SoundExchange - what does it really do?

I recently had the opportunity to review and comment on two producer contracts. One was a full length document from a mid-level Nashville producer, while the other was a shorter deal-memo on behalf of a Grammy Award winner.  In both instances the producer demanded a share of the revenue stream generated by SoundExchange; and for both artists, my first task was to explain what SoundExchange actually does.

Most of us are familiar with the basic Performing Rights Organizations (PROs), BMI, ASCAP and SESAC. SoundExchange is yet another PRO, but unlike BMI/ASCAP/SESAC which pay the owner of the composition, SoundExchange is linked to the sound recording. In more technical terms, it collects for the digital public performance of sound recordings, as provided for by the Digital Performance Right in Sound Recording Act of 1995 and the Digital Millennium Copyright Act of 1998.

Therefore, SoundExchange’s licensing collection, and member distribution, is limited not only to the sound recording,  but to the digital broadcast use of that sound recording, distinct from typical terrestrial radio. Examples include fees paid to play sound recordings over XM-Sirius satellite radio, internet radio like Pandora, and internet streaming sites such as Spotify. The digital statutory license fees are paid out by SoundExchange to the copyright owner/record label (50%), the featured artist (45%) and non-featured session players (5%).

The co-existence of BMI/ASCAP/SESAC and SoundExchange can be confusing. It’s important to remember that terrestrial radio stations pay fees to the owner of the composition copyright, but not for use of the sound recording. Digital streamers and broadcasters, however, pay for both use of the composition (BMI/ASCAP/SESAC) and the sound recording (SoundExchange). An artist may share in more than one of these revenue streams depending on the specifics of his/her business arrangements. Imagine an artist-owned record label that owns the sound recording (SoundExchange 50%), a song written by the artist (BMI/ASCAP/SESAC), and performed by the artist him or herself (SoundExchange 45%).

Concerning producer/artist contracts, it’s not uncommon for the producer  to seek a flat fee, paid in scheduled installments; a royalty on units sold; and a percentage of the artist’s SoundExchange Featured Artist income. A typical agreement might have the artist execute and deliver to SoundExchange a letter of direction, allowing the producer to receive his/her cut directly.

Above all, it’s necessary that a sound recording owner is properly registered with SoundExchange, and that a schedule is submitted itemizing the applicable masters. Businesses should be able to complete this task themselves, or they may elect to delegate the process to legal counsel. Naturally, this article is intended as general information, only, and not specific legal advice. If you have questions, please feel  free to contact me at (419) 243-6148 or lmeyer@mpdwlaw.com.  Of course, more information is available at www.soundexchange.com.

The Doors, And The Big Money of Classic Rock Song Licensing

It seems that most of my friends are at one extreme or the other with The Doors. But, love ‘em or hate ‘em, they generated legends, rumors, and imitators. The Doors remain a staple on Classic Rock radio, and their back catalogue is among the most coveted in the field of music licensing.

At the suggestion of fellow music law blogger Trip Aldredge, I recently read “The Doors Unhinged” by John Densmore, the Doors’ drummer. If you’re a fan (like me) it contains some great background on the band, its early days, etc. It also provides an interesting insight into the world of band partnership agreements and the big money of classic rock synch licensing in film and commercials. And lawsuits, too.

The book focuses on the falling out between surviving band members. In conjunction with the estate of Jim Morrison, John Densmore filed suit against Ray Manzarek and Robbie Kreiger, challenging Manzarek and Kreiger’s right to bill themselves as The Doors. Concert posters used a logo and type font associated with the band’s LP jackets. Advertisements and in-concert screen projections featured images of Jim Morrison. When Densmore and the Morrison estate objected, the parties agreed to use of the name The Doors Of The 21^st Century, only to see “Of The 21^st Century” buried in microscopic font. As The Doors, Manzarek and Kreiger (joined by Stewart Copeland and Ian Astbury) were pulling down up to $195,000 a night.

Here is where it gets interesting. When Densmore and the estate sued, Manzarek and Kreiger counter-claimed for $40 Million Dollars, based on Densmore’s refusal to authorize licensing of The Doors’ music in TV commercials. Do you remember the Cadillac ads a few years ago with the music of Led Zeppelin? The Doors were approached first. Cadillac eventually offered $15 Million Dollars. Manzarek helped organize the proposed deal, Kreiger was inclined to give approval, but Densmore emphatically vetoed the idea.

The original partnership agreement among the Doors, and subsequent publishing administration deals, uniquely granted veto power to any of the four partners. The band did one commercial early on, and Densmore regretted it. A later offer from Opel cars was angrily rejected by Morrison, and almost broke up the band. Densmore felt differently about film projects. For example, The Doors made $5 Million Dollars licensing music for the movie “Forrest Gump,” not to mention a tremendous increase in back catalogue sales after the film came out.

In justifying his position against TV commercials, Densmore argues that he is protecting the integrity of the catalogue, and thereby safe-guarding the band’s financial position in the long run, not to mention saving his soul. In the book, he points to folks like Tom Waits and Neil Young as shining examples. Densmore also tithes a set percentage of his income to charity each year. In short, he appears to be one guy with 1960s ideals still intact. If you are interested in the business of music, classic rock, or anyone who has the balls to turn down $15 Million Dollars, you should enjoy “The Doors Unhinged” (Percussive Press).

LESSONS LEARNED: Recent Copyright Suits Involving Led Zeppelin and The Beastie Boys

  

Led Zeppelin is used to lawyers. The recent flap over “Stairway to Heaven” with the estate of Randy California is not the first allegation of copyright infringement against the legendary band. Years ago, I heard an attorney speak who had been part of Zeppelin’s defense team in a suit brought by John Lee Hooker. The lawyer recounted how his hands were essentially tied, thanks to years of interviews where Robert Plant and Jimmy Page openly talked about borrowing from old blues songs.

Still, I could not shake the question, “Why now?” The answer probably lies in a recent United States Supreme Court decision involving the movie “Raging Bull,” Petrella v. Metro-Goldwyn-Mayer, decided on May 19, 2014. The Court held that each infringing act starts a new limitations period, although each infringement is only actionable within three years of its occurrence. The Court allowed a suit to continue that was filed in 2009, although the movie was originally released in 1980, and the claimant’s copyright was renewed in 1991. If successful on the merits, the claimant’s recovery would not include exploitation of the film before 2006.

As a result, even before reaching the musical question of infringement, the current suit against Led Zeppelin will no doubt be challenged based on the time delay. Recent authority suggests, however, that the delay will prohibit recovery for use of the song before 2011, but will not act as a complete bar to the litigation.  

Earlier this Spring, The Beastie Boys settled a suit against toy maker GoldieBlox for use of the song ”Girls” in a commercial. One of the interesting things here is that once dispute  arose, it was GlodieBlox who went on the offensive, filing litigation in hopes of having its use declared to be a permissible parody of the original song. The band counter-sued, alleging infringement.

The concept of claiming parody as a “fair use” defense traces back to Campbell v. Acuff-Rose Music, an action based on 2 Live Crew’s version of the Roy Orbison classic, “Pretty Woman.” According to the Supreme Court’s opinion, 2 Live Crew originally intended to license the song from the publisher, Acuff-Rose, and to properly credit the original songwriters. When the music publisher refused to license the song, 2 Live Crew released it anyways. Approximately 250,000 unit sales later, Acuff-Rose filed suit. (The Court never mentions the compulsory license process.)

Once sued, 2 Live Crew changed tactics, and rather than offer to license the song (and pay the statutory mechanical license rate), the band argued that its version was a parody, constituting a “fair use” and making it unnecessary to obtain the typical mechanical license. The United States Supreme Court agreed, and held that the track could qualify as a protected parody, despite the commercial nature of the 2 Live Crew release.

At first blush, the Goldieblox song seems to be a likely candidate for fair use protection. Company representatives claimed that its version of “Girls” made fun of the original Beastie Boys track, and its sexist lyrics, by instead urging gender equality, especially in the fields of technology, math, and science.

 Because the case was settled, we will never have a definitive judicial interpretation of the facts and law. We do know, however, that the settlement required an apology from GoldieBlox, and payment by Goldieblox to one or more charities (selected by The Beastie Boys). Without more details, it’s impossible to know whether Goldiebox’s settlement indicated a lack of confidence in its legal position; or, if it was a simple recognition that it had made a colossal mistake in forging ahead with the ad campaign without first securing a synchronization license from the music publisher. With that much money at stake, assuming that you will qualify as a parody strikes me as a pretty gutsy move.

The lessons learned? If someone has infringed your intellectual property rights, and it’s been more than three years, your cause of action may be limited, but not completely lost. But, if an infringing use qualifies as a parody, it may be exempt from the licensing process. And, sue Led Zeppelin if you have to, but you should probably leave The Beastie Boys alone.

Sync Licensing Your Music

Today’s post is the result of both recent client assignments, and two articles that I came across; one by Neil Gillis on Sonicbids.com extolling the benefits of sync licensing, and the other by Jason Blume on BMI.com discussing how you might actually score that elusive song placement. These articles can be found in their entirety at the following links:

 http://blog.sonicbids.com/4-ways-that-getting-a-sync-license-can-jumpstart-your-music-career

http://www.bmi.com/news/entry/10_things_you_need_to_know_about_placing_music_on_tv_and_in_films

The motivation is simple. “Sync” is short for “synchronization”, and means that your song (and probably your master) will be synchronized with a visual image. Song placement in a TV, movie or commercial is obviously a great piece of resume material. It can also generate two income streams.

The first income stream is the possible payment of an up-front licensing fee. The fee may be split between use of the composition (i.e., the songwriter and his/her publisher) and use of the master recording (i.e., the record company). Both must be licensed if the master recording is utilized (versus re-recording a new master). The fee is usually split in equal 50/50 shares between the two licenses. A typical DIY indie artist may own everything (i.e., his/her publishing and the master) thereby streamlining this process.

The amount of the up-front fee can depend on several factors, including the overall project budget, the length of the scene, and the overall importance of the scene (such as over the opening or closing credits, as opposed to coming out of the jukebox and being barely audible during the bar fight scene). Of course, it helps if the song is not easily replaced. In low budget projects, an artist might be asked to license music without an up-front fee. Because of the second income stream, such deal may still make sense, depending on the facts.

That second stream consists of performing rights society royalties; through BMI, ASCAP or SESAC; and is often referred to as “back-end money.” For TV and movie placements, royalties are generated each time that the episode or movie is broadcast. As a result, even a placement with no up-front fee can generate some money, as can a movie that ends up being released straight-to-DVD (assuming it eventually ends up on TV.) 

For example, a client here previously licensed a song in a movie that had a very limited theater run, but it’s available on DVD, and it gets shown on TV occasionally. The movie’s budget was spent on a couple of high-profile song placements. My client was offered use of his song in a jukebox scene. If you don’t know what to listen for, you’ll never make it out over din of conversation and beer bottles. The fee was $1 dollar.

However, the deal was laid out in advance; it gave the client a nice piece of resume material at a key stage in his career; and, to this day, it continues to show up on BMI quarterly statements. No one is getting rich. It is a few dollars here, and a few dollars there, but it’s a perfect example of sync licensing in action.

Even if the “why” is clear, the “how” of sync licensing is a bit more complicated. The goal is to get your music in front of a project’s music supervisor, who in turn has the ear of the director. It’s the music supervisor’s job to determine what music is needed, including “source music” to be used in the background, coming out of car radios, etc.

Unless you know a music supervisor, as a songwriter you may end up pitching your material to music libraries, sometimes called sync houses. These businesses have vast quantities of music available to them and can fulfill any request that might come from a music supervisor: a track about sunshine, something sung in Russian, death metal instrumental, etc. Music Dealers is just one example of this type of middle-man licensing business. http://www.musicdealers.com/#!/

An artist working with (for example) Music Dealers typically licenses songs to MD on a non-exclusive basis, leaving the artist free to shop the song elsewhere. This process allows MD to pre-clear the song, putting it in a position to approach music supervisors with the necessary rights and authorities (from the songwriter/master owner) already secured.

Assuming that a song placement is scored, the typical arrangement splits any up-front fee between the artist and the sync house, allots the publisher’s share of performing rights royalties to the sync house, while allowing the writer to retain his/her writer’s share of any performing rights money. The song is generally given a new title, and re-registered with the artist’s performing rights society, allowing income to be traced from that specific placement, as opposed to, say, spins on the radio where the sync house had no involvement.

If you are either licensing your own songs, or are a music publisher actively engaged in the process, some good online sources offer general education on the topic, and possible pitching opportunities.  Examples include Music Library Report and Cue Sheet. You can find them at the links below:

http://musiclibraryreport.com/miscellania/cue-tips/#

 http://www.cuesheet.net/

As always, this is meant as general guidance, and not specific legal advice. If you have a specific sync license question, feel free to contact me at lmeyer@mdpwlaw.com. Happy licensing!

So, what does a Tour Manager do?

I’ll include a link to recent article in Billboard that includes some great rock ‘n roll war stories. While not everyone has the pressure of escorting Keith Richards through customs (can you even imagine?) many indie-level bands do have someone on board as a designated tour manager.  That person might even double at the merchandise table.

Probable tasks include keeping track of the itineraries sent by the booking agent, knowing how long of a drive it is to the next gig, load-in time, sound check time – and oh yeah – how much is the band getting paid?

As someone actively involved in tour publicity, I interact with one specific tour manager in a very nuanced fashion. In addition to other tasks, as I field press opportunities, the tour manager keeps track of the interviews that I schedule - day and time of call, who initiates the call, etc. Not that big of a deal, perhaps, but figure in time zones, the 8 hour drive to the next city, pulling off to get cell reception, and . . . you get the picture.  It is one thing if it’s a writer calling to advance a story, but it’s another if the interview is going live to radio. Very quickly, the extra set of hands comes in handy.

Another component of tour publicity is the occasional radio in-studio. I generally check with the tour manager before confirming. On the day of the performance, I’m back in my office hoping that the phone doesn’t ring (as that could only mean that something has gone wrong); and again, the tour manager is the one with the GPS and the studio address, figuring the distance from the station to the venue, and what time the band has to be out the door to make load-in – perhaps even leaving time to find that vegetarian restaurant the promoter mentioned.

So, unlike this article, you may not be bandaging Alice Cooper’s head-wound, or carrying $100,000 in a brief case. But, even with an indie 5-guys-in-a-van tour, there can be plenty of need for a tour manager.

http://www.billboard.com/articles/news/5915668/tour-managers-of-foo-fighters-the-rolling-stones-fleetwood-mac-swap-wild-tales

 

 

 

 

 

ASCAP, BMI, SESAC - FRIEND OR FOE?

As a topic, performing rights societies will do doubt be revisited here time and time again. One of the first things to understand is that they represent the individual or entity that owns the copyright in a musical composition, and they pay their members based on broadcast use of that material. If you didn’t write the song – there’s no money; and if there isn’t any broadcast use of the song – there’s no money.

Currently, a contentious issue is whether the PRS format in the US should be modified to compensate not only the owner of the composition, but the owner of the sound recording copyright, as well. SoundExchange pays royalties to sound recording owners (typically a record label), but for on-line digital broadcast, only. For every track played over traditional terrestrial radio airwaves, only the composition owner (typically a publishing company) receives public performance royalties. It’s been that way forever.

This distinction is particularly important for cover songs, especially those that become more popular than the originals. Classic rock examples include Joe Cocker singing “With a Little Help From My Friends”, and Aretha Franklin’s version of “Respect”, among others. In these instances, the recording artist (or his/her record label) does not receive performing rights society royalties, only the underlying music publisher.

And David Byrne isn’t happy. A recent post by Byrne points out potential unfairness to great jazz musicians who played on sessions, recording traditional material; and the fact that other countries do in fact pay for broadcast use of the sound recording. Byrne argues that foreign broadcasters pay that royalty, which is collected by a foreign PRS, and is funneled back to the applicable US organization – where it sits.

Link here for an update on Byrne’s efforts, including videos of both his cover, and the original Biz Markie performance, of “Just A Friend.”

 http://www.okayplayer.com/news/david-byrne-biz-markie-just-a-friend-live-cover.html

PS – Here is a personal confession. I learned about Biz Markie thanks to my four year old daughter and the show Yo Gabba Gabba. Three cheers for DJ Lance and crew!

WELCOME TO TOLEDO MUSIC LAW

Why a Toledo-based music law blog? I say, Why not? Granted, this isn’t NYC, LA or Austin, but Toledo has contributed musicians to the worlds of jazz (Art Tatum and Jon Hendricks) and rock (Gary Louris), not to mention one of today’s hottest EDM exports (Wes Quinonez performing as Le Youth). And yes, many names could have been mentioned just as easily.

Some local players move on to bigger markets, but return to Toledo for homecoming shows and special events. Others play locally, but take off on periodic tours for weeks, or months, at a time. Through digital distribution, local artists can sell their tracks world-wide. We have a symphony. There is college-level music education, community college music technology programs, and Toledo School for The Arts. Our scene includes buskers, house concerts, clubs, theaters and concert halls. In my own circle of local friends and acquaintances, I am proud to know several musicians that support themselves solely by playing (or more precisely, by being paid to play) music. We still have independent record stores! In short, the business of music is alive and well right here in Toledo.

Check back periodically for updates on trends and legal developments impacting local Ohio artists, venues and promoters. Potential topics include performing rights societies (BMI, ASCAP, SESAC), revenue streams for musicians, etc. Leave a comment, or if you need guidance on a specific issue, send me an email.