at a time, a music publisher affiliates with all three if it intends to conduct significant business.  In order to submit an application, each PRO requires, among other things, that a music publisher give three choices for names in order of priority.  So, when choosing a name for your music publishing company, bear in mind that you will need at least nine variations in order to submit applications to the PRO’s.

To illustrate this point, consider the various entities used by Sony ATV Music Publishing Nashville, a major player in the Nashville music publishing arena since its purchases of Tree Publishing and Acuff Rose Music merged two of the giants in the history of the Nashville music industry.  One recently charted song by Taylor Swift, Our Song, is owned in part by Sony ATV’s BMI publisher affiliate, Sony/ATV Tree, BMI.  Another song on Billboard’s country single chart this week is Rascal Flatt’s Take Me, which owned in part by Sony ATV’s ASCAP affiliate, Sony ATV Tunes, ASCAP.  Finally, Sony ATV also has a SESAC affiliate, which goes by the name Sony ATV Sounds, SESAC.  A closer examination reveals that each of these entities are separate entities, probably owned in whole or in part by the parent conglomerate.  As a side note, Sony ATV Music Publishing Nashville was recently name country music publisher of the year 2007 by all three PRO’s, ASCAP, BMI and SESAC, making it the first publisher in history to do so.  Read about it here.

You’ll note that Sony ATV uses a different, creative variation of the name for each PRO affiliate, a pattern often followed by other publishing houses, such as Warner Chappel Music, which has variations such as WBM Music SESAC, WB Music ASCAP, Warner-Tamerlane Publishing, BMI, and Warner Chappel SOCAN (a Canadian PRO).

Smaller publishers may not wish to follow the course of Sony ATV by maintaining separate limited liability companies for each publisher affiliate and parent LLC, as this can lead to greater expense in the formation of the company.  Rather, one option would be that one entity can be used for the parent company, and operate subsidiaries under assumed names for each of the publishing affiliates.

Once you’ve determined the names to be used and the types and numbers of entities you’ll be using, the next step is to prepare and file the appropriate documentation with the secretary of state in the state you’ll be operating your business.  Information about formation of a business entity in Tennessee is available from Tennessee’s Secretary of State.  Then, in Tennessee, you must register the entity in the Register of Deeds office for the county in which your principle place of business resides.  Next, you’ll need to obtain a Taxpayer Identification Number from the IRS by filing Form SS-4.  Finally, you’ll need to apply as an affiliate at each of the following PRO’s:  ASCAP, BMI & SESAC, assuming, of course, that you intend to contract with writers from each of these affiliates.  You’ll note that SESAC has a different process than ASCAP or BMI in that the process is more selective and requires that you initiate contact with their Publishers Relation Staff prior to being reviewed for affiliation.

You might also want to explore joining an organization such as the National Music Publisher’s Association, which owns and operates the Harry Fox Agency, an organization that serves as the clearinghouse for the collection and distribution of mechanical and digital license fees.

After this, you need to begin the process of developing agreements that will be used to sign songwriters to your various affiliate companies.  Work with a good entertainment attorney to customize and draft exclusive songwriting agreements and single songwriting agreements as an basic first step in this process.  Then, you’re ready to start scouting talent!

This article is intended as a basic outline of the steps required to form a music publishing company.  It is not intended as, and should not be substituted for, the advise of a good entertainment attorney, which should definitely be retained and consulted prior to starting this entire process.  Expect to spend somewhere in the range of $5,000-10,000 in various legal fees to complete the entire process.

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Music Publishing 101, Part 1: A brief history

This blog series will explore music publishing, giving a little bit of history and outlining the basic steps necessary to form a music  publishing company.  Part 1 looks at a brief history and background of music publishing.

Modern music publishing in the United States can trace its roots to “Tin Pan Alley,” the name given to a grou116962_come_play_my_songp of sheet music publishers who collected on West 28th Street in New York City in the late 19th, early 20th Century, when names like Irvin Berlin and John Philip Sousa were the leading composers.  This coincides roughly with the invention of introduction of Thomas Edison’s Gramophone and the phonograph cylinder.    Tin Pan Alley publishers were concerned mainly with selling sheet music and piano rolls.  The most dramatic shift in popularity from printed music to recorded music did not occur until the development of the “talkie,” when The Jazz Singer was released in 1927.

In 1914, ASCAP was formed to protect the copyrighted music compositions of its members.  The organization expanded with the introduction of the new invention called radio in the 1920’s.  Because owners of radio stations did not like paying what they considered exorbitant license fees to ASCAP for the performances of musical compositions, the broadcasters formed their own organization, BMI (Broadcast Musicians Inc.) in an effort to drive the license fees down.

Modern music publishers are in the business of engaging composers, i.e., songwriters, and obtaining ownership of their copyrights.   In exchange for the copyright, the music publisher agrees to exploit the composition to potential licensees (a process generally referred to as “song plugging”), administer the copyright, collect the mechanical royalties and license fees, and distribute a portion of the collected monies to the composer.

Most music publishers will offer promising composers what is called an “exclusive songwriter agreement” in which the composer is obligated to provide the publisher with a minimum number of commercial musical compositions within a certain period.  The composer generally receives a “salary,” which is fully recoupable from future royalties.   Again, the publisher gives up the copyright in the musical composition in this type of deal. 

Another, less common deal type, which is reserved for songwriters who have some clout in the industry, is called a “co-publishing deal”   This arrangement is usually very similar to the exclusive songwriting arrangement discussed above, except that the songwriter only gives up half of the copyright in the musical composition and retains the remaining half. 

Less often, music publishers offer “single song agreements” to composers who may have one or two compositions that interest the publisher, but not enough that it feels warrants a longer term commitment.  Most major publishing houses do not offer these type of agreements.  They are generally the purview of independent and upstart music publishers.

There are myriad gradations of these deals, and the terms in any one agreement can be as varied as an artist’s palette of colors, so if you are interested in music publishing agreements, please contact a reputable music attorney prior to obligating yourself or giving up a copyright.

Tomorrow’s installment of Music Publishing 101 will discuss the basics of forming a music publishing company.

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Return fire by the music industry – artists to testify before Senate

The Senate Judiciary Committee is holding a high-profile hearing  today on the subject of imposing additional performance royalties on so-called “over-the-air” or “terrestrial” radio stations (I’ll just call them OTA’s in this article).  Investigative hearings such as these are usually precursors to legislation being introduced on the subject.  898993_antenna_4Grammy winner, Lyle Lovett and Chicago-based singer-songwriter Alice Peacock testified before the Committee this morning at 9:30 ET.  Their testimony was broadcast live at C-SPAN.

So, what is the issue.  OTA’s and the music industry are currently engaged in one of the biggest industry and lobbying battles to hit Washington in quite some time.  The OTA’s fired a recent shot when a concurrent resolution was passed by Congress.  Now, the music industry is firing back. 

One of my recent blog entitled New concurrent resolution, H.Con.Res 244, introduced to combat performance royalties for record labels gives some background on the issue, which is basically this:  Currently, OTA’s pay performance royalties to ASCAP, BMI and SESAC in the U.S. for airplay performances of the musical composition copyright.  They do not, however, pay a performance royalty to the owners of the sound recording copyright for over the air performances of the copyright.  The sound recording copyright is distinct from the musical composition copyright.

This is because when Congress introduced new legislation in the mid-90’s to grant sound recording copyright owners a right to performance royalties, it specifically excluded OTA’s from the legislation on the basis that the artists and record labels who owned the sound recording copyrights benefited from the publicity of over the air performances, which offset the need for payment of a performance royalty.    Keep in mind, again, that this does not apply to the performance royalties paid to songwriters and music publishers.

The effect of the Digital Performance Royalty in Sound Recordings Act of 1995 is that only digital performances of the sound recording copyrights are entitled to compensation.  This applies only to Internet webcasters, Cable Radio and Satellite radio stations.  These types of services — Pandora, Sirius, XM Radio, Last.fm, for example — pay performance royalties to both the owners of the musical composition copyright and the sound recording copyright.  Many industry groups are rallying to rectify what is viewed as an unfair advantage for OTA’s.

One such group is musicFIRST, which stands for “fairness in radio starting today.”  This organization is made up of a large and impressive group of recording industry groups and well-known artists.  Unfortunately, the RIAA’s involvement in this organization has diminished its reputation on many blogs, such as this article entitled Lovett goes to bat for radio royalties, the credibility of which is call into doubt by the fact that the writer is ostensibly unaware of Lyle Lovett’s reputation and notoriety.  But don’t make the mistake of slanting your opinion against musicFIRST based on that organization’s involvement.  Check out the website and seriously consider the issues and you’ll probably understand their perspective.

There is tremendous validity to the argument that radio broadcasts no longer hold the same sway over consumers that they did in 1995.  One research study conducted by Dr. Stan Leibowitz, an economics professor at the University of Texas, compared record sales and music radio listening habits in nearly 100 cities across the United States and found that exposure for a song on the radio was a substitute for purchasing the music and, therefore, actually had a negative impact on sales of music.  Critics point out that the study was funded, at least in part, by the musicFIRST coalition and say that there are studies which indicate the opposite, that is that radio airplay stimulates interests in new music and therefore encourages sales.  Think about your own habits – when was the last time you heard a song on the car radio and rushed to buy it?

Another argument propounded by the OTA’s in opposition to payment of royalties to the owners of sound recording copyrights is that it would put them out of business.  They simply can’t afford to pay more royalties for the music they use.  Of course, Internet webcasters and Satellite and Cable radio providers are saying “talk to the hand . . . call waiting!”   But the truth is that OTA’s get the bulk of their revenue from advertisers and their revenue increases if they attract larger audience by playing the latest music.  Furthermore, stock analysts are predicting that advertising revenues, in general, are on the increase for the foreseeable future.  One researcher, George Williams, reportedly found that the annual growth of radio advertising rates from 1996 to March 2007 was 10% a year, outpacing the Consumer Price Index by more than three times its 3% a year rate.  It is very doubtful that OTA’s revenues would be seriously altered by this legislation, in fact, the OTA’s would more than likely simply pass the additional costs on to advertisers.

The bottom line, in my view, is that the legislation, when it is finally proposed, will create a level playing field for the broadcasting industry, providing that both digital and OTA’s pay the same royalties.  This seems fair, doesn’t it?  Now, whether the powerful OTA lobby will prevent the passage of such legislation is a blog for another day. 

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The long tail wags the dog! An independent artist succeeds using the Internet

I have often advised my clients in the past that the new direction for independent artists is what I refer to as “guerilla” marketing, meaning finding alternative means of marketing your product.  One of the most explosive methods of doing that over the past few years has been the Internet.  One of the problems with marketing yourself on the Internet, however, is how do you get people to come to you?  The void of the Internet is so vast, that finding an artist whose sound is something that matches your musical taste is even more difficult than finding a needle in a haystack! 

So, it is a beautiful thing to see an artist actually breaking into the Billboard charts catapulted in large part by her success on the Internet, particularly her MySpace page.  Her success story gives hope to every artist whose desire is to put out a record, throw it up on the Internet, and have people flock to listen.

Enter Indianapolis, Indiana singer-songwriter Sally Anthony whose  “eTeam” of over 125,000 fans, including over 40,000 friends on MySpace, helped propel Anthony to stardom.  Thanks in largem_6c31918cf33c79bad2c07905f6783a30 part to that online community, Anthony’s first album, Vent, released in 2004, sold over 175,000 physical and digital copies.  Two releases from that album spent months on the R&R pop chart.

Her new album, Goodbye, released October 23rd, has already sold 14,000 digital copies.  It has already reached the top of the pop charts at walmart.com, FYE Digital and iTunes and on November 7th landed at No. 9 on the Billboard Heatseekers Chart.  The album is being distributed by her company, Gracie Productions, through Imperial Records/EMI.

Anthony is succeeding because she is treating the music industry as broader than just the radio promoted, hit-driven, plastic disc business the major labels seem stuck in.  She is viewing the music industry as an entire package, generating buzz wherever she can, from the ground up rather than from the top down.

I predict that we will start to see more and more of these types  of breakthrough artist as the popularity of YouTube, Facebook, MySpace and other online communities grow in popularity and as the pioneers of the Internet find more creative ways to index diverse product, match it to the tastes and purchasing patterns of Internet users, and make recommendations – sites such as  LivePlasma, Pandora, Audiobaba, Last.fm, MyStrands and, of course, Amazon,

As radio fades into the annals of history alongside the monolithic corporate conglomerates that are r060719_Books_longtailChartecord labels, these innovative types of indexing sites will help those artists in the deep dark recesses of the “long tail”  find an audience for their music.  By the way, if you haven’t read Chris Anderson’s treatise on this subject, The Long Tail, buy a copy and dissect it now.   The long tail consists of that product that is not in the mainstream — not on the shelves of Wal-mart — but product that is still sought after and purchased by people.  Maybe it’s only ten people per month, but people still want and buy it.  It is the millions of artist that fly below the radar of the “hit-driven majors.”  These are the artists who can benefit from the exposure the Internet can provide.

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New concurrent resolution, H.Con.Res. 244 introduced to combat performance fees for record labels

For years now, a huge battle has been brewing between proponents of performance royalties for the owners of sound recording copyrights to be paid by terrestrial radio stations (those broadcasting through the air) and it has been gathering steam in the last several months.

The battle is being waged between the giants of industry,  the RIAA, representing the four major record labels, aRep. Michael Conawaynd organizations like the National Association of Broadcasters and the Free Radio Alliance, representing the broadcast radio industry.  The latest round of fire was shot on Oct ober 31, 2007 on behalf of the broadcasters when two Texas lawmakers, Michael Conaway, a Republican, and Gene Green, a Democrat, co-sponsored concurrent resolution H. Con. Res 244, the “Local Radio FRep. Gene Greenree Act.”

 A concurrent resolution is a legislative measure passed by both the House and the Senate generally used to address the sentiments of both chambers with regard to certain matters.  Since they do not have the force of law, concurrent resolutions are generally used to provide for adjournments, recess, use of the Rotunda, and other such matters.  The “Local Radio Free Act” is essentially a policy statement supporting free local broadcast radio and opposing any new performance fees, taxes or royalties for the public performance of sound recordings over the airways.  Ever wonder what is behind all of this noise?

When a company wants to use a sound recording of a musical composition, there are two copyright owners with whom it must deal:  the owner of the musical composition copyright and the owner of the sound recording copyright.  For example, Dolly Parton (or her publishing company) owns the copyright to I will always love you, but two different record companies own the copyright in the sound recordings performed independently by Dolly Parton and, later, by Whitney Houston.  And, of course, one of the rights granted by the Copyright Act to the owner of a copyright is the right to publicly perform the work.

For years, ASCAP, BMI and SESAC have collected the performance royalties on behalf of the composers and writers of the music compositions.  All radio stations, whether terrestrial or digital (over the Internet or Satellite), pay performance royalties for the musical compositions they play over their broadcasts — to the tune of around 500 million dollars per year.  It wasn’t until 1995 and the passage of The Digital Performance Right in Sound Recordings Acts that the public performance right was created in the sound recording of a musical composition.  At that point in time, the digital broadcasters of music, including Satellite and Internet stations, were required to start paying a performance fee to the owners of the sound recording copyright, i.e., the record labels and artists who perform the song.  The Act specifically exempts, however, the local radio stations that broadcast the music over the airways, ostensibly on the grounds that the recording artists and labels were receiving free publicity from the broadcast radio stations in exchange for the use of their sound recording.

Now, with the demise of the CD and the rise of illicit downloading, the record industry is pressing Congress hard to extend the Digital Performance royalty to the local broadcasters and, of course, those broadcasters, with their extremely old and strong political ties, are fighting hard against it. 

The RIAA, for its part, is sending CEO Mitch Bainwol onMitch Bainwol, CEO of RIAA the interview circuit.  Bainwol is consistently hailed by many Washington publications as one of the most powerful and influential lobbyist in Washington.  In an L.A. Times article in which he discussed the performance fee, Bainwol is quoted as saying that “the creation of music is suffering because of declining sales.”  This group has the formidable support of the U.S. Copyright Office, which has support the removal of the exemption for terrestrial stations for many years, and the chair of the House subcommittee on intellectual property, California representative Howard Berman, who is actively pursuing legislation to remove the exemption.

The National Association of Broadcasters is fighting the RIAA with a barrage of print ads and radio ads in support of their position.  They use the word “tax” as an emotive term to sway people to their side.  The NBA stress that it is the major label conglomerates that would get the bulk of any new performance fees.  The radio broadcasters are a formidable force themselves with corporate entities such as Cox Radio, Citadel, Cumulus, Clear Channel, just to name a few, in opposition to the expansion of the digital performance fee. This new legislation is a result of this group’s hard fought efforts against any new measures, claiming that with profit margins already in the single digits in some instances, a performance tax would obliterate their business.  

In the grand scheme of events, the concurrent resolution is probably a non-event.  It is the efforts of one group’s successful lobbying finding a materialization.  Don’t expect this to be the last word on the subject, however.

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Last Man Standing – collaborating with other songwriters

See Jane.

See Jane write lyrics.

See Dick.5237697662_f8e465b716

See Dick write melodies.

See Dick meet Jane.

See Dick and Jane combine their efforts and collaborate together to write a song.

This is one frequent story among Nashville’s songwriting community.  On any given afternoon in Nashville, there will be innumerable co-writing sessions occurring at any given moment.  Those collaborative efforts certainly produce most of the top hits on the country charts.  The odds are, however, that at least 9 out of 10 of those songwriters will not know the implications of collaborating with another songwriter on the creation of a copyright.

Rarely do songwriters consult an attorney or enter into any form of collaboration agreement prior to co-writing.  Rarer still is the songwriter that fully understands the important consequences that flow from co-writing with another songwriter.

If a songwriter does happen to consult about this issue, the first thing I tell them is that it is very much like entering into a marriage relationship.  When two songwriters get together and collaborate on the creation of musical composition, each songwriter is a co-owner of and equal and undivided interest in the whole copyright, i.e. each songwriter co-owns 100% of the copyright – regardless of the relative extent of their respective contributions.   Ownership is not equally divided, as is commonly thought — i.e. split 50/50 (that confusion comes from the fact that the royalties derived from the copyright are usually divided equally).

In the Dick and Jane analogy above, for example, Jane does not separately own the lyrics and Dick separately own the melodies.  Dick effectively owns 100% of the song, including both the lyrics and music and Jane effectively owns 100% of the song, including both the lyrics and the music.  The concept is very similar to the legal principle of tenancy in common. Unless they agree to the contrary in writing, each songwriter has the right to administer the entire copyright without consulting with the other songwriter, i.e., each songwriter may issue nonexclusive licenses to the entire copyright or issue first use licenses.  The only obligation each co-owner has to the other is to account for any profits earned by the exploitation.  A co-owner may not, however, without the permission of the other co-owner, transfer exclusive rights to use the work or transfer the entire copyright to a third party.

To be absolutely clear, the Copyright Act does not really define “joint authors,” but rather defines a “joint work” as a “work prepared by two or more authors with the intention that their contributions be merged into inseparable or interdependent parts of a unitary whole.”  17 U.S.C. 101.   The key here is intention — i.e., the parties must intend that their work be integrated or merged to form a united whole at the time the work is created.  The legislative history that accompanied the act specifically states that a work is “joint” if the authors collaborated on its creation.  See H.R. Rep. No. 1476, 94th Cong., 2d Sess. 120 (1976); S. Rep. No. 473, 94th Cong., 1st Sess. 103-104 (1975).

Take for example the circumstance that arises when a person creates a poem, which is registered as a copyright.  Then, later on, a second person takes the poem and modifies the words, adding music to create a song.  The situation described is different from the collaborative effort in that there was no intent, at the time the poem was created, to merge it with the second creative effort.  The second work, the song, is a derivative work, and its writer needs permission from the creator of the poem to create the derivative work.

While we’re on the subject of derivative works, each co-owner of a joint work may create derivative works independently of each other and without the permission of the other, and, without any obligation to share the royalties derived from the exploitation of the derivative work.

Songwriters3 Now, not to further confuse the issue but, in the eyes of the law, there is a difference between co-ownership in the copyright and split of the royalties.  To get back to the Dick and Jane analysis, the typical understanding is that Dick and Jane would split any royalties received from the exploitation of the copyright on a 50/50 basis.  It is important to understand once again, however, that this understanding can be modified with a written agreement between the co-writers.  A songwriter whose reputation is strong enough can certainly request that he or she receive a greater percentage from the royalties, and even ask for a greater percentage ownership interest in the copyright.  These types of exceptions, however, must be expressed in writing between the parties in order to be enforceable.

Another complication arises in circumstances where a party merely contributes an “idea” to the collaborative effort.  Is that person entitled to be a co-owner?   I’ve had this issue arise in litigation.  Two parties are collaborating on a song and have most of the song written.  In walks a friend who is also a songwriter.  He listens to the song and contributes an idea that is incorporated into one line of the song.  He leaves, the song is finished, and becomes a hit.  Does the third songwriter have an interest in the song?  The answer to the question is inevitably determined by the particular facts and hinges on whether the third party merely contributed an idea, or actually contributed the expression of an idea.

As a final observation, let’s overlay the life of the copyright over the co-ownership of a collaborative work to give our brains a final flash fry if you will.  Assuming the work to have been created after January 1, 1976, the life of the copyright is life of the author plus 70 years.  In the event of a joint work, however, it is the life of the surviving author plus 70 years.    What this means in realty is that one of the co-writers in a successful hit song, i.e., the last man standing, will eventually become co-owners with the heirs of the deceased songwriter, either in the form of a wife or a child.

Most songwriters, of course, are not thinking this far down the road when they make their daily co-writing appointments.  But that’s the real thrust of this article.  If you’re a songwriter, you should consider the possibility of a collaboration agreement.  Most songwriters, I admit, do not think about this sort of thing because it cramps the creative vibe that needs to be created in a collaborative effort.  This, in my opinion, is not a wise idea.  At the very least — and this is not my recommendation — the writers should have some conversation about the consequences of their efforts.  Considering the consequences, the best course of action would be to consult with qualified legal counsel and get a collaborative agreement drawn up and signed — or at least have a written statement of intent signed by both writers  — at some agreeable point before the co-writing session begins, so as not to interfere with the creative efforts.

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