For the next few weeks, we’re going to post sections from the article “20 Questions for New Artists” by Chris Castle and Amy Mitchell some of which has been posted various places. This doesn’t constitute legal advice, or any intent to form the attorney-client relationship. Chris, Amy and others will also be publishing occasional excerpts from the “Artist Glossary of Industry Terms” as a companion guide.
It is a good idea for one band member to take responsibility for keeping track of the papers and information relating to the band’s business, such as receipts, bank statements, credit cards, payments, approvals for licenses, etc. This is especially important if there is no manager involved with the band.
It’s a bad idea if this “managing member” has too much latitude to go off the rails–which in this case means run up bills, take on other debt, disappear with the money. The “managing member” must keep the other band members informed, and should not be able to assume any liabilities or sign any contracts on behalf of the band without written consent of the other members and giving them a chance to read and understand what it is they are signing up to.
The duties and authority of this person need to be clearly spelled out and understood. This is the kind of thing that is addressed in a band partnership, shareholder or LLC operating agreement (and you may well be forming a “de facto” partnership as it is), so we will reiterate the importance of having the band agreement drafted by a lawyer.
Song splits are probably the most sensitive conversations that the band has together. Some professional songwriters take split sheets into each writing session and at least get all the co-writers to sign off on the split sheet and at least register the song with their PRO when the song is completed. This is another one of those discussions that are better had before the band is making money to avoid the “selective memory disease” and can help if the band (or any member-writer) is ever accused of copyright infringement in connection with a song.
Song splits become especially important if you are writing with “outside writers” such as a record producer who may bring beats or a singer who brings a top line, or even just a producer who helps to shape the song as well as the recording.
Whenever you co-write with someone not in your band (which could be a producer or another songwriter) there are some issues you have to be concerned about. Some of this may be a little too complex legally for most people to try on their own, but we will assume that if you have a record deal (which is when most of these issues come up) you will already have a lawyer or manager to help you. These are not all the issues involved, but if you cover all of them you will avoid a good deal of agita later on. Your lawyer should be able to help you get song split agreements drafted.
1. Splits: It seems obvious, but make sure there is no dispute about who wrote how much of the song.
2. Videos: You will need to be sure that the co-writer agrees to whatever terms are in your record deal that cover the synchronization license for promo music videos that are in your recording agreement. Assume that you’ll need to get a free sync license for promo music videos. “Promo music videos” can include YouTube which is technically a commercial exploitation but which throws off so little revenue that is may as well be promotional. You do not want to wake up and find out that you have to pay a sync license for a promo video. One way to refer to this is “a free sync license for promotional or “YouTube-style” music videos”.
3. Controlled Compositions:
Record companies must license the right to sell reproductions of songs in records (or what the Copyright Act defines as “phonorecords”). The Music Modernization Act’s revisions to the mechanical licensing section of the Copyright Act now treats record company mechanical licensing differently than digital music service mechanical licensing but does not change the rules applicable to controlled compositions.
Record companies (and I use the term broadly to include any distributor of phonorecords) typically will negotiate the maximum mechanical royalty rate that they must pay on records they release. These terms apply to songs written, owned or controlled by the recording artist.
These special terms are found in a clause in the recording artist agreement which is called the “controlled compositions clause.” The terms typically will include a maximum cap, a reduced mechanical rate applied as a percentage of a fixed rate and a limitation on the types of records for which a mechanical is paid. For example, a maximum album rate of 10 times ¾ of the minimum statutory rate on the date of delivery of the record concerned applied to sales of records for which an artist royalty is also paid would be a fairly customary (and low) controlled compositions rate. (These reductions typically do not apply to digital reproductions.)
Very often digital distributors and some indie distributors will require that gross monies paid for digital downloads or physical record sales are inclusive of mechanical royalties. This is not true of streaming, where the streamer (like Apple Music) pays the mechanical separately. The Music Modernization Act created a blanket license for streaming mechanicals and gave the streamers a retroactive safe harbor on unlicensed uses that were the subject of David Lowery and Melissa Ferrick’s class action lawsuit against Spotify and David Lowery’s separate class action against Rhapsody over unlicensed songs and unpaid mechanicals.
Controlled compositions clauses do not apply to sales in the world outside of the United States and Canada, and even in the United States and Canada there have been developments that reduce the effects of certain controlled compositions clause provisions, especially for digital sales. Controlled compositions clauses must be carefully negotiated.
If you are an artist signed to a recording agreement with a controlled compositions clause, you want to be sure that your co-writer accepts all the terms that apply to you. If you are the unsigned co-writer, be sure you understand all the terms of the controlled comp clause that apply to your song. You can ask for a copy of the “redacted” clause from the artist contract (and artists who do a lot of co-writing should have a digital copy of this clause ready to send out as it is a fair request).
4. Demo Ownership: Make sure you are clear about who owns the copyright in demo recordings. Remember—there are two copyrights in each sound recording, the sound recording itself (the demo) and the song that’s recorded (that you are co-writing). If you are the featured artist, you want to own 100% of the sound recording copyright in the demo. The percentage ownership of the demo and the percentage ownership of the song are two very different things and the ownership shares are independent of each other. Just because your cowriter owns 50% of the song doesn’t mean the cowriter owns 50% of the recording. This will become important if you use a pitching service for film and TV placements (“syncs”) and the licensee wants to use the recording of the cowrite. If you are signed to a record company, the record company will technically own the demo (or will take the position that they do).
5. Other Sync Licenses and Pitching: Aside from music video syncs, there is a whole world of film and TV licensing as well as advertising opportunities. These often require servicing a recording of your song to the film and TV supervisors or creatives at advertising agencies.
There are people who operate these pitching services, and major labels (at least theoretically) do it themselves. If you co-write with a writer who either has a pitching deal or a record deal, you need to have an understanding of who can pitch the song and who can approve synchronization licenses. If you are the featured artist, you will want to have some control over who is pitching the song because if your co-writer pitches the song for a use you do not want to approve, that can create confusion in the film and TV licensing community and may result in your not getting considered for future syncs that you do want. (The conversation with the co-writer will go something like this: “Want do you mean the artist won’t approve it? YOU PITCHED IT TO ME!”)
You will also need to have a clear understanding with any outside writers of how pitching services your co-writer has contracted are compensated. This can involve “retitling” or giving up a share of publishing. Your share of songs should not be subject to those pitching agreements unless you separately decide to accept the terms, but you must, of course, know what the terms are before the fact. We’ll cover these agreements separately.
6. Creative Commons: As usual, you have to be very careful not to write with anyone who intends to make your co-written song available under any kind of a “Creative Commons” license. The “CC” license does not work very well for professional songwriters, mostly because it is very poorly drafted and it is effectively irrevocable. See “Carefully Co-Writing Without Creative Commons” (by Chris Castle), Public Licenses: The Gift that Keeps on Giving (by Prof. Jane Ginsburg), Common Understanding (by ASCAP’s Joan McGivern)