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MUS 580 Test 1
MIA Students Study Guide
196
Music
Graduate
09/29/2015

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Term
The rights for copyright holders
Definition
Reproduce the work, Distribute copies of the work, Perform it publicly, Create Derivative works, Display the work publicly
Term
Basic history of copyright law. Where it originated and the major copyright legislation milestones in the USA
Definition
1710 British pass the Statute of Anne - protects copies of writings for 14 years, renewable for 14 years
1791 and 1793 - french laws for fine arts grant authors control of copying, distributing, and sale of their works plus a fixed term of rights after their death
1787 U.S. Constitution under Legislative Branch
Term
What section of the USA Constitution does copyright come under
Definition
Article 1, section 8 in 1787
"To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors, the exclusive Right to their respective Writings and Discoveries."
Term
What other items are addressed in that section 8
Definition
powers of congress, legislative
borrow money/regulate commerce
rules of naturalization
established the post office
form armies/navies and declare war
make laws to enforce the constitution
promote science and useful arts
Term
The main points and copyright term in the Copyright Act of 1790
Definition
first ever FEDERAL copyright law (States had already adopted copyright laws)
term = 14 years "from the time of recording the title thereof"
performance and mechanical rights not included
Term
The main points and copyright term in the Copyright Act of 1831
Definition
first general revision to US Copyright law
term = 28 years with option to renew for another 14 years (42 years total)
Term
The main points and copyright term in the Copyright Act of 1909
Definition
allows the right to perform work publicly (first protected in 1889)
translate the work into other languages
the right of mechanical reproduction
first term = 28 years from date of first publication with option to renew for additional 28 years within 1 year of expiration of first term (56 years total)
Established requirement of copyright notice on work
Term
The main points and copyright term in the Copyright Act of 1976
Definition
Defined sound recordings as "original works of authorship comprising an aggregate of musical, spoken, or other sounds that have been fixed in tangible form"
phonorecords as "physical objects in which sounds are fixed" (records, tapes, cds)
Finally addressed TV, cable, movies, records
Defined publication as "distribution to the public"
Spelled out "Fair Use"
Term = life of the composer + 50 years
broadened to works not published but in "fixed" form and those without copyright notices
Right of Termination (35 years after transfer, begins in 2013)
Law went into effect January 1, 1978
Juke Box Performance Royalties covered
covered Cable & Satellite Royalties
Copyright Royalty Tribunal established
Term
The outcome of the Berne Convention Implementation Act of 1988
Definition
No longer necessary to have copyright notice on the work
Work does not need to be registered, but you must register in order to file an infringement claim
Transfer of copyright ownership not required to be registered with Copyright Office
Public Domain songs in the USA could become protected
Term
What was changed in the Copyright Term Extension Act of 1998 (Sonny Bono Act)?
Definition
CTEA increased the total term of all works under copyright protection as of January 1, 1999 by 20 additional years
Aligned USA terms with European Union terms
Works published after December 31, 1977 are protected for 70 years after the death of composer
Term
What is the duration of a copyrighted work published since 1/1/78?
Definition
70 years after the death of the composer
Term
What is the duration of a copyrighted if there is more than one writer?
Definition
70 years after the death of the last living composer
Term
How long is work for hire works covered in the USA?
Definition
95 years from publication or 120 years from creation (whichever comes first)
Term
What’s a mechanical license?
Definition
payments for devices "serving to mechanically reproduce sound"
Term
Why is mechanical license compulsory?
Definition
Congress was concerned that the music industry was going to develop into a gigantic monopoly
The copyright owner must license to anyone who wants to use it in a phonorecord
Term
What is the current statutory mechanical royalty rate?
Definition
9.1 cents per composition up to 5 minutes
or 1.75 cents per minute over 5 minutes long
Term
Who sets the current statutory mechanical royalty rates?
Definition
Copyright Royalty Board (CRB)
Term
Are jukebox licenses compulsory?
Definition
Yes
Term
Are broadcast licenses compulsory?
Definition
NO
Term
Are cable re-broadcast licenses compulsory?
Definition
YES
Term
Explain what a synchronization license is?
Definition
license to use music in "timed synchronization" with visual images
includes motion pictures, tv, tv commercials, and home video devices, but not radio commercials
Term
Know the difference between the master rights and the publishing rights
Definition
Master recording : The right to license the actual sound recording of a song to users.
owned by labels, publishers or Artists, it is separate from the song license.
Publishing rights: The right to license a songwriter’s copyrighted musical composition or words to users.
Term
Know all the Performing Rights organizations in the USA
Definition
ASCAP
BMI
SESAC
Global Music Rights
SoundExchange
Term
What is SoundExchange?
Definition
SoundExchange is a nonprofit organization whose board is made up equally of record company and artist representatives. SoundExchange collects for performances of masters instead of songs.
includes satellite/internet radio and digital performance royalties paid to soundexchange
Term
Is there performance income in movie theatres
Definition
a. In the USA? No
b. Outside the USA? Yes
Term
Royalty rates for different types of print music
Definition
Sheet Music : 20% of marketed retail price
Folio : 10-12.5% on marketed retail price
personality folios: additional royalty of 5% for using name and likeness of the artist
Educational : 10% of SRP
Term
Who is performance income outside the USA paid to?
Definition
The foreign subpublishers
publishers make deals with local publishers in each territory to collect on their behalf (subpublisher)
The local performance right society of the foreign country pays the publisher’s share to local subpublishers (who then pay the US publisher) and the writer’s share to the US PRO (who then pay the writer).
Term
How much do subpublishers normally keep?
Definition
Can keep 10-50%, but normally they keep 15-25%, that is why they’re called 75/25 or 85/15 deals
Term
Who usually owns the masters?
Definition
Labels, publishers, artists
Protected by Federal law since 2/15/1972
Term
Another name for a production music house?
Definition
Music Library
Term
What publisher owns most of the Beatles songs?
Definition
Sony/ATV
Side note - Michael Jackson owns half the masters
Term
Definition of copyright
Definition
A limited duration monopoly
Term
What is copyrightable?
Definition
Original works of sufficient materiality fixed in tangible form
Term
When does something become copyrighted?
Definition
As soon as you make a tangible copy
Term
Are you required to register your copyright with the Copyright Office?
Definition
no
Term
What are the exceptions to the copyright monopoly?
Definition
Cable t.v. rebroadcast, Public Broadcasting System, Jukeboxes, Digital performance of records, Phonorecords and digital downloads of non dramatic music compositions.
Term
What is a dramatic work?
Definition
Any work intended to be performed dramatically and tell a story. Includes plays, scripts, choreographic notation, choreographic shows, and scenarios for a film (but not the film itself).
Term
When did mechanicals first appear in the copyright law?
Definition
1909 Copyright Act
Term
What does “mechanical” mean?
Definition
working or produced by machines or machinery; digital is considered mechanical for royalties in the music industry.
Term
Under what conditions is a copyright owner required to issue a mechanical license?
Definition
The song is a non-dramatic musical work.
It has been previously recorded and previously distributed in phonorecord form.
The new recording doesn’t change the melody or fundamental character of the song.
The new recording is only used in phonorecords.
Once a song has been recorded and released to the public, the copyright owner must license it to anyone who wants to use it in a phonorecord (defined as such in the Copyright Act) for a specific payment established by law.
Term
Are mechanicals paid on free goods?
Definition
Passman page 229, Paragraph 3, line 2: “The controlled composition clause will say you get no mechanicals on free goods” and page 75, “The record company doesn’t get paid for them so they don’t bear royalties” THIS IS FOR ARTISTS. FOR PUBLISHERS, mechanicals ARE paid on free goods because they are paid on goods DISTRIBUTED, not SOLD. (pg 224)
Term
What is the makeup and function of the Copyright Royalty Board?
Definition
Three judge panel that sets the:
Mechanical Royalty Rates
Cable TV Secondary Transmissions
Non-commercial Broadcasts for Non-dramatic Works
Digital Performance of Sound Recordings
Digital Delivery of Phonorecords
Term
What are foreign mechanicals based on?
Definition
Paid as a % of the wholesale price
Term
What are the main functions of a publisher?
Definition
Music Publisher Functions:
Administrator
Exploit/License (Song plugger)
Creative Staff Person (A&R)
Term
How do publishers normally split the money with their writers?
Definition
50/50 unless otherwise stated in the contract.
Term
What are the various types of music publishers?
Definition
Majors
Major Affiliates
Independents (Stand-Alones)
Writer Publishers
Term
What are the major sources of music publishing income?
Definition
Royalties: (PMPS)
Performance
Mechanicals
Print
Synchronization
Term
What are the names of the companies that issue mechanical licenses in the USA and Canada?
Definition
Harry Fox Agency (USA)
Canadian Musical Reproduction Rights Agency (Canada)
Term
What fees the companies that issue mechanical licenses in the USA and Canada take for their services?
Definition
Harry Fox: 8.5%
CMRRA: 6%
Term
What else do mechanical licenses organizations do?
Definition
Audit Record Companies
Term
How often do mechanical licenses companies pay?
Definition
Quarterly, 45 days after the close of the quarter
Term
Do record companies normally pay the full statutory rate?
Definition
NO
Term
what rate do record companies normally pay?
Definition
Normally in the 75% of the statutory rate range
Term
Understand what a Controlled Composition Clause is and the various rates paid under it
Definition
Puts a limit on how much the record company has to pay for each controlled composition
Controlled composition: song that’s written, owned, or controlled by the artist in whole or in part.
Normal rate for Controlled Compositions: 75% of the statutory rate
Record clubs or budget records: 50% of statutory rate
Albums: Usually 10 times the single song rate per album
Mechanicals for free goods: No
Mechanicals paid for multiple uses: No
Paid on Public Domain songs: No or 50% of the normal royalty
Term
What is a DPD?
Definition
Digital phonorecord delivery
Term
When was DPD added to the copyright law?
Definition
In 1995
Term
How are licenses with venues normally issued?
Definition
Blanket licenses
depends on square footage and max occupancy
Term
Can a writer affiliate with more than one PRO?
Definition
NO
Term
Can a publisher affiliate with more than one PRO?
Definition
Yes, but must be registered under different names. [ASCAP 1yr, BMI 2yrs, SESAC 3yrs]
Term
What are the ranges of synch fees for use in different parts of a movie?
Definition
Major studio : 10,000-100,000
Main Title : 50,000-250,000
End title : 35,000-100,000
Term
What does MFN mean?
Definition
Most Favored Nations = everyone is paid the same rate
Rates go up if anyone ever gets more.
pg 252, “they pay the same amount for every song, no matter what” - regarding license fees
Term
What are the normal fees for video game synch?
Definition
Major Hits: 50K
normal rates : 8K-10K
commercial : 10k-30k
No royalties except for music-based games.
Term
Know the difference between interactive and non-interactive radio
Definition
Interactive : Spotify (you decide what music you want to hear)
Non- interactive : Pandora (someone else decides what you hear)
Term
What are the royalties based on?
Definition
performance royalties; performing rights. “each user needs your permission to play the song on the radio, TV, night clubs, amusement parks, etc.”
Term
What is a Mixed Bundled Service?
Definition
One that includes one music product with one or more non-music products or services together
Term
What’s a Paid Locker Service?
Definition
You store music you personally have access to on another server - aid services to upload and save your music in the cloud and access it from any device you own. They can scan and match your music to theirs.
Term
What’s a Purchased Content Locker?
Definition
Requires you to upload your own music to their server (Amazon and Google), then allow you to access it from your device(s).
Term
What fees do foreign subpublishers normally take?
Definition
Monies earned: 15%-25%
Printed music : 10%-15%
Term
What does “At Source” mean?
Definition
This means the percentage remitted to the original publisher from the subpublisher must be based on the earnings in the country where earned, which is the source.
Term
Know about DART and the Audio Home Recording Act of 1992
Definition
Digital Audio Recording Technologies
The Audio Home Recording Act of 1992
Gives permission to copy records at home for private non-commercial use
Imposes a tax on digital audio recorders and digital audio tapes.
Term
What is included in the DART act?
Definition
Money is paid to: Record Companies, Featured Artists, Musician Unions, songwriters, and publishers.
Computers are NOT covered!
Term
What is the most important thing to do when setting up a publishing company?
Definition
Register the name with a PRO!
Term
What other things do you need to do when setting up a publishing company?
Definition
Eventually set up three publishing companies with the three US PROs, if working in the USA.
Affiliate as a writer
Fictitious Business name Published
Register the copyrights
Register the songs
Term
Who normally pays royalties to songwriters?
Definition
Publisher
Term
What are the exceptions in paying royalties to songwriters by publishers?
Definition
Performance money and DART money
Term
What does “co-terminus” mean?
Definition
Two or more deals with the same term
Term
What is a “Passive 360 Deal”?
Definition
The record company has no control over the rights involved.
They just collect the money.
Term
With one songwriter writing the music and another one writing the lyrics, who controls each part of the song?
Definition
Both control the ENTIRE song and it does not matter who wrote lyrics and who wrote music
Term
What is “Net Publisher’s Share” or NPS?
Definition
The amount that is left over to be paid to the publisher once all the obligations are met
Admin cost - writer’s share = net publisher’s share
Term
What does “Co-publishing” mean?
Definition
Two or more people share the copyright to a song
Term
What is the normal range for publisher administration fees?
Definition
In the 10-25% of gross income range deducted first before anything else
Term
What are some of the direct expenses that are deducted before the publisher receives their NPS?
Definition
Copyright Office
Demo Costs
Collection fees
Legal Costs
Preparation of Lead Sheets
Term
Know the different types of publisher admin deals?
Definition
One Administrator
One Administrator with Restrictions
One Administrator with Direct Payment to other Parties
True Co-administration
Co-administration with Exceptions: Controlled compositions, Statutory Rate Licenses
Term
What is a “cover record”?
Definition
Recording of a U.S. composition by a local artist in the local territory, obtained by the administrator
Term
What is the technical definition of “Work for Hire”?
Definition
If it is made by an employee within the scope of employment, it’s a work for hire. If the employer is “directing” or “supervising” the creation of the work.
Term
What are the criteria that define a Work for Hire piece?
Definition
Commissioned
Created under a written agreement
Created for use in one of the following:
A motion picture or other A/V work
A collective work
A compilation
A translation of a foreign work
A supplementary work
Term
Understand Termination Rights
Definition
Added in the 1976 Copyright Act
You can get your copyright back 35 years after you transfer the rights to a publisher
Term
Does Termination Rights apply to Work for Hire?
Definition
No, because there was no transfer in the first place
Term
What did the Fairness in Music Licensing Act add to the copyright law? (1998)
Definition
This act states that stores under 2,000 sq.ft. or restaurants and bars under 3,750 sq.ft. don’t need a license to perform music.
Advocated by the National Restaurant Association, National Licensed Beverage Association lobbied heavily for the bill (WTO was not happy).
Term
What are the negatives for not registering a copyright with the Copyright Office?
Definition
Can't collect Compulsory License Royalties
Can't file an infringement action
If you don’t register within five years after first publication of the work, you lose the legal presumption that everything in the registration is valid.
(can't stop someone from using your song)
you can’t recover Attorney fees nor can you get statutory damages unless you registered before the infringement happened.
Term
What are the legal remedies for copyright infringement?
Definition
You get the fair market value of the use the infringer made.
You can recover the infringer’s profits.
You can get an injunction. (not using song)
You can recover statutory damages (if registered).
The court can order destruction or seizure
If the infringement is willful, there are criminal penalties.
You can get your court costs (if registered).
Term
Know where the music fits in during the movie production process
Definition
Music is left until the last possible moment when the film is locked and the amount of money spent on music pales in comparison to the other production costs
It must meet a critical release date, so recording and editing need to be completed in time for distribution.
Composer has 8-10 weeks to score and record the music. Sometimes even less.
Term
Know the three types of music primary to most films
Definition
Original Underscore
Original Song
Licensed preexisting Song
Term
What are the deals involved in Motion Picture Music?
Definition
motion picture deals:
The Performer (singer/instrumental)
The record company to whom the performer is signed
The record producer
The songwriter
The publisher to whom the songwriter is signed
The owner of a Master Recording that’s sampled in the song
The publisher who owns a song that’s being sampled
The record Company putting out the soundtrack album
Term
What are the rights involved in Film Music?
Definition
Acquisition of rights for the picture
Performing artists:
Songwriters, composers and publishers
Record producers
Record companies (both for use of existing masters or samples in the film, and for clearing rights to put new recording of their artists in the film.
License of Rights from the picture company to others:
A deal with a record company to release a soundtrack album
Licensing film clips for music videos
Possible a publishing administration deal
Term
What are the two types of Film Music Performer Deals?
Definition
to perform in the picture
to use the performance in a soundtrack album or single
Term
How are artists usually paid to perform in a film?
Definition
A flat fee
Term
What are some standard fees artists usually are paid to perform in a film?
Definition
Up to 400K + for major artists
Norm is:
200K - 400K for superstar
15K-25K for mid level artist
5K-10K for minor artists
10K-20K for featured instrumentalists
100K for big names
Term
Explain All-in Deals for Film Music
Definition
When the artist prefers to negotiate a deal with the film company to record and deliver a track in exchange for a set fee, but the artist pays the recording cost and keeps the difference.
Not as beneficial, because the artist doesn’t know if the director will make them re-record until they (the director) likes it, all at the artist’s expense.
Term
What are the important aspects of the soundtrack record album?
Definition
What’s the royalty to the artist?
Who is the royalty paid to?
For the distributor what can be recouped against your royalty?
What can your record company recoup?
What rights does the film company have?
Roles in the release of music videos
Term
What are the royalty amounts for soundtrack albums?
Definition
12-14% all-in, pro-rated
16-18% for major artists
both of the above could include escalations based on record sales
Record companies want to collect the royalties and keep 50% before paying the artists
Term
What is recoupable in soundtrack albums?
Definition
recording costs (negotiable to be non-recoupable)
artist’s performance fees (negotiable to be non-recoupable)
conversion costs
re-use fees
Term
Understand the rights to artist film recordings
Definition
artist can use recordings on their own record
restriction on re-recording (usually 5 years)
right to release singles and music videos
film shares cost of music video split 50/50
limited film footage allowed on the music video
Term
Understand about licensing of the master for motion pictures
Definition
song licensing, not the score or underscore
deal between the film company and record company
right to use the master is only for the physical recording, not for publishing rights
artist may or may not have approval rights from the record company
artist can block a deal if they own the publishing on the song
Term
What are the two main elements of the record company/film company master license?
Definition
how much is the synch fee?
what is the royalty if the master is going to be used on a soundtrack album?
Term
What determines the fee the record company will charge?
Definition
The popularity of the artist
How the music will be used in the film
Term
What are the royalty ranges for the fee the record company will charge?
Definition
11-14% prorated with the Most Favored Nations (MFN) Clause
Term
How is the money split between the record company and the artist?
Definition
50/50
if the record company is releasing the soundtrack album or single, the artist would get their normal royalty rate
Term
What are the two types of soundtrack albums?
Definition
Score Albums (consist of only underscore music)
Song Albums (songs from major artist. Consists of pre-written material or songs specifically for the film)
Term
What are the advances and royalty rates for both score albums and song albums?
Definition
Score: Usually just the re-use fee (these albums don’t usually sell too well), 17-18% royalties
Song: $100k-$300k, some up to $500k, royalties up to 18-20% with escalations up to 22% if sales reach over 1M copies
Term
Who pays a majority of the costs to release soundtrack albums?
Definition
The FILM COMPANY
Term
What is the background music of a movie called?
Definition
underscore , score
Term
What are the fee ranges for film songwriters?
Definition
$0 to $100,000 for established writers
A majority of the deals fall in the $25,000 to $50,000 range for major films
It depends on whether the writer gets a part of the publishing
Term
What is it called when they get paid more money based on higher revenue from the film?
Definition
Kickers (additional money based on the success of the film)
Term
What is a step deal?
Definition
Meaning the deal is done over a series of “steps”
Writer creates the song and gives the company a demo recording for a small amount of money.
If the film company doesn’t like it, the writer is required to re-write the song.
Once the film company is happy it goes forward with the deal; if not, the deal is off.
Term
What does “on spec” mean?
Definition
“On Speculation” - write the song without a commitment from the film company to pay a full fee.
Meaning film company pays nothing or sometimes a few bucks for the cost of a demo.
Term
Are film songwriters normally paid royalties or work for hire?
Definition
They are almost always treated as Work for Hire.
Term
What rights will film companies ask for in their film songwriter deals?
Definition
To use the song in sequels, prequels, trailers, co-promotions, studio tours, theme parks, live entertainment, and etc.
Term
What is a single card credit?
Definition
No one else is on the screen at the same time
However, the writer usually doesn’t get a single card-at best, they share credit with the performer.
Term
What is the billing block of a movie ad poster?
Definition
It is that microscopic box of credits down at the bottom of movie ads.
Term
Do composers normally get a share of the publishing for film scores?
Definition
No, with exception of low budget films where the producers let the composer keep the publishing in exchange for a lower fee to write the music.
Term
What are typical film composer fees?
Definition
50K to 1.5million+, Normal range is $300K to $700K
Term
Instead of exclusivity, what will film companies normally ask for from a composer?
Definition
First Priority, which means you can take other work as long as you perform on time.
Term
What is “spotting”?
Definition
Where the composer and director sit down with a final cut of the film and determine exactly which “spots” need music, and exact length of each.
Term
How much do orchestrators get paid and what are they paid based on?
Definition
$80 - $85 per page of score, varies based on size of the orchestra and number of pages of music, as well as complexity of orchestration .
As a rough guideline: simple orchestrations is about $400 per minute of music.
Term
What kinds of royalties are paid to composers, producers and conductors on soundtracks?
Definition
Conducting: 6 - 10%
Producing: 3 - 4%
Floors - For major composers
Term
What is the one thing that the record company normally recoups in a soundtrack deal?
Definition
Conversion costs (converting a film recording to a master that can be used in a record)
Term
What is a composer package deal and what is the normal pricing?
Definition
Package deal = the music including recording costs.
Pricing:
$50K for budget to $2million for major films
Purely electronic: $100K - $400K
Hybrid of electronic and real instruments: $50K - $250K (Orchestra and Studio are both paid)
Low budget: $5K to $10K (Composers will want the publishing and soundtrack)
Term
What are the normal exclusions from composer deals?
Definition
Licensing of outside music
Recording costs of outside music
Re-use fees
Re-scoring
Lyricist expense
Vocalist expense
Music Editor fees
Mag stock (soundtrack imprinted on the film) and transfer cost
Pre-records
Sidelining
Excess Musicians
Library Music
Term
What will a composer usually ask for on low budget films?
Definition
Back-End participation or bonus when the box office reaches certain levels.
A percentage of the publishing
Soundtrack record extra royalties
Adding the advance that the film company gets for the soundtrack album.
Term
What are the normal fees for TV composers?
Definition
(Almost all TV packages) Background Score $5-$10 K for 30min, $9-$20 K for 1 hour, $10-$60K for 2 hours
TV Themes $10-$25 K or up to $40K+
Term
How are video game composers paid and the normal rates?
Definition
Work for hire and package deals
Normal rates are $1K to $1,500 per minute of music, $1.5K-$2.5K for package deals
Term
What are the roles of the Music Supervisor?
Definition
Coordinates the music for the film
Focuses on the choice of songs
May be involved in the underscore as well
Works with the Producer and Director to work out the type of music needed before production. (Songs on camera must be pre-recorded; they are lip-synched or danced to on the film.)
Term
What are typical film music budgets?
Definition
$500K - $1.5 million of total $40 million - $100 million film budget.
Term
How are Music Supervisors paid?
Definition
$25K to $100K per picture
Top Supervisors also have royalties on soundtracks of 1 - 2% non-pro-rated.
They may also get escalations of .25% or .5% at 500,000 and 1 million units.
Royalties are paid after recoupment of costs
Sometimes box office bonuses are included.
Term
Are Music Supervisors used in television?
Definition
Used when TV shows have to license a lot of music
Rush productions
Smaller budgets
TV production departments not equipped to deal with complex clearance issues
Fees are $3,500 or so per episode with 1% royalty with records or downloads + sales escalations
They search indie record labels, YouTube and similar sites looking for unknown artists with cool material to put it on a TV show (pay is very little but placements promote artists career)
Term
Know the big mistakes in the downfall of the record industry and the historical significance of each one.
Definition
CD Longboxes
Decentralized record industry’s inability to move quickly
Innovativeness of initial solution was not projected to scale
Illustrative of record industry’s reliance on record retailers
Independent radio promotion
Plugola (derivative of Payola) - product or service endorsed on TV or radio for personal gain without consent of networks or stations. Accepted bribes for free “plugs” for endorsements on air
4 major broadcasters in 2001
iHeart Media
CBS Radio
Citadel (owned by Cumulus)
these controlled 60% of the market
Entercom
Digital Audio Tape (DAT)
developed by Sony Corp. in mid-1980s
replacement of cassettes
tried to make a copy protection (copy-code) to prevent piracy but the electronic developers were angry at the record industry’s request to make their product inferior so the record labels refused to license to DAT.
should have worked together with the consumer tech community to establish a “best practices”, which could have laid better groundwork for later battles on digital media and consumer technology. Nothing was solved - instead the market shifted the burden to another segment of the tech community: computers.
The single was killed
record industry sales relied on singles until commercialization of LPs in 1948.
singles were used as a way to sample the album before purchase.
80s-90s phased out the single because it cost to much to produce for profit margin
Discontinued to drive further album sales
Industry had not built or sustained a commercial consumer interest in their singles’ products. It completely undercut the revenue stream.
Inflated margin of CD album sales because industry relied too much on physical distribution and retailing, so they couldn’t survive off lower profit margins.
Pumping up the Big Box Retailers
Retailers like Best Buy and WalMart would sell their CDs for an extremely low profit margin or at a loss, which drove competition of local/national record stores out of the market
In 1996 these retailers accounted for 25% of all CD sales in the market
Co-promotion schemes (a form of payola)
MAP - Minimum Advertised Price
marketing funds based on price at or above specified level. Support for stores selling CDs above a certain price
consumers paid $480M more than they should have due to MAP
2000 - Record labels accused of price fixing
Drove Tower Records and Musicland into bankruptcy
Devalued music to consumers
Consolidated retailing power to few big chains
SDMI - Secure Digital Music Initiative
Purpose was to develop technology specifications protecting digital music
Goals: convenient access to music online, apply DRM restrictions to work of artists, and promote new music related business and technologies
Consumers tried to hack SDMI encryption
Instead of monetizing new market, group just sought copyright protection
RIAA (Recording Industry Association of America) Lawsuits
sued its own customer base 5 months after iTunes surfaced
ended 5 year lawsuit campaign in 2008, which targeted 18,000
Record labels lost money
There was little impact from the lawsuit and it martyred those actually prosecuted.
Sony BMG’s Rootkit
A software on CDs sold, which would illegal copying and online piracy, but was automatically installed on Windows desktop computers when consumers tried to play the CDs
Software was too illegitimate, consumers outrage at Sony’s lack of empathy, which pushed Sony into losing $2-4M in recalls, and customers exchanging CDs without software
Reinforced Napster’s belief industry was too focused on punishing consumers than catering to them
Record label was forced to dissolve their R&D into copy protection
Term
What companies jointly developed the CD and is still paid a royalty for this?
Definition
Sony and Philips worked jointly on their own versions of technology and used lasers developed at MIT and Bell Labs in the 1960s.
Term
When did the Longbox retire?
Definition
The longbox retired in April 199,3
Term
Which four companies today control more than 60% of radio?
Definition
By 2001 iHeart Media, Citadel, Cumulus and Entercom controlled more than 60% of radio.
Term
What were the big changes in the Telecommunications Act of 1996?
Definition
This Act removed the caps that a single entity could own no more than 2 broadcast stations per market and no more than 40 total. This resulted in Massive industry consolidation.
Term
How many radio stations can an entity own in various size markets?
Definition
Restrictions are based on a sliding scale. In a radio market of 45 or more stations, an entity may own up to 8 radio stations. No more than 5 on the same service (AM or FM)
radio markets between 30 and 44 radio stations may own up to 7 no more than 4 on the same service.
radio markets between 15 and 29 radio stations may own up to 6 no more than 4 on the same station
Radio markets 14 or fewer may own 5 stations no more than 3 in the same station
the entity doesn’t own more than 50% of all the radio stations in that market.
Term
“Payola” refers to what?
Definition
Payola is the illegal practice of payment or inducement by record companies for the broadcast of recordings on radio.
Term
What was excluded from the Audio Home Recording Act of 1992?
Definition
Excluded professional audio equipment and computers from having to include the Serial Copy Management System.
Term
Who collects and pays out DART royalties?
Definition
Royalties are collected by the Copyright Office (Quarterly).
Distributed according to statute.
Term
Who does the DART royalties money go to?
Definition
Sound recording fund
(⅔ of royalties collected) divided as follows:
60% for the copyright owners of the sound recording.
40% for the featured recording artist with a small percentage going to AFM and AFTRA non-featured artists.
Music works fund
(⅓ of royalties collected) divided as follows:
50% to publishers
50% to writers
Term
When was the first CD released?
Definition
Billy Joel’s album 52nd Street released on October 1st, 1982
Term
Understand MAP pricing
Definition
MAP - Minimum Advertised Price
marketing funds based on price at or above specified level. Support for stores selling CDs above a certain price
Term
Who was the founder of Napster?
Definition
Shawn Fanning
Sean Parker
Term
What was “Fair Play” encryption?
Definition
Prevented users from playing the Advanced Audio Coding (AAC) music files on more than three computers.
Term
When did the iTunes store launch?
Definition
April 28, 2003
Term
What is the most important asset to a performing group?
Definition
Group’s Name
Term
What can the group name be protected by?
Definition
Service Mark
Term
What’s the difference between a Personal Manager and a Business Manager?
Definition
Personal manager = The most important person to help your career
Helps make major business decisions
Decisions on recording and record companies
Decisions on publishing and publishers
Helps with the creative process
Promotes the artistic career
Assembles and heads the team
Coordinates concert tours.
Business Manager = Handles money
Term
Who is the first person an artist should sign for their personal team?
Definition
Personal manager or lawyer
Term
What fees do Personal Managers charge?
Definition
15% to 20% of earnings (what you bring in)
Majority get 15%
Term
What does Power of Attorney mean?
Definition
The power to act for you
right to sign your name to contracts
hire and fire your other representatives
cash checks
Term
What kinds of functions does a Business Manager perform?
Definition
(Handles the money)
Collects it
Keeps track of it
Pays the bills
invests funds
Files tax returns
(Does not need to be licensed!)
Term
What fees are paid to Business Managers?
Definition
5%
Hourly
Flat Fee
Monthly Fee
Term
What kinds of fees do Lawyers charge artists?
Definition
Most in the music industry don’t charge hourly
Those that do charge between $150-$600 per hour
Some charge a 5-10% fee
Monthly retainer
Value billing (based on the deal)
Term
Who regulates Agents?
Definition
UNIONS - AFM, SAG-AFTRA, Actor’s Equity
Term
What is the market share for the top three record companies?
Definition
Universal-19.7% (including EMI)
Warner-19.4%
Sony-15.5%
Term
What are the departments in a normal label?
Definition
A&R
Sales
Marketing
Promotion
Product Management
New Media
Production
Finance
Business Affairs/Legal
International
Term
Who are the major record distributors?
Definition
EMI distributes (Capitol and Virgin)
Sony distributes (Columbia, Epic, Jive, and RCA Records
Universal distributes (Universal/Republic, Interscope/A&M/Geffen, Island/Defjam, Motown
WEA distributes to Warner Bros., Elektra, Atlantic
Term
What are the two types of Independent Labels?
Definition
Major-Distributed Independent
True Independent
Term
What is the Artist Royalty based on for record sales?
Definition
% of wholesale price (PPD)
Term
Are artist royalties paid on free goods?
Definition
no
Term
What is the packaging deduction for CDs?
Definition
25%
Term
What are unrecouped royalties called in an artist’s agreement?
Definition
Deficit
Term
Explain Cross Collateralization?
Definition
Part of every record deal
Advances from different records all go into one pot of recoupable advances
Can also apply to different agreements (such as recording and publishing)
Record companies try for cross collateralization sequentially. Current advances cross collateralized with past and future recordings. Recoup advances “under this or any other agreement.”
Term
A Gold Record means what level of sales?
Definition
500K
Term
A Platinum Record means what level of sales?
Definition
1 Million
Term
What are normal artist royalties on records?
Definition
New Artist : 13%-16% of PPD
Middle level : 15%-16%
Superstar : 20% +
Term
What are producer royalty ranges?
Definition
3%-4%
Term
What if a mixer gets a royalty?
Definition
It is deducted from artist’s royalty
Term
What does Pay or Play mean?
Definition
Record label either pays for you to play or pay for you to go away (buy you out of record deal)
Term
What does Exclusivity mean in a record deal?
Definition
You can’t make records with anyone else during the term of agreement.
Term
What are normal royalty rates for sales of a USA artist’s record in Canada?
Definition
85% of the USA Rate (ex: 10% USA Rate = 8.5% in Canada)
Term
What about in other “major” territories such as the UK?
Definition
70% to 75% of the USA rate (ex: “10% of USA rate = 7%-7.5% of PPD)
Term
What about for ROW?
Definition
Rest of World (the grab bag of countries left over)
Royaltys run around 50% to 66.66% of the U.S. basic rate
5% to 6.66% of PPD
Term
What are normal reserves for mid-level artists?
Definition
35% to 50% of the records shipped
Term
What is the name of the service that tracks record sales?
Definition
SoundScan
Term
Understand the difference between non-interactive and interactive webcasting
Definition
Non-Interactive: users don’t have control over what they hear (Pandora, iTunes Radio)
Interactive: you do have control - (Streaming on Demand)
Term
What are some examples of streaming on demand?
Definition
“Celestial Jukeboxes/Cloud servers”
Spotify
Rhapsody
Rdio
Term
What is the largest satellite radio company?
Definition
Sirius XM - (monthly or annual fee - non-interactive)
Term
For permanent downloads how much does the digital service provider usually keep?
Definition
30% = Digital Service Provider
Term
How much do record companies get on ringtones?
Definition
50% of retail price for mastertones
Term
How much do record companies get on interactive streaming?
Definition
60% of ad revenue and/or subscription fee prorated for each master
Term
How much do record companies get on full lockers?
Definition
58%
Term
How much do record companies get on bundled service?
Definition
58%
Term
How much do record companies get on video streaming?
Definition
70%
Term
How much do record companies get on apps?
Definition
Apple and others usually keep 30%
Term
What is coupling?
Definition
Putting your performances on records with performances of other artists
Term
What are the royalties on mid-priced records?
Definition
66.66% to 75% of the US basic rate (6.66% to 7.5% if you have a 10% royalty).
Term
What are the royalties on budget records?
Definition
50% of the tip-line royalty rate
Term
What are the royalties on record clubs?
Definition
Lesser of: Half of your top line royalty rate or
50% of your company’s net licensing receipts from the record club.
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