Minds
& Money
Intellectual Property in the Music Industry
MUM Says: Without getting into too much detail, copyright exists in the music industry in two forms:
Composition
Master or "sound" recording
Being able to see these two forms interact across the industry sectors will empower you to track and generate money. Kind of like Neo in the The Matrix; you see it clearly so then you’re able to exploit powerfully.
Composition is the music and lyrics
The sound recording is the audio file, whether it exists in a digital or physical format. Whenever money is made from reproduction (listening, purchasing etc.) or music that is performed live, the money goes to the composer and the owner of the sound recording.
Typically in the music industry, this can be song lyrics on a piece of paper. It becomes more tangible once you add chords/melody and record it.
How is copyright controlled?
Controlling copyright is often specified in written agreements to identify who owns what. It is divided up by percentages and income is distributed accordingly.
How is copyright commercialised?
The most common form of commercialisation of copyright today in the music industry is digital streaming. Every time you stream a song, you are reproducing someone's art and the owner of the copyright will get paid for it (whether the written agreement is simple or convoluted).
What is the legislative description of copyright?
Copyright is the legal and exclusive right to copy, or permit to be copied, some specific work of art.
If you own the copyright on something, someone else cannot make a copy of it without your permission.
Copyright usually originates with the creator of a work, but can be sold, traded, or inherited by others.
What is the purpose of copyright?
The purpose of copyright is to recognise and protect a person's art and to identify people who are using it without permission. If copyright didn't exist, people would steal each other’s artistic content and have nothing to be responsible for. Copyright gives responsibility to the person wishing to use it and if it isn't yours, you have to speak to the owner and seek approval.
Copyright as the Creator Sector
As an artist, you are generally the creator of the copyright. You write down lyrics, play chords and create a melody. Once you write it down or record that composition (even if it’s a phone demo), it is in a fixed form and hence, copyright is born.
It is a good idea to register it with the only collection agency in Australia - APRA. Registering it puts an official stamp on it and allows you to take legal action in the event of infringement. Composition is defined as music and lyrics. Music is the chordal or harmonic structure of the song and lyrics are the melody and words. Together that forms 100% of the composition. In the example of Bernie Taupin and Elton John, Bernie writes the lyrics and Elton creates the music - 50/50.The sound or master recording is the audio file. Whoever pays for the recording of the audio file owns it. Plain and simple. Each of these two aspects can be defined as:
Composition - 100%
Master Recording - 100%
If Bernie and Elton's manager paid for the master recording, the splits are as below:
Bernie and Elton - 50/50 on the composition
Manager - 100% of the master audio file.
As an artist progresses through their career, they may come across situations where they have the opportunity to relinquish or sell-off a percentage of their copyright (in a sense) to form business partnerships. There are many ways to form written agreements around copyright and this is where all of the confusion and misconceptions arise.
Summary:
• Composition is the music and lyrics and is owned by their creator/s.
• The master recording is the audio file and the owner is the person who paid for it.
• Percentages are used to represent copyright.
• Copyright may be sold off, licensed or relinquished for business dealings.
Copyright for the Management Sector
The traditional management agreement is 20% of gross or net (depending on the relationship). This means they take a cut of the gross income, regardless of the income source. This may work for some and may not work for others.
All income can be:
Record sales
Digital streaming income
Tours, shows, festivals
Synchronisation
Where things get complicated is when a manager assumes the role of a producer or helps the artist with their songwriting or the purchasing/paying for sound recordings. Suddenly there is copyright involved. Producers may claim a percentage of the composition due to changing a lyric or a chord here and there etc. You can see how things can get more complex from this point. The biggest thing to take from this context is that it is up to the Manager and the Artist to negotiate a fair deal from the beginning and be upfront about the distribution of income from all sources. If they do this right, no-one gets hurt. Contracts are pulled out and lawyers get involved when people accuse others of deception or decide they don't want to continue their current agreement. As we will see, this is an infrequent occurrence in the music industry and legal disputes have shaped the industry moving forward.
Businesses that Operate Across a range of Sectors
Labels
The extension of this is a major label providing a 360 deal where all business undertakings are conducted in-house and the artist has to relinquish a large percentage of their copyright as an incentive for the label to do their thing.
They do the following:
Sign artists (written agreement specifying all percentages)
Help them create their art (and take a cut of the composition)
Pay for the recordings (now they own the master)
Distribute their art (and take a cut from the income)
Book gigs (and fill out performance reports for APRA)
Obtain synch's (and take a cut)
Label Services
Label services don't tend to touch copyright, their job is a fee-for-service and provide:
Distribution
Publicity
Sync
Other business offerings
As you can see, there are times when copyright is not touched or is barely considered, and there are other times where there are major discussions involving splitting percentages.
Copyright is the backbone of the industry. Without it, it would be a very different landscape to that which exists today. In closing, there is one last point to consider. The major labels have influenced the copyright standard we have today by determining the specific splits during the physical distribution and digital eras. This is likely to continue into the future unless a new model emerges. How people consume music will impact the future of copyright.
Key Point: Copyright is up to the discretion of the owner