5-Minute Refresher: Copyright and the music industry

L. Blake Harvey is the founder and chairman at Lawrence Blake Group Int’l., a New York-based corporate communications firm pioneering innovation in corporate communications, public relations, and brand architecture.

How often do you hear that copyright is for lawyers and it’s their job to understand how it works? Or, that the band playing on the record owns all copyright in the record? What about the common myth that mechanical royalties are the same as record royalties? The truth is, all of the above stated are just that: myths.

Copyright is fundamental to earning income in the music industry. The rights in the music and the lyrics, sound recordings, performance and published editions, together with the rights underlying the merchandising, are the source of the money that flows through the music industry as a whole. Unless artists and their advisers understand the basics of copyright, they cannot maximize their income or fully protect the integrity of their work. I've been working with musicians, record labels, and performance venues for over five years, and in my youthful gathering of experience, I've found that copyright is commonly not taken seriously by up and coming musicians. This article serves as a fresher-up course in the importance of copyright for rising musicians and their teams.

The basics

Copyright plays an essential role in any developed sophisticated society. If society is to recognize creativity, innovation and imagination, then copyright is the principal tool by which we accord that recognition. This is economically expressed by the award of a range of exclusive rights that grant the owner the power of control and vital commercial rights. Copyright underlies most of the ways that people make money out of music. To better understand the value of copyright, consider the following points.

  • Most songs that are recorded are copyright. Even the sound recording itself has a copyright.

  • Most of the popular music played in live performances is in copyright.

  • Merchandising involves the use of copyright material.

  • Playing music in public places usually requires payment of licence fees to the copyright owners.

  • Communicating music on the internet usually requires the consent of copyright owners.

  • Virtually no film or television drama is now made without the use of music and thus the use of copyright.

  • Every time you listen to music on the radio you are listening to the result of several contracts involving copyright.

Registering your copyright

Although an author obtains copyright protection the moment the work is written down or recorded, an author can get important additional benefits and protections for his work by registering it with the United States Copyright Office. Copyright registration enables an author to take legal action if someone uses their work without their permission and also makes them eligible to receive statutory damages and attorneys’ fees under certain circumstances. The filing fee for registration is $30 and the proper forms can be obtained online through the Copyright Office’s website (www.copyright.gov).

The “Poor Man’s Copyright”: The practice of mailing a copy of one’s own work to one’s self is sometimes referred to as a “poor man’s copyright.” There is no provision in the Copyright Act that offers protection for the “poor man’s copyright” and it is not a substitute for registration. There is no value to this because it only proves that an envelope has a postmark.

What is covered by copyright?

Copyright protection is given to two classes of things:

  • ‘Works’ (ex: musical, literary, dramatic works and artistic works – which include photographs); and

  • ‘Subject matter other than works’ (ex: sound recordings, broadcasts, published editions and film – or ‘cinematographic works’).

What rights does copyright include?

Copyright is a package of rights. Copyright in a work includes the exclusive right to:

  1. Reproduce the Work: The rights to make copies of the work, such as the right to manufacture compact discs containing copyrighted sound recordings.

  2. Distribute Copies of the Work: The right to distribute and sell copies of the work to the public.

  3. Perform Works Publicly: Copyright owners of songs (but not owners of sound recording copyrights) control the rights to have their song performed publicly. Performance of a song generally means playing it in a nightclub or live venue, on the radio, on television, in commercial establishments, elevators or anywhere else where music is publicly heard.

  4. Make Derivative Works: A derivative work is a work that is based on another work such as a remix of a previous song or a parody lyric set to a well-known song (a classic example being Weird Al Yankovic’s song “Eat It” which combines Michael Jackson’s copyrighted original work “Beat It” with a parody lyric “Eat It”).

  5. Perform Copyrighted Sound Recordings by Means of a Digital Audio Transmission: This is a right recently added by Congress that gives copyright owners in sound recordings the rights to perform a work by means of a digital audio transmission. Examples of digital audio transmissions include the performance of a song on Internet or satellite radio stations (such as XM or Sirius).

  6. Display the Work: Although this right is rarely applicable to music, one example would be displaying the lyrics and musical notation to a song on a karaoke machine.

Who owns the copyright?

It is important to distinguish between the musical work reproduced on a record, and the recording itself. Remember, there is only one owner of Paul McCartney’s "Yesterday" but hundreds of recorded versions – each new recording has a different owner. The general rule is that the ‘author’ of the song is the owner of copyright. The author of the music is of course the composer. The author of the lyrics is the lyricist. The lyrics are protected as a ‘literary work’ and the melody as a ‘musical work’. If their authors are different people, then separate permissions will have to be obtained from each one if you want to reproduce, or ‘cover’ the song.

If there is more than one owner of the sound recording, the owners own the copyright as ‘tenants in common’ in equal shares. ‘Tenancy in common’ is an ancient legal concept, referring to a situation in which two or more people have distinct ownership rights in the same piece of property, and essentially, they can each deal with their piece as they would like. So, each owner’s permission will be required to exercise (or to authorize a third party to exercise) rights in the sound recording. Having an ownership share in the copyright of the sound recording can improve the bargaining position of a performer, by giving him or her the right to control the use and exploitation of the recording.

How long does copyright last?

Prior to 1 January 2005, the general rule was that copyright in the musical composition and in the lyric lasted for 50 years from the end of the year in which the author died. However, as of 1 January 2005, the term of protection was extended to 70 years from the end of the year in which the author died. If the work wasn't ‘published’ (say as sheet music), publicly performed, broadcast, or sold in the form of records, during the composer’s lifetime, then the copyright period does not start running until the end of the calendar year in which the first of those events occurs

The assignment of copyright

Assignment is essentially a transfer of ownership and rights. It is just like a sale of the rights. Thus, you should always beware of assigning your rights as it means losing ownership of them. Under the Copyright Act, assignments of copyright are only effective if they are set out in writing and signed by or on behalf of the owner who’s making the assignment. It used to be common for record companies, and publishers dealing with copyright to adopt a rather heavy hand in this regard. They used their considerable power not only to acquire assignments of copyright but also to get a free hand in the way in which they exploited those copyrights. Fortunately, the general approach has improved greatly. Most companies now will negotiate their deals so that the composer or artist retains at least a degree of control over how their works and recordings may be exploited.

Remember that when you assign your copyrights, you may expose yourself to Capital Gains Tax. You must do your tax planning before you have that big hit – not after. If you leave it until after you have the hit, your copyrights, once worth only a nominal amount, suddenly have a new taxable value.

Licensing the rights

When a copyright owner grants a licence, he or she permits another to use the relevant rights of copyright, but still retains ownership, and thus a certain amount of control over those rights. Licences allow the use to be limited to the real needs of the licensee. Licensing also means that you don’t lose total control of your rights. Where possible, copyright owners should license, not assign. Exclusive licences must be in writing, signed by the ‘licensor’ (the one granting the licence) or their agent.

Record labels and recording agreements

The main function of a record label, or recording company, is to manufacture, distribute, market, promote and sell an artist’s music. The artist and the record label enter into a written “recording agreement” which governs their relationship. Some of the key provisions in recording agreements include: the term or duration of the agreement, the number of songs or albums to be recorded, the royalties to be paid to the artist, the territory (the countries where the record label can release or sell the album), the budget for recording, marketing and promotion and the general rights that the artist grants to the record label. Recording agreements are often 50 to 80 pages long and contain complex language and terms that are not only difficult to understand but can significantly impact the artist’s rights, obligations, and compensation. Accordingly, any time an artist gets offered a recording contract they should consult an attorney to review the agreement, explain its terms to them and negotiate with the record label to get the fairest possible deal for them.

Mechanical royalties

Mechanical royalties are fees paid to the copyright owner of a song (usually the songwriter and/or the music publisher) for the right to reproduce the song on a recording. The U.S. Copyright Act provides that once a song has been commercially released, any other artist can record and release their own version of that song in an audio-only format (CD, cassette tape, vinyl, digital download etc) without the copyright owner’s permission so long as they pay the copyright owner or the copyright owner’s publisher the minimum statutory royalty rate for every copy of their version of the song that is pressed and distributed. The minimum statutory (“mechanical”) royalty rate is currently 8.5 cents for each copy of the song that is pressed and distributed but that amount increases periodically and is computed differently if a song is more than five minutes long. Usually, the record label releasing the recorded version of a copyrighted song pays mechanical royalties to the publisher or songwriter according to the terms of a contract called a “mechanical license agreement”.

What is a trademark? How to trademark a band’s name?

A trademark is a word, name, symbol or device, or combination of them, used by a business in commerce to identify its goods and services and to distinguish them from others. Trademark rights may be used to prevent others from using a confusingly similar mark, but not to prevent others from making the same goods or from selling the same goods or services under a clearly different mark.

Before deciding on a particular band name, it is important to determine whether anyone else is already using that name. A band’s rights in its name depend on a few key factors: (1) whether the band used the name first; (2) the geographic area (city, state, region, etc) where the band uses the name; and (3) whether the band actually performs under the name. If the band used the name first it may be able to stop other acts from using the same or a similar name. However, unless the band has obtained a federal trademark registration giving it an exclusive right to use the name throughout the United States, the band would only have the rights to use the name exclusively in the areas where it was the first to use the name. For example, if a local band performed live or sold its CDs only in Chicago, it could not prevent a band in California from using the same name, but could stop the other band from using the name in Chicago if the Chicago band was the first to use the name in that area. Additionally, if a band applied for a federal trademark registration for it’s name in 2005, it could not prevent another band that started using the name in 2001 from using the name in the geographic area(s) where that band performs or sells its music.

Conclusion

The rights of copyright feed, house and clothe both composers and recording musicians and they provide the profit incentive for record and publishing companies to promote and invest in those musicians and their work. The rights are valuable and certainly worth the time to ensure you’re doing everything you can to protect your work.