“A clear contender for the one indispensable work on the topic, this book delivers the goods. There is no one involved in the music business who will not learn and benefit from this ambitious work.”
—NEW YORK STATE BAR ASSOCIATION
“This book gives you the real deal on the way the music business really works, whether you’re new to the game or even if you think you’re a veteran—from contracts to touring, good and bad money decisions, and even creating a team no artists should do without.”
—SEAN PAUL, ATLANTIC RECORDING ARTIST
“An indispensable compass to guide you through the trials, traumas, and occasional triumphs you will encounter in that most unusual ‘life work’ called the music business.”
—BRUCE LUNDVALL, PRESIDENT AND CEO OF THE BLUE NOTE LABEL GROUP
“This book is like a map, showing how to avoid the danger zones in the music business.”
—RIC OCASEK, RECORD PRODUCER, FORMER LEAD SINGER AND SONGWRITER FOR THE CARS
“An absolute must for anyone interested in the music business. This is by far the most informative book on the business of music I have read to date, and it’s one that I’ll refer back to regularly.”
—BIG HEC, RAPPER, PRODUCER, AND VIDEO MAGAZINE PUBLISHER
“Attention classical musicians: this book is for you! In the rapidly changing world of the performing arts, it is more important than ever to understand fundamental business principles. This book explains it all—and will save you a lot of time, aggravation, and money.”
—CHARLES LETOURNEAU, FORMER SENIOR VICE PRESIDENT, IMG ARTISTS ARTISTIC CONSULTANT FOR THE NAPA VALLEY FESTIVAL OF THE ARTS AND OTHER ARTS ORGANIZATIONS
“Peter Thall has made it his business to know everything that’s worth knowing about the music world, and now he’s sharing it with the world at large. I’m frequently asked for the insider’s view of the industry, and I always point them to Peter’s very useful and informative book.”
—ROGER FAXON, CHAIRMAN AND CEO, EMI MUSIC PUBLISHING
“Whoever reads this book is getting expert advice from one of the most respected and knowledgeable players in the music industry today. I wish this book was available when I was looking to begin my career in the music business.”
—DAVID RENZER, CHAIRMAN AND CEO, UNIVERSAL MUSIC PUBLISHING GROUP
Copyright © 2016 by Peter M. Thall
All rights reserved.
Published in the United States by Watson-Guptill Publications, an imprint of the Crown Publishing Group, a division of Penguin Random House LLC, New York.
www.crownpublishing.com
www.watsonguptill.com
WATSON-GUPTILL and the WG and Horse designs are registered trademarks of Penguin Random House LLC
Previous editions were published by Billboard Books, New York in 2002, 2006
Library of Congress
Cataloging-in-Publication Data
Names: Thall, Peter M.
Title: What they’ll never tell you about the music busines : the complete guide for musicians, songwriters, producers, managers, industry executives, attorneys and accountants / Peter M. Thall.
Description: Third edition. | Berkeley : Ten Speed Press, [2016] | Includes bibliographical references and index.
Identifiers: LCCN 2016015721 (print) | LCCN 2016018133 (ebook)
Subjects: LCSH: Music trade—Law and legislation—United States. | Music—Economic aspects—United States. | Copyright—Music—United States. | Band musicians—Legal status, laws, etc.—United States. | Popular music—Writing and publishing.
Classification: LCC ML3790 .T43 2016 (print) | LCC ML3790 (ebook) | DDC 780.23/73—dc23
LC record available at https://lccn.loc.gov/2016015721
Trade Paperback ISBN 9781607749745
Ebook ISBN 9781607749752
v4.1
a
CONTENTS
Cover
Title Page
Copyright
Preface
Acknowledgments
1 • INTRODUCTION
Selecting the Right Attorney
Personal Representation
Deal Makers: Why You Need Them
Deal Blockers: How to Get Past Them
Staying the Course or Calling It Quits
2 • INVESTORS The High Costs of Low Finance
The Costs of Being Heard
Of Investors and Investment Agreements
Finding the Money
Internet-Specific Offerings
The Safe Harbor Disclaimer
Getting the Right Advice
Paying It Back
Overcalls and Conversions
Commissions
Crowdfunding
Should He Who Pays the Piper Call the Tune?
A Backer Who Knows What He’s Doing
3 • ADVANCES Why They Seem a Lot Like Loans (and Vice Versa)
A Sad Story and a Happy Story About Advances
Is One Person’s Money Another Person’s Motivation?
4 • ROYALTIES Some Unvarnished Truths
How the Royalty Pie Is Sliced and Who Gets the Pieces
Recording Costs
United States CD Album Royalty Calculation
Payment on Less than 100% of Records Sold
“New” Technology?
“Special” Categories
Two Diabolical Deduction Devices
Reducing Mechanical Royalties
Special Issues Regarding Controlled Compositions
The Beat Goes On: Other Important Deductions
Prepayment of Royalties
The Myth of Royalty Escalations
Free Goods
Lost or Misplaced Royalties
Chipping Away at Post-Term Royalties: Synchronization Licenses
Accountings, Audits, and the Statute of Limitations
How Responsible Should Record Companies Be?
The Effects of Digital Downloading on Pricing and Royalties
360 “Deals”
The Digital Evolution
5 • PERSONAL MANAGEMENT The Whys, Wherefores, and Watch Outs
What a Personal Manager Should (and Should Not) Be Expected to Do
Managing the Five Stages of an Artist’s Career
Remakes
KMMA: Keep My Music Available—At All Costs
Choosing Your Manager
The Question of Clout
Paying Your Manager
The Term of the Agreement
Extending or Terminating an Artist-Manager Relationship
Breach of Contract in Artist-Manager Agreements
6 • MANAGING YOUR BUSINESS AND YOUR FINANCIAL FUTURE When “Show Me the Money” Isn’t Enough
What a Business Manager Does
Finding the Right Person
Certified Public Accountants
Auditing the Auditor
What Kind of Business Is Being Managed?
Should You “Do Business as” or Form a Partnership?
Money Means Options: Resisting the “Keep ’Em Poor” Philosophy
Managing Your Money
Investing: Is Anyone in Charge Here?
Making It and Saving It
7 • WHEN YOUR JOB IS MORE THAN A GIG Employment Agreements and Disagreements
Term of Employment
Duties
Reporting Lines
Confidentiality and Competition
Stock Options
Perks
Termination
Working in a Foreign Land
Relocation and Re-Relocation
Visas
Disability and Death
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Provisions That Survive Termination
Vacations
Release and Settlement
Employment Issues Specific to the Music Industry
Variations of Royalty Calculations
Employment Agreements with Celebrities and Others Otherwise Engaged
Mail
The Ownership of Ideas
8 • RECORD PRODUCERS Are They as Sharp as Their Points?
How 25% Can Equal 100%
Cross-Collateralization: It Does Not Apply to the Producer
Producers’ Royalty Provisions: The Basics
The Producer as Author of the Sound Recording
Producers and Neighboring Rights
9 • GETTING YOUR RECORD HEARD A Practical Guide to Marketing and Promotion
Marketing Tools
The Goal-Oriented Campaign
The Record Contract
Do Record Companies Know What They Are Doing?
Victim or Victor?
Television Campaigns
Radio Promotion
Airplay and Payola
The Same Old Song (Only the Coda Is New)
The Beginning of the End?
A Brief Look at the Promotional Picture—from the Artist’s Point of View
10 • TOURING CONCERNS Trials and Tribulations
The Club Tour
The Grand Tour
Sample Tour Budget
Private Charter
Elements of Touring Agreements: Commonalities and Idiosynchrasies
11 • MERCHANDISING Your Band, Your Brand
Tour Merchandising
Retail Merchandising/Web Merchandising
Confidentiality
Compliance with Local Laws
End-of-Term Inventory and Sell-Off
Artwork and Photographs
Coupling
Life and Disability Insurance
Piracy
Audits
12 • AUDITS Truth or Consequences
Examining the Audit
The Flow of Money
Access to Registration Information
The Black Box or “Something Is Abyss Here”
Television Campaigns
Interest Charges
Statutes of Limitations
Conducting Audits in Foreign Countries
A Few Practical Suggestions
The Right to Audit: A Contract Issue
13 • MUSIC PUBLISHING The Odyssey of the Song
What Is a Music Publisher—and What Does It Publish?
Copyright: A Bundle of Intangibles
Financial Secrets and Realities
Mechanical Royalty Rates Outside of the United States
Top Gun—a Top Buyout for Paramount
The Administrating Function
Family Ties (Too Close to Sue)
When Your Publisher Forgets You
Foreign Taxes
At-Source Versus Receipts Deals
The Black Box Revisited
Copyright Reversions
14 • WHEN RODGERS MEETS HAMMERSTEIN Determining Songwriter Credits
Cowriting Agreements
Cowriters Who Are Band Members
15 • BEING YOUR OWN MUSIC PUBLISHING COMPANY Pros and Cons
Self-Publishing
Getting in Touch with the Copyright Office
Why Bother Doing It Yourself?
Acquiring Copyrights
Reversion of Copyrights
The Value of the Copyright
The Impact of Administrating Costs on True Earnings
The Cost of Giving Away a “Piece” of the Publishing
16 • INTERNET ENTREPRENEURSHIP Doing It Yourself
Competing with the Big Boys
Artist, Songwriter, Performer—and E-Commerce Expert?
Making a Living
Stealing and Protecting Against It
Dos and Don’ts of Internet Entrepreneurship
Manufacturing and Distribution
Kickstarting Your Career
Podcasting
Instantaneous Dissemination of Live Performances
Creating a Website
Which People Should Do It Themselves?
A Word of Warning—and Encouragement
17 • LOST, MISPLACED, NEGLECTED, AND ABANDONED Royalty Opportunities You Were Never Told About
An Introduction to Neighboring Rights
Broadcast Mechanicals
Neighboring Rights in Our Own Backyard: Canada
Lost, Misplaced, Neglected, or Abandoned: Which Category Are Your Royalties In?
Show Me the Money
Two Neighboring Rights–Friendly Countries: The UK and the Netherlands
Neighboring Rights Collections Agencies
Performing and Other Obscure Rights in Sound Recordings
18 • URBAN MUSIC The Beat Goes On
Roots
The Milieu
Urban Music: The Producer’s Cosmos
Different Strokes for Hip-Hop Folks
Rap as Protest
The Importance of the Mix: Mixtapes
Career Ceilings
Hip-Hop and Pop Culture
Business Management and the Management of Business
The Changing Image
Contractual Issues
The Rap Coalition: Self-Help Exemplified
Hip-Hop Rules
19 • CLASSICAL MUSIC Dead or Alive?
A Little History
Demise or Rejuvenation?
The Metropolitan Opera
An Essential for Success: Spirituality
New Life for an Old Genre
The CD Arrives: Both a Blessing and a Curse
The Internet: Is It the Answer?
The Role of Record Companies
The Composer-Artist: Special Considerations
Classical Composers and their Publishers: Some Pitfalls and Some Options
Classical Management
Presenting the Singer
Music Education
20 • TERMINATION OF GRANTS OF COPYRIGHTS For Every End, a Beginning
Basic Term of Protection
“K-K-K-Katy”
Termination of Grants
Duration of Copyright: Subsisting Copyrights
Who Can Terminate
The Control of Termination Decisions
The Rights Granted
The Windows for Termination
When Automatic Renewal Applies
The Sonny Bono Term Extension Act
Keeping Records
The Technical Requirements for Termination
21 • COMPLIANCE WITH COPYRIGHT LAWS Hints for the Corporate Counsel
Intangible Rights and the Internet
Licensing From Music Publishers and Sound Recording Owners
Copyright Provisions Applicable to the Internet
Term of Copyright
Sampling, Borrowing, and Stealing
Rights Management
Dangerous Language Alert
Music Clearance: The Music Industry’s Revenge
International Issues: One-Stop Shopping
So Your Corporation Has Also Decided to Become Adventurous?
22 • CATALOGUE VALUATION How to Improve Your Odds at Winning Big
Factors in Valuing Catalogues: An Overview
Satellite Radio, Internet Radio, Mobile Phone Streaming, and HD Radio
Evaluating Data
Who Owns the Catalogue?
Termination Issues
The “Trunk”
Who’s Sorry Now? The Blackbird
23 • COPYRIGHT ISSUES A Sampler
Changing Copyright’s Image
Copyright Infringement
Sampling
The Impact of the Internet on Recording and Publishing Agreements
How the Internet Has Provided Context for Songwriters’ and Publishers’ Search for Equitable Treatment
The Internet Is Global: So What? I’ll Tell You What
What Is to Be Done?
The Fairness in Music Licensing Act
The Copyright Term Extension Act: A Lesson in Leverage
MP3: How Two Letters and a Numeral Terrorized an Entire Industry
Napster and Post–Napster
The More Things Change, the More They Remain the Same (or Do They?)
24 • COPYRIGHT Can’t Live with It—Can’t Live Without It
Battles or Battle-Axes
Copyleft (aka Copy Wrong), But Not Copyright
The Clearance Nightmare
Copyright and Personal Property
Misuse of Copyright
Some Suggested Solutions
25 • SOLVING PIRACY IN THE 21ST CENTURY How to Avoid a Greek Tragedy
Illegal Downloading
When an Apple Boomerangs
When Culture Trumps Commerce
Copyright Owners: Power (Not) to the People
What Would the Greeks Do?
Conclusion
PREFACE
We are the music makers
And we are the dreamers of dreams,
Wandering by lone sea-breakers,
And sitting by desolate streams,
World-losers and world-forsakers,
On whom the pale moon gleams:
Yet we are the movers and shakers
Of the world forever, it seems
—ARTHUR O’SHAUGHNESSY
There are enough agents, accountants, attorneys, managers, and music publishers, not to mention friends and family, who are more than willing—for love or money—to advise young artists (musicians, singers, and songwriters) in the pursuit of their careers.
Most of this advice is well-intentioned—and it may even be timely and helpful. However, it may also be irrelevant to a particular individual’s circumstances. The reasons for this are manifold.
Not the least of the problems in offering advice to young artists is the fact that they customarily have limited knowledge of the music industry. Unlike participants in other industries, the major players in the music business often enter the arena with neither a clear understanding of its workings and history nor the means to obtain the information that would convey such knowledge to them. The people who make up the heart and soul of the music industry do not usually know a break-even point from a producer point, a royalty from a prince, or a mechanical license from a synchronization license—in short, they don’t know their business. In the course of writing this book, I have discussed various chapters with senior executives in different departments of major music business companies. At the end of the discussion, all of them told me, in so many words, “You know, I learned a thing or two today.” This is not to criticize them. As an attorney who has practiced in the music industry for more than forty years, I learned long ago that managers and executives in the music industry, unlike their highly trained peers who choose to work in the financial or real estate worlds, rarely have the requisite background to function in the industry at an optimal level. Yet these managers and executives are ultimately responsible for making the decisions that will make or break their companies.