The New Music Age

One of things that we stress to S&E Entertainment clients is that you need to be accessible to as many people as possible, both in person and online. The bottom-line: have a presence where your fans are and provide them the ability to interact with that presence. it is no longer enough to simply put the information out there and hope that someone enjoys it and spends their time and money following your musical career.

A recent article by Kyle Bylin highlights this advice:

"I was ten when I recorded "The Rockafeller Skank" by Fatboy Slim off the radio onto cassette tape. Twelve when “The Real Slim Shady” by Eminem premiered on TRL. The idea that I could reach out and connect with the artists that I liked didn’t exist yet or at least wasn’t familiar to me. MySpace didn’t become popular where I grew up – almost no one that I knew had it. Artists were perceived as unreachable. What you knew about them was based on the lyrics in their songs or maybe a brief interview segment in Rolling Stone. Even the concept of sending traditional fan mail was of no interest, because there was no expectation of the artist reading it or writing back. It was basically the equivalent of trying to actually send your Christmas list to Santa at the North Pole.

In the truest form, I, along with everyone I knew, were passive consumers of music and thought nothing of tuning into the radio and not getting to choose what songs were playing. Waiting through a few terrible videos on MTV in order to hear something good was commonplace and seen as a way to pass the time. Today that’s just not the case anymore. Music fans have set different expectations for artists and insist that they are met. While not everyone has interest in messaging their favorite artist, those that do, anticipate a reply back. Of course, no one is shedding tears when old hats like Metallica or Def Leppard don’t reply, but for Making April or Owl City, fans have come accustomed to the idea that they are able to reach out to these artists and make a real connection.

What does this mean for an artist? Think about it as the blurring of the line between the public artist and the private individual, at a time, when the boundary between home and studio has largely disappeared. On tour, thanks, by and large, to advances in digital technologies, the ability to stay in touch with their fans has become delocalized for many artists, so that it can be done at all hours from almost anywhere. Leisure time once spent doing creative things — where an artist could take time away from it all — has turned into work that ranges from learning how to market themselves online and off, answering an endless barrage of messages from fans, bloggers, and managers, and trying to keep all of their profiles, blogs, and social media tools relevant and up-to-date.

“It’s that the once disparate spheres have now collided and interpenetrated each other, creating a sense of “elsewhere” at all times,” writes Sociologist Dalton Conley in Elsewhere, U.S.A. He continues, “It is the plethora of economic opportunities created by technology that creates a dogging sense of loss, of needing to be elsewhere, doing something different.”1 Whether you liken elsewhere to the next social networking site that seems to have more promising opportunities or the idea that instead of making more music you should be figuring out how to better market the music that you’ve already made — the message is clear — that what it means to be an artist in the twenty-first century will be drastically different from what previous generations have experienced."

Royalties -- Getting Paid In The Music Business

Some artists are truly inspired and moved to action by the music in their hearts. They would lovingly ply their trade on the street corner, adhering to a strict vow of poverty just to know they could have their music heard. However, most musicians want to be compensated for their talent and efforts – if nothing else to pay the rent and eat. They too are inspired and moved by their music, but fame, riches, and glory are also strong motivators – or more likely the fabled ultimate payoff for a lifetime of hard work. It is called the music business for a reason, but far too often artists jump at the chance to “get into the business” without properly protecting their art or even understanding how they are compensated for their music.

Without a doubt, the least understood and most overlooked sources of that compensation are royalties. Through a series of articles we will break down the Players, the Royalties, and the Payoffs.

PART I – The Players

Songwriter(s) – The person or people that wrote the lyrics and/or the musical notes for the song. Together, the lyrics and music are called the musical composition. Notably, the lyrics and music can be written by entirely separate people or groups that each have their own publishers, assigners, and performing rights organizations. Often the individual(s) responsible for the music are called composers.

Performer – The performer is the person or group that actually plays the musical composition at live performances and on recordings. The performer gets permission to perform the musical composition though a license. When the performer or someone within the performer’s group is also the songwriter, this license is usually not written down because if the song belongs to you, then you always have the right to perform it. As we explore a little further, it turns out that the songwriter does not always own his songs because part of the ownership is shared with a publisher.

Record Company – A record company employs performers to play and record musical compositions. In exchange for the marketing a performer, arranging for recording and production of a song, and occasionally a cash advance, the record company owns the master recording of the performer playing the musical composition. In plain English, the record company owns the recorded version of the performing playing the song. This is referred as the master or the sound recording.

Publisher – The publisher is a company that works with the songwriter to promote his musical compositions, encouraging performers to play the song, placing the song in movies and commercials, and pitching the song to record companies. Often, publishers pay the songwriter for partial or complete ownership of the musical composition (usually 50/50). Then the publisher charges a licensing fee to performers, film and television directors, and record companies for the right to use the musical composition. Occasionally, a publisher does not take ownership of the musical composition and the underlying copyrights but merely charges the songwriter a flat fee or percentage to promote and license the musical composition. This type of publisher is called a rights administration company.

Performing Rights Organization – A performing rights organization (PRO) is an association or company that works with songwriters and publishers to monitor and assign royalties any time a musical composition is performed. This includes radio play, live performances, and play on film and television. Very recently, PROs are monitoring and paying royalties on digital plays on the Internet, based on licenses. The major PROs are the American Society of Composers, Authors and Publishers (ASCAP), Broadcast Music, Inc. (BMI), and the Society of European Stage Authors and Composers (SESAC). Notably, songwriters can only register with one PRO.

Mechanical Rights Agency – A mechanical rights agency works with songwriters and publishers to license the right to record a musical composition to performers and record companies. When a performer wants to record a song for which he is not the songwriter, then he must obtain a mechanical license. The mechanical rights agency issues the license, tracks the usage of the recorded song, and facilitates payment between the performers and publishers/songwriters (the mechanical royalty). Of course, the mechanical rights agency charges a percent of the mechanical royalty for their services. The major mechanical rights organizations are The Harry Fox Agency and the Canadian Mechanical Rights Production Agency (CMRRA).

Now armed with the knowledge of the people involved in creating a song, you are now ready to understand the different ways that a musician can get paid for that song (i.e. revenue streams). Come back for Part II – The Royalties.

Matthew T. Nagel is an entertainment attorney at Wuestling & James in St. Louis, Missouri and an adjunct professor at Fontbonne University and Washington University School of Law. If you have questions, you can reach him at Nagel@wuestlingandjames.com.

* Articles are primarily educational and do not purport to constitute legal advice. No attorney-client relationship is created between the author and any reader of this article. If you have legal concerns or questions be sure to consult with an attorney licensed to practice in your jurisdiction.