Darrin McGillis Productions

Elect Darrin McGillis Mayor of Miami Dade County, Florida

2011-03-23T01:47:00.001-04:00

Darrin McGillis is an official candidate for Mayor of Miami Dade County Florida.

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Political advertisement paid for and approved by Darrin McGillis candidate for Mayor of Miami Dade County, P.O. Box 56-6091, Miami, FL 33256.

How do I protect the name of my band?

2010-08-20T06:38:00.001-04:00

The two key concepts involved in "protecting" the name of a band are "territory" and "priority". Territory means the area where you use the name, e.g., Miami, Florida, Mid-West, United States, world-wide, etc. Priority, as the word implies, involves who uses the name first. These two concepts work together to limit the scope of protection for a name.

If you started using your name first, you can prevent others from using it. However, the law allows you exclusive use of the name only in the area where you have used it. For example, if you started playing the Miami area in 1995 and never played or distributed music outside the Miami area, you could not prevent a band from using the name in Florida. However, they could not use the band name in Miami since you were the first to use the band name there. You also may acquire the rights to your name for Miami in 1995 and nation-wide in 1999 when you release your first record for a major. If someone started using your name in another part of the country in 1996, you could not prevent their use in their territory since they have priority in that area.

A famous case involved two bands both performing under the name, "Flash". The first was a small band in San Francisco who had never recorded a record and the second was an English band who had a major label deal. Since the San Francisco "Flash" was a prior user in that area, the English "Flash" was not allowed to sell albums in the Bay area.

Before investing money in the name of your band, you should investigate whether anyone else is already using the name. If someone is already using your name, as explained above, they have priority in their territory. A good place to start is BMI and ASCAP. Both of these organizations will do a search of their roosters for conflicting names. You may also check Phonolog which is a list of albums and can be found at many record stores. Also check out the annual Billboard International Talent & Touring Directory. There are also many resources at libraries in large metropolitan areas. The librarians will also assist you in doing a trademark search of state and federal trademarks. The final place you may consider searching is the Secretary of State of California and New York. Since these are the two largest "entertainment" states, they can be helpful as well. The Secretary of State can tell you if they have any businesses registered under the proposed name. You can never be guaranteed that no one is using your name somewhere, but these avenues are a good place to start.

After checking the availability of your name, you should take steps to protect that name. As stated above, priority of use in a specific territory is the key to protecting a name. Keep careful records of your public use of the name. Record where and when you played or sold records, and any publicity so as to prove what territory you have used the name in and for how long. As for legal protection, there are a few routes you can take.

You cannot copyright a band name. The correct legal protection is a trademark. Within trademark law there is a category called service-marks. A trademark identifies a product while a service-mark identifies a service. Since a band is in the business of providing entertainment services, a service-mark is the proper tool to protect the name of a band.

The amount of protection you want for the band directly reflects the amount of money it will cost you. The least expensive route is a state trademark. Fees vary from state to state, but they are generally under $100. A state trademark gives you protection throughout the state you register. You can get the application by calling the Secretary of State. If you don't have a record contract or don't tour nationwide, I recommend a state trademark to start.

The next step is a federal trademark. A federal trademark gives you rights throughout the entire United States. The application fee for a federal trademark is presently $245. If your music is distributed throughout the United States or you do extensive touring, you may want to obtain a federal trademark. These forms can be obtained by calling (703) 308-4357.

Since the entertainment industry is now world-wide, there are 175 countries that allow the registration of trademarks and 60 which allow the registration of entertainment service-marks. Even if you focus on the five or so most important jurisdictions, (Great Britain, Canada, Germany, Mexico and France), you are still talking a great deal of money for trademark protection on a worldwide basis.

Finally, the "(R)" symbol: what does it mean? Unlike the copyright symbol, "©" (which anyone can use whether their work is registered with the Copyright Office or not), the trademark symbol, "(R)", can only be used if you have a federally registered trademark. By using the "(R)" symbol, you put everyone on notice that you own the trademark and anyone using it would be a willful infringer. There is also a "TM" symbol used occasionally. This has no legal definition or significance, but is generally used to claim ownership of an unregistered trademark.

In conclusion, when starting a band, you should: first, research the proposed name for conflicting uses; second, document the dates and territory where you use the band name; third, take steps to protect the name through service-marks.

What should I put on the jacket for my demo tape?

2010-08-20T06:10:00.001-04:00

If you look at any of the jackets on your CD's or tapes, you will notice various bits of information. Although the content often differs, many of the same things are on every jacket. It should not surprise you that these things should also go on your tape. However, what is necessary and what does it mean? First for the cover. The only things which should go on the cover of your tape or CD are the band's name and the title of the tape, along with any artwork.

Now for the good stuff: What goes on the back cover or J- card insert? The first thing to consider is credit. You obviously want to give yourself, "the band", credit for the record. As for crediting others, that depends on contracts. If you have a contract with a producer, it will surely include a clause whereby you must give him credit on the jacket. The same may go for the recording studio, manager. Receiving proper credit is very important in the entertainment industry. However, the only legal obligation to include anyone will be contractual.

Speaking of credit, be sure to include who wrote what songs. If the band wrote all the songs together, "All songs written by Band" should suffice. If someone other than a band member wrote a song, be sure to include their name even if not under a contractual obligation. You would not want to risk a copyright infringement law suit. This is particularly true if you do a cover version of a song or sample previously recorded material. Credit must be given to the owner of the material, be it a song or sample.

The next thing you must include is publishing information. If you have your own publishing company or publisher, you must list this information. This is important for royalty reasons if you wish to collect publishing money. Further, if someone someday wants to do a cover version of your song, they will need to contact the publisher for permission. What do you do if you have neither a publisher or administer your own publishing? At a minimum, you should join BMI or ASCAP and include "all songs BMI" on the jacket. It is easy to join BMI or ASCAP and the affiliation should be listed on the jacket.

There are a few legal technicalities you should always include. First, always include, "all rights reserved, unauthorized duplication is a violation of applicable laws." If you look at any of your CD's, I guarantee you will see this language or something similar to it somewhere. These words are important in some countries for protection of your work. If you plan on selling your CD outside the United States, you will also have to include "Manufactured in USA" to clear customs. It is a good idea to include this even if you don't have plans of exporting at this time.

Also legally essential are copyright notices. The first notice is written "©" and should be followed by the name of your band and the date. This means you are claiming a copyright in the lyrics and music for each of the songs. If you have a publisher, the publisher's name and the date will follow the copyright symbol, but if you have a publisher, they will explain all of this to you. You can (and should) use this symbol even if you have not registered with the Copyright Office. You should also include another copyright symbol. Unfortunately my computer cannot make this symbol, but it consists of a "p" with a circle around, just like the © symbol. The date and the band's name should also follow this symbol, just like the © symbol. If you have a record label, the label's name will follow the circled p symbol, but once again, your record label will explain this to you if applicable. This circled "p" symbol means that you are claiming a copyright in the sound recordings on the CD. You have two copyrights when you record a song; one is for the music and lyrics and the other is for the recorded version of the song. This explains why you need two copyright symbols on you tape.

If you print a lyric sheet, you should also include the copyright symbol "©", the date and band name (or publisher) followed by "All rights reserved/lyrics used by permission". As you can tell, copyrights are everywhere. They protect very valuable intellectual property and you should always take measures to guard your own work.

There are a few other minor details. If the band, record label or anyone else has a Trademark or Servicemark, you have to include that on the jacket. Note you cannot use the (R) symbol unless you have a federally registered trademark. This is different than the copyright symbols which you can and should always use. If someone does have a federally registered trademark, include this information in a conspicuous place.

If your music was recorded using "Dolby" (which is a federal trademark), you must include their symbol. Once again, my computer cannot reproduce their symbol, but I'm sure everyone has seen it before. Also, on a CD, you must include the universal compact disc logo which your CD manufacturer will provide to you. Finally, on tapes, you may include the type of tape and EQ setting required.

You should also consider including a UPC bar scanner code. This is rather costly and should only be used if you have a good distributor who will be getting your CD into stores. For information on how to obtain a UPC symbol, contact the Uniform Code Council, Inc. 8163 Old Yankee Road, Suite J, Dayton, Ohio 45458 or call (513) 435-3870. This is a non-profit company which gives out UPC codes to everyone in the country. The fee is $300.

The final item is a contact address for the band. Always put an address and telephone number on your jacket. The CD may end up in the hands of someone important and you certainly would want them to contact you. You may also use it to develop a mailing list. Considering setting up a fan club where you can sell merchandise like t-shirts or upcoming CD's. I highly advise including such contact information.

I hope this column has given you an idea about some of the things you frequently see on CD jackets or tapes. More importantly, I hope have guided you on what you should include on your next demo.

What should I do when I play live?

2010-08-20T06:05:00.001-04:00

Most bands play live. Whether you play live shows infrequently or on a regular basis, you should consider a written contract when playing live. A contract can be very simple. It does not have to be full of legal mumbo jumbo to be a contract. It can be as simple as "Band agrees to play on July 17, 2001 for one hour for $3,000 at Venue X." That is sufficient to be an enforceable contract.

At a minimum, a contract should have the following elements. First, it should be in writing. An oral contract may be valid, but it is very difficult to enforce. The expression, "an oral contract is not worth the paper it is written is on" comes from experience. Therefore, I highly recommend getting the terms in writing. Second, it should be signed by both parties. This means the agent or venue owner and one member of the band. Each band member has authority to bind the entire band in a partnership.

The following terms must be in the contract to be enforceable. First, it must specify the requirements of the band. This will include the date, time and length of performance. It is important to clarify how long the band will have to play to get paid. This can be expressed in terms of hours ("Band will play for one hour") or sets ("Band will play three 45 minute sets"). Be sure that both the band and the venue owner know what is expected of the band to avoid disputes during the show.

The second thing a performance contract must contain is the manner of compensation for the band. This can be a guarantee ("Venue owner will pay Band $4,000"), incentive (Venue owner will pay Band 50% of the net profit of ticket and/or door sales") or some combination (Venue owner guarantees Band $1,150 plus 25% of the ticket sales and/or door"). Included in the compensation clause should be when the band is to be paid. You should ask for half when you show up and half when you finish. If you are to receive a percentage of the door, have someone you trust oversee the person at the door to keep them honest. Venue owners notoriously under count the ticket sales and/or door when it comes to paying the band.

These few things are all that are needed in a simple performance contract. In summary, a simple contract will be in writing, include the band's obligation to play and the venue owner's obligation to pay. Finally, it will be signed by both parties. There you have it, a simple, enforceable contract. I can never guarantee you will get paid, but I can promise that it will be much more likely that you will get paid with a written contract.

What about more detailed contracts? A contract can be as complicated as you want it to be. The type of contract you require (simple two sentence vs. 30 pages of legal mumbo jumbo language) depends mostly on the types of places you play and your level of success. A garage band playing a Wednesday night at a small club does not need the same contract as REM at a coliseum. Just as the proverbial garage band would not present the small club with a thirty page contract, you would not expect REM to play a coliseum on a simple two line agreement.

The American Federation of Musicians (AF of M) also has a standard contract for performing artists. Most touring artists use the standard AF of M contract with a specifically tailored rider detailing the band's particular requirements.

Here are a few suggestions that a band may consider including in their standard contract with venues. Some bands may want to include technical requirements such as sound, stage or electricity. This may be helpful especially if you book a tour and schedule venues you have never been to before. You may also specify minimum publicity and promotion responsibilities of the venue and the band. Finally, some bands include specifics on "hospitality" backstage.

A contract confirms in writing the mutual understanding and agreement between two parties. There is no reneging or changing the terms after the show when you have it in writing. A written contract also shows that the band takes their performance seriously. Finally, a contract is important to enforcing your rights if a club owner refuses to pay you. For all of these reasons, I highly recommend a performance contract.

What if someone wants to shop my tape?

2010-08-19T07:56:00.001-04:00

If someone approaches your band willing to "shop" your tape, there are many questions you should ask. First, though, the term shop needs some explanation. When someone shops your tape, it means that they take a copy of it and try to get you a record deal. Basically, people who shop tapes claim to have some contacts that may be able to land you a record deal. Great you say, someone to help me get a record deal! Not so fast.

First, people don't shop tapes for free. Never pay someone to shop your tape. Shopping a tape is speculative in that it is a gamble. No one can guarantee they can get you signed.

A true shopping deal will pay the person out of future royalties from the deal they secure for you. If someone shops your tape and gets a record label to sign you, they will want a percentage of the income from the record deal. This is standard. What varies is the percentage. Some people are scrupulous and take only what is fair. Others over-reach.

What is fair compensation for someone who shops your tape? Fair compensation is 10%. It is not unfair to take 25%, but I usually tell bands anything over 10% should be viewed skeptically. It is not unheard of for people to ask for 50%. In fact, I once saw a proposed contract that offered a 60/40 split with the band getting the 40%! This is over-reaching and not standard in the industry. The other option, and one I prefer, is to offer them a point or two on the record contract. A point is a percentage point. Usually a band will get between 10-15% of the price of the album. Offer the person shopping your tape one to three points. Three points on a 15% royalty rate is 20%. The bottom line is that people who shop your tape are entitled to get a percentage, but there is a point that it becomes too much.

Another important point is to make sure the shopping deal is non-exclusive. Do not allow someone to have exclusive rights. In an exclusive arrangement, if someone from Sony Records happened to be at your show and signed you, the person shopping your tape may be entitled to his cut, even though they had no part in the deal! With non-exclusive rights, anyone can shop your tape. Why limit yourself to allowing only one person to shop your material when more people increase the likelihood of getting signed.

I also recommend putting the deal in writing. Imagine this scenario. A person agrees to shop your tape for 20% and nothing is put in writing. He calls you up and says RCA wants to sign you, but I want 50%! This is a true story. The deal fell apart and the band never signed to the major label. The moral of the story is get it in writing. It does not need to be a long formal contract. Something that says "I agree to shop your tape and if I secure you a deal, I get 10%" is sufficient. There is a lot more that should go into it, but at a minimum, get the terms in writing.

Getting someone to shop your tape can be an important step in the career of a band. However, it can also prove disastrous. Please give much thought to the idea before allowing someone to do it.

What form of business should my band be?

2010-08-19T07:52:00.001-04:00

A band is a business. The more you treat your band like a business, the more likely you are to succeed in the industry. There are essentially three forms a business can take. First is a sole proprietorship. If you are a solo artist, this is the route to take. However, if you are a band, this form is unavailable for obvious reasons. Therefore, your choices are between a partnership or a corporation. There are a few other forms businesses can take, limited partnerships, limited liability companies, etc., but they are too complicated to address here.

A corporation is an interesting concept. The way it works is you create a company which is owned by stockholders. This stock is not traded on the Stock Exchange, but owned by the band members. In the entertainment industry, a band which incorporates forms what is know as a loan-out corporation. What the corporation does is contract with other parties for your services. For example, if you have a loan-out corporation and you get a record deal, the corporation would sign the contract and would provide the services of the band, thus the name loan- out. The band itself does not sign contracts, but the corporation does.

Why should you form a loan-out corporation? There are a few reasons. A corporation gives you limited liability. This means if the band does something and gets sued, the person is limited to recovering money from the corporation and can't sue the band members individually. If you are a punk band and people go crazy at your shows, you may want to consider forming a corporation so if anyone hurts themselves at one of your shows and sues you, they won't be able to garnish your wages. Anthrax is being sued by a fan for when the lead singer stage-dived and injured a fan. If Anthrax is a corporation, the injured fan would be limited to recovering assets from the corporation. If they are not, the injured fan could sue the band members individually and take each of their houses. This is a simplification, but I think it makes the point clear. Another advantage to incorporating is the tax consequences. Corporate taxation is way beyond the scope of this article, but there can be important tax considerations to incorporating.

The other alternative is a partnership. This is the route most bands will take. In fact, the band is a partnership without even doing anything at all. The general law of partnerships presumes when a group of people act together, they are a partnership. Without a written agreement to the contrary, the law will assume various things about your band. First, everyone will be liable for everyone else. This means that if one of your bandmates signs a contract obligating the band to rent rehearsal space for $10,000, each band member is responsible even though they had no part in the transaction. The law presumes that each partner will be bound by the actions of all the other partners. Also, if you break up, the law will presume that all the band members own the band name and any of them can use it in the future, since no one has exclusive possession. This means that if the band breaks up, all four members could start their own version of The Band and use the name. That certainly would lead to confusion!

Note I prefaced that paragraph with, "without a written agreement to the contrary." You can enter into a written partnership agreement with the other band members which alter many of the things the law presumes. In fact, I highly recommend that bands enter into a partnership agreement.

A partnership agreement should address a few important points. First, the band should decide who owns the right to the name of the band. Ownership of the band songs is another important issue which should be covered in a partnership agreement. Other issues include what to do when someone leaves the band? Who can spend money on behalf of the band? (Remember my rehearsal space example). How to kick someone out of the band? Virtually anything can go into an agreement among band members. Remember, it is a contract between each of you so you can include anything that is important to you.

Whether you decide to be a partnership or a corporation, the important part is to put the agreement in writing. A written agreement between band members is a contract which dictates the relationship among the members. If you do this up front, everyone knows what is expected of each other. The example I always use to stress the benefits of a written agreement is Pink Floyd. When they broke up, they spent hundreds of thousands of dollars fighting over who owned the rights to the name Pink Floyd. Granted, it was worth spending that kind of money over, but the point is that it could have been taken care of inexpensively in a partnership agreement before the dispute arose.

You can get a partnership agreement form in an office supply store (e.g. Office Max) or the County Clerk. These forms are not music specific, but it will give you a good idea of where to start. You can order the forms for incorporation from the Secretary of State. Remember, your band is a business. It is not called the Music Business-Entertainment Industry for nothing.

The business of a band.

2010-08-19T07:48:00.001-04:00

Not enough bands realize that their band is a business. Some band members may be familiar with business practices, but my experience has been that most are not. Therefore, this column will address what to do when you start a business.

The very first thing a band should do is get a business license from the county they live in. A business license is also called a "fictitious name certificate" or a "doing business as" (d/b/a) license. What this certificate does is tells the world that X,Y & Z are doing business using the name "The Band". The procedure for obtaining a d/b/a license is through the County Clerk. They will require an application and a small fee. Generally, another legal requirement is that you publish your application in a newspaper for 3 weeks. Most newspapers do this in their legal classified sections. The newspaper will publish your d/b/a license and it will read something like this: "LEGAL NOTICE: X,Y & Z are doing business as "The Band" with principle place of business at 123 N. East St. Chicago." The newspaper will take care of the rest and you will soon receive your business license. The main reason you need this license is to open a checking account in the band's name.

The next thing you should do is get a tax ID number for the band. I realize that very few bands pay taxes on what they earn. I am not sanctioning not paying, but this is the procedure for doing it the legal (and correct) way. You need to file form SS-4 which can be obtained by calling 1-800-829-3676. Fill out the form and mail it to the IRS regional office for your area.

Once you have a tax number, you should keep track of all the income the band earns. More importantly, you should keep track of all the band's expenses. This includes everything from promotion costs (flyers, 8x10's, etc.) to equipment (guitars, amps, PA's, etc.) to tour expenses (gas, meals, etc.). All of these are tax deductions. Taxes can be complicated so you may want to see an accountant. Don't worry, even the accountant's charge is deductible. The IRS also puts out a great, though lengthy, tax guide. When requesting your SS-4 form, also request Publication 334, "Tax Guide for Small Businesses." Anything you ever wanted to know, or not know, is contained in this guide.

Another tax issue bands should be familiar with is sales tax. I have yet to encounter a band who was aware that they were supposed to pay State sales tax when they sold tapes, CD's and tee shirts. Sales tax is what you pay when you buy something tangible, whether it is a pack of gum or a new car. Procedures vary from state to state so you should contact your Department of Revenue or Taxation for more information on sales tax.

I also recommend bands consider taking out insurance. You can buy insurance for anything. For example, sports teams often take insurance out on their star's physical ability. Consider insuring your equipment. If it gets stolen or damaged, the proper insurance policy may go a long way toward getting the band playing again. Also make sure whoever drives the band has auto insurance. Once again, insurance is deductible as a business expense.

When someone refuses to pay the band and/or group.

2010-08-19T07:45:00.001-04:00

This article will discuss what to do when a club owner or promoter refuses to pay you. A typical call starts out, "My band played at Club X on Saturday and the owner told us we would get $300 but after the show he said it was a bad night and could only give us $50." My first question is whether the band had a written contract, and in most cases, there was not. You will know from my other articles that I always recommend using a written contract. Even a one sentence agreement stating "Band will play Club on [date] at 10 P.M. for four hours and receive $300" can be an enforceable contract. You are much less likely to get stiffed if you have it in writing.

Assuming you don't have anything in writing, are you out of luck? The answer depends on what you want to do about it. First, be insistent about getting paid the agreed upon amount. Make a nuisance of yourself. After getting stiffed, it is unlikely you are going to play that club again, so there is no need to stay on the good side of the person. Next, tell everyone you know that the club refused to pay you. Clubs quickly gain reputations and it will have difficulty getting bands in the future.

The above ideas may put enough pressure on the booking person to pay you. If this doesn't work, there is always the legal route. First, you could contact a private attorney. However, it should come as no surprise that lawyers charge for their services. Typically, the attorney fees would end up costing more than the amount you are owed. In addition, you cannot recover attorney fees from the club owner unless you have a written contract that allows for fees. It makes no sense to pay a lawyer $500 to collect $300. If the amount you are owed is significant, a private attorney may be advisable. You can also pursue the case yourself in small claims court.

Thousands of people every year file and pursue their own lawsuits. It is not as difficult as you imagine. Go to the local courthouse and find the Clerk's Office. Ask someone there for information about filing a small claims case. Most courthouses have packages which include all the forms and easy to understand instructions.

I am not going to go into all of the procedures in this column only because different courthouses have different procedures. However, there are a few common elements. First, you must file a complaint at the Clerk's Office. This involves writing down why you are suing the club. This need only be a few lines. "Band played Club on [date] and Club promised to pay Band $300 and Club refused to pay therefore Band demands the sum of $300." Once again, check the forms at the courthouse, but the complaint is not too difficult. Next, you have to serve the lawsuit on the club. Most small claims procedures allow you to send the lawsuit via certified mail. In some jurisdictions you must use the Sheriff, but all localities require you serve the lawsuit on the club.

After filing the lawsuit and serving the club, you will get a court date. If you have any written documentation, bring it to court. If you have any witnesses, bring them to court. In small claims court, the rules of evidence are relaxed and the judges are accustomed to dealing with non-attorneys. Explain your case to the judge and he or she will make a ruling. That's all there is to it. I highly encourage you to learn the procedure on how to use small claims court to avoid getting stiffed. The above description is very basic, but the point is that the procedure is not difficult, though it can be time-consuming.

My band and/or group just recorded a demo, who owns the Copyright?

2010-08-19T04:52:00.001-04:00

This answer to this question is not as simple as you may imagine. First, you have to narrow the question and ask which copyright? When a band records a demo, they have two copyrights. The first copyright is in the words and music of the song. This is the copyright which most people think of when they talk about copyrighting a song. The second copyright is in the recorded version of the song. This is known as the sound recording. So when you record a demo, you have two copyrights: one in the words and music and the other in the sound recording. If you were to re-record a song, the copyright in the words and music would not change (same song, right?), but you would have a new copyright in the new sound recording.

Back to the question of who owns the copyright to the new demo. Let's deal with the copyright to the sound recording first. All the people who contribute to the recording have a claim to the copyright to the sound recording. In reality, however, the person who pays for the studio time usually, through a contract, owns the copyright in the sound recording. If you have a record deal, the record company will pay for the studio time to record the album and the record company will own the copyright to the sound recording. The songwriter will still own the copyright to the words and music, but the record company will own the sound recording. If the band pays for the studio time, then anyone who contributes to the sound recording would own the copyright unless there was a written contract to the contrary. In summary, if a band records a demo, the musicians who play on the demo jointly own the copyright to the sound recording.

Now to who owns the copyright to the words and music. Whoever contributes to the writing of the song has a claim to the copyright. The Copyright Act considers everyone who contributes to a song to be a joint author. It does not matter how much or little you contribute; if you participated in writing the song or recording the song, you are a joint owner of the copyright.

The Copyright Act states that each co-author has an indivisible share to the entire copyright. This means that each person owns the entire copyright. The copyright is not divided into portions according to the contribution of each author. The primary reason behind this is how can you decide who contributed what? Joe did the first verse and part of the chorus and Sara did the bridge and guitar solo and . . . you get the point. It is impossible to divide a song up in this manner. An analogy I like to use is when you scramble an egg, you can't separate it.

This form of joint ownership can have some interesting consequences. For example, each co-author can do what they want with the copyright as long as he pays the other owners their pro rata share of the proceeds. One band member can license the song to anyone so long as he splits any money he received with the co- owners. Further, one copyright owner cannot stop another from using the song in a particular way if he disapproves. Each author can do as they please. The only exception to this is the work for hire doctrine. A person can write a song and never own the copyright under the work for hire doctrine. Therefore, absent a work for hire contract, all the persons who contribute to writing the song own the entire song equally.

Ownership of the copyright to a song can be very lucrative. It is the songwriters who receive money from publishing. Publishing money comes from licensing your song to others for a fee. It is for this reason that bands should have a partnership agreement which specifies who owns and controls the band's songs.

What is the law regarding "Sampling"?

2010-08-19T03:03:00.001-04:00

Sampling is the use of portions of prior recordings which are incorporated into a new composition. Sampling has become an integral part of many genres of music today. When you sample someone's song without permission, it is an instant copyright violation. It is the unauthorized use of copyrighted material owned by another. Sampling without permission violates two copyrights-the sound recording copyright (usually owned by the record company) and the copyright in the song itself (usually owned by the songwriter or the publishing company).

If you want to use a sample legally, you must obtain permission from the copyright owner. The copyright owner is usually a publishing company or record label. Remember that you must obtain permission from both the owner of the sound recording and the copyright owner of the underlying musical work. The fee for a license to use a sample can vary tremendously. The fee will depend on how much of the sample you intend to use (a quarter second is a minor use; five seconds, a major use), the music you intend to sample (a Madonna chorus will cost more than an obscure drum beat), and the intended use of the sample in your song (it is more costly to build your entire song around the sample than to give it only minor attention).

There are two different ways to pay for a license. First, you can pay a flat fee for the usage. A buy-out fee can range from $250 to $10,000 on a major label. Most fees fall between $1,000 and $2,000. The other way to pay for the license is a percentage of the mechanical royalty rate. The mechanical royalty rate is the amount a person pays to the copyright owner to make a mechanical reproduction (copy) of the song. A license which is a percentage of the mechanical royalty rate is generally between ½ ¢ and 3¢ per record pressed. Everything is negotiable and it is not unusual to get a license for free, if you ask.

If all of this sounds confusing, there's hope. There are businesses devoted entirely to securing and negotiating clearances for samples.

If you use samples without obtaining the proper clearance licenses, you have to be aware of the penalties. A copyright infringer is liable for "statutory damages" that generally run from $500 to $20,000 for a single act of copyright infringement. If the court determines there has been willful infringement, damages can run as high as $100,000. The copyright owner can also get a court to issue an injunction forcing you to cease violating the copyright owner's rights. The court can also force you to recall all your CD's and destroy them.

There is also a rumor going around that you can use four notes of any song under the "fair use" doctrine. There is no "four note" rule in the copyright law. One note from a sound recording is a copyright violation. Saturday Night Live was sued for using the jingle, "I Love New York" which is only four notes. The test for infringement is whether the sample is "substantially similar" to the original. Remember, a judge or jury is the one who determines this and these people may be much less receptive to your music than your fans. My point is you cannot rely on fair use as a defense.

Sampling can also have tremendous consequences if you have a record contract. Most record contracts have provisions called "Warranties", "Indemnifications" and "Representations". These provisions constitute a promise that you created all the music on your album and an agreement to reimburse the label if it is sued. These same provisions are included in all contracts throughout the entertainment distribution chain. The record company has them with the artist, the distributors with the record company, the record stores with the distributors, and so on. Well, all these warranties point back at the artist who is responsible to everyone else! Therefore, if you violate someone else's copyright, you will be paying all the bills of your record company, distributor and any stores which incur expenses as a result of your infringement. This can run into serious money as you can imagine. You will also be in breach of your record contract. Read your record contract carefully before using any samples.

What is a "Work for Hire"?

2010-08-19T02:55:00.002-04:00

Work for hire is a special term used in the United States Copyright Act. Normally, when a person or group creates a copyrightable work, whether a song or a computer program or a sculpture, the person or persons creating the work have a copyright in the work. Thus, the creators can exploit the work and receive money for their creative energies.

A work for hire is when a person creates a copyrightable work but does not own it. How can this be? The Copyright Act allows for the copyright to go not to the creator but to the person who hired the creator to make the work. The law treats the creator as if he did not even participate. The employer owns the copyright and it is as if they created the work themselves without any help from the actual creator.

Musicians should be very careful of work for hire contracts. Under a work for hire contract, you have absolutely no right in the music you create. There are legitimate times when work for hire contracts are acceptable. If you write music for commercials, you will undoubtedly have to sign a work for hire contract. The company who makes the product will want the rights to the jingle you create. Another time you may encounter a work for hire contract is in session work. If someone asks you to help them record but not be a full-blown member of the band, they may ask you to sign a work for hire contract. This situation can be a little trickier than the commercial jingle example. If you sign a work for hire contract to play with a band, you will not be entitled to any royalties or even credit for your work other than what the band agrees to pay you. It will be as if you never existed and the band will be deemed the creator of your music.

A work for hire is not the same thing as transferring ownership in a copyrightable work. You may create a song and then sell it to a company for a commercial. This is not the same thing as a work for hire. You have more rights if you create a song yourself then transfer it than if you had a work for hire contract. The Copyright Act allows an author of a song to get it back even after transferring. If you transfer a song to someone, you may serve written notice on the person who holds the copyright between the thirty-fifth and fortieth years after transferring the copyright and get your song back! Thirty-five years may seem like a long time and you may think that songs won't be worth anything in that long, but think of songs like, "White Christmas" or "Memories". Under a work for hire contract, you never get your song back because you never owned it in the eyes of the law.

A work for hire contract is something you should try to avoid. Fortunately, there are specific criteria needed to create a work for hire. A copyrightable work will be considered a work for hire if you are an employee and create the work in the course of your employment. For example, people who create computer programs for IBM are making works for hire. IBM will own the copyright to the final program, not the programmer. If you are not a regular employee, there must be a written contract specifically stating it is a work for hire contract. This is what musicians will run into the most. If you see a contract that has the words "work for hire" in them, your antennas should immediately go up. Be careful with these type of arrangements. You may not have any rights in whatever you create.

Learn About: Music Industry Contracts

2010-08-19T02:50:00.002-04:00

Contracts are the life-blood of the entertainment industry. This article addresses many of the dangers and misunderstandings about contracts within the music business. First, always get something in writing. Second, make sure you understand the contract you are presenting and the contract you are signing. These may seem obvious, but as discussed below, this advice is seldom followed.

Although you may come to agreement orally as to the general terms, you should always reduce the understanding to writing. There are many reasons why you should get it in writing. First, a writing serves to memorialize the understanding between the parties. As time goes by, the two parties might have different memories as to what constitutes their agreement. By getting it in writing, there are no disputes over the terms of the contract.

Second, written contracts are much more likely to be enforced by a court in the event of disagreement. Oral agreements are not always unenforceable, but a judge is much more likely to enforce the terms of a written agreement. Finally, there are some contracts which must be in writing. If it is not in writing, there is no contract. For all of these reasons, it is a good idea to get the contract in writing.

A contract need not be elaborate. It need not be drawn up by a lawyer. It does not have to be notarized. There are a few items which the contract must contain. First, you should write down what each part is going to do for the other. If it is a contract between a band and a film producer, the contract would start: Producer agrees to provide five hours of studio time and Band agrees to record one song. Next, it must contain what the parties are giving to each other. For those aspiring to be lawyers, this is called "consideration". A statement such as: Producer shall pay Band $1000 for all rights in the sound recording, should be sufficient. Finally, the document should be signed by both parties. As you can see, it does not take much to create a written contract.

The above example is very simplistic, but at least it is something in writing. There is no substitute for a complete contract between parties. However, I recognize that budget and time constraints may prevent some people from having a complete contract. There are many "form" books out there which contain "model" contracts in the music industry. Some are better than others.

There is, however, a danger in using such forms. Many people don't know how the forms work. They find a form which says, "Management Contract" or "Record Contract", they photocopy it, and have an artist sign the agreement. It is crucial that you understand how the contract works before you use it. These are generic agreements and may not operate the way you expect. Before using any of these form agreements, learn how music contracts operate in general. Read about record contracts and management contracts then compare your form with what you have read. I have never encountered a form which did not need some modification and customization.

There are many pitfalls to using a form without knowing how the contract works. It always amazes me how many managers give a band a management contract to sign, then the band gives it to me to review, and when I negotiate with the manager, he/she doesn't even know how the contract operates. In addition, in representing the band, I have taken advantage of this lack of knowledge of the manager and included clauses that are very helpful to the band. The same holds true with independent record labels. If I am negotiating with someone who owns a label, I learn very quickly if the person knows how their contract operates. If they don't, I am able to include clauses that no major label would ever allow. This emphasizes the point, that if you are going to use a form, be sure to understand how it works.

As you can gather from my discussion above, each deal is different and each contract should be modified to fit the particular needs of the parties.

What is Copyright Infringement?

2009-09-09T17:15:00.003-04:00

Most musicians do not ask me this question like I have phrased it above. Instead, they ask, "what if someone rips off my material"? The answer is, they infringe your copyright. You get a copyright the minute you put your song on tape or write it down on paper. You do not get a copyright by sending your song to the Copyright Office in Washington D.C.; doing this registers your copyright. I will explain the benefits of registering your copyright shortly, but you do not need to do this to prevent someone from ripping off your songs.

In order to prove that someone infringed your copyright, you must show that you own the copyright. Second, you must prove that the infringer had access to you song. The infringer, on the other hand, will try to show that he did not have access to your song. If your song was a hit across the country and was on the radio a lot, it should be easy to prove the infringer could have heard it. However, if you pressed 500 copies of your demo and sold it at shows, it may be hard to prove someone 2000 miles away had access to your song. The stronger showing of access, the greater the chance of proving infringement.

After you establish access, you must prove that the infringer's song is "substantially similar" to yours. This legal definition is purposely vague because it is up to a judge or jury to determine if the song is substantially similar. If a band copies your entire song, note for note, it should not be hard to convince someone of the substantial similarity between the two. However, even a copied drum beat can be infringement, if you prove it is substantially similar.

Once you prove access and substantial similarity, the infringer can present defenses. First, he can argue that his song is an independent creation. Going back to the copied drum beat, it is conceivable that the infringer thought it up all by himself and it is only a coincidence that your song has the same drum beat. After all, there are only a limited number of drum beats. This would be proof of independent creation. In fact, it is theoretically possible that two people could create the same song with neither knowing of the other's work. Once again, it is not infringement unless you prove they copied your song.

It is important to realize that you do not have to prove that the infringer stole your song on purpose. It can be infringement even if the copying was done subconsciously. The copyright owner has to prove a lot of things, but intent is not one of them.

If you prove someone infringed your copyright, then everyone who commercially exploits the song is also an infringer. Therefore, a record company who puts out the song, even though they had no reason to realize it was infringing your copyright, it is still liable. This re-emphasizes the fact that you do not have to prove someone deliberately infringed your copyright.

Now you have proved ownership, access and substantial similarity and countered all the defenses and proved infringement: What do you get? The Copyright Act provides various remedies. First, you are entitled to an injunction, which is a court order forbidding the infringers from distributing any more copies of the infringing work. Second, you are entitled to actual damages. Actual damages are what harm you suffered from the infringement. These damages are usually next to nothing unless you prove that the value of your song has been diminished by the infringer's version. Perhaps the most significant remedy is the award of profits. You are entitled to the profits the infringer made off of your song. If the infringing song made a lot of money, you are entitled to the portion attributable to your creation. This gets complicated and is far beyond the scope of a web page.

You get the above remedies whether you register your copyright as soon as it is created or not. So why should you register your copyright immediately? First, you need to register before you can sue for infringement anyway, but there are two other reasons to register your copyright. Registering your copyright gives you two additional remedies which are unavailable to those who do not register. First, you are entitled to attorney's fees. These can be very important because otherwise, you will have to pay your attorney. With the prospect of attorney's fees at the end of the case, it will be easier to convince a lawyer to take your case. Finally, you are entitled to statutory damages. Since the damages discussed above can be difficult to prove, the judge can award you statutory damages ranging from $250 to $10,000 and up to $50,000 if the infringement is intentional.

Good luck,
Darrin E. McGillis

What is Publishing?

2009-09-09T17:12:00.002-04:00

Publishing is a lucrative area for bands that write their own material. When a band writes a song, they own the copyright in that song. Publishing is the money you receive for writing the song. A quick distinction must be made between the copyright in a song and the copyright of a sound recording. When you record the song for a record company, the company owns the copyright of the sound recording (the version you record for them), but you retain the copyright of the underlying song. Publishing money comes from the copyright of the song, not the sound recording. Bands that write songs own this particular copyright and receive publishing money from their ownership.

The owner of the song is entitled to certain exclusive rights. This means that only the copyright owner can do certain things with his song, unless people pay him to use it. When people pay the copyright owner, the owner is said to grant a license. The money from these licenses is what is called publishing. There are essentially four areas of publishing income: performance, mechanical, print and synchronization. There are a few others, but they rarely come into play.

The right to prohibit public performance of your song is the first right and area of publishing income. No one can play your song in public unless they pay you. BMI and ASCAP are responsible for collecting money for licenses from people who want to play your music. For example, every time your music is played on the radio, you are entitled to performance license money which BMI or ASCAP will collect for you. These organizations are involved in one small area of publishing (performance licenses) and are not true music publishers, but I will touch on this later.

The second right of the copyright owner is the right to reproduce the song. This is known as a mechanical right which gets its name from when they used to mechanically make records on wax tablets. This technique is gone but the name remains. A mechanical right means that each time someone makes a physical copy of the song you own the copyright for, you receive money. The current rate, as set by the United States Copyright Office, is 7.1¢ per song. Once again, there are exceptions to this, but they are too complicated to go into here. If you write 10 songs on an album at 7.1¢ per song, you will receive 71¢ for every album made. If you sell a million albums, it does not take an accountant to figure out you are looking at serious publishing money.

The third and fourth main areas for publishing money are print and synchronization licenses. These are small compared to performance and mechanical, but they are additional sources of revenue. A band receives publishing money from a print license any time the song is written down and published. For example, the piano score for "Somewhere Over the Rainbow" has probably made a lot of money from print licenses. Money from print licenses are usually a few cents per copy printed. A synchronization license, affectionately know as a "synch" license in the industry, is granted any time your song accompanies a visual image. Videos are a good example of synch licenses. In addition, commercials, movie soundtracks, and background music on TV are also examples of publishing money from synch licenses. The amount of money for a synch license varies widely. Your record company will demand a free license for a video while a feature song for a movie soundtrack from an established artist can exceed $100,000. Each license will generate a different fee.

Since figuring out how much money everyone owes you from your publishing can be difficult, many bands hire a publisher. A publisher's job is to collect all this money for you. They will also have a better idea of the going rate for the various licenses you will want to grant. For example, how much would you charge for a commercial which wanted to use your song? Publishers "administer" your copyrights which is just an industry term for collect money. Not surprisingly, publishers do not do this for free. Most publishers will collect your money and give you half while they keep the other half as a fee. There are other arrangements, but this is the standard publishing deal. It surprises many bands when they find out that they actually sign over ("assign") the copyright to the publishing company. A publishing agreement usually states that the band assigns their copyright to the publisher and in exchange, the band will receive one half of the publishing revenues generated. In this way, it really does not matter that you do not own the copyrights as long as you still receive your money. For those of you who want to know why you must assign your copyright, the answer lies in a legal technicality that states the owner of the copyright must sue to enforce a copyright. You pay the publisher to take care of enforcing your copyright for you. Ask yourself the question, would you rather be in court or on the stage?

Many record contracts force you to give your publishing to their publishing company. This should be avoided if possible; it is just another way for the record company to take more of your money. The reputation of publishers is very important. Only sign a publishing agreement with a company that knows what they are doing. A good publisher will make you money. The alternative is to administer your own publishing and set up your own publishing company for your songs.

What is a manager?

2009-01-15T11:39:00.006-05:00

The term "manager" does not have a precise definition in the music industry. A manager can range from a friend who helps book shows for you, to a corporation that handles dozens of artists. This column will focus on professional managers.

A manager is someone who takes an interest in an artist's career and invests his or her time and energy in helping the artist succeed. The duties of managers are rather ambiguous. They include counselling the artist as to all aspects of the entertainment industry including record companies, advertizing and merchandising. Overall, a manger is your link to the entertainment industry. He will advise you as to standard practices, reputations, etc.. Therefore, it is of the utmost importance to get a manager who knows what he is doing. Since the manager will be getting a percentage of your income, be sure you get what you pay for. Some managers will sign you up for a percentage of income and sit back and do very little and wait for the band to hit it on their own.

There are various things you should look for in a manager. First, make sure you like the manager personally. You will have more contact with your manager than with anyone else. If you don't get along, don't feel comfortable, don't hire him as your manager. Second, make sure the person respects your music and your abilities as an artist. Your manager should be your biggest fan and supporter. Third, check out the person's reputation. Remember, this person will be representing you. Finally, find out if the manager has contacts in the record industry. If you are desperate, you can ignore the previously mentioned three criteria if the manager can secure you a record deal. There are some people who have incredible contacts. However, be forewarned, my experience has shown that managers talk a good talk about industry "contacts" but seldom deliver. Therefore, I would stick with the first three criteria as paramount. If someone says they can get you a record deal, allow them to "SHOP" your tape non-exclusively, but don't let them be your manager.

Most professional managers will present you with a contract to sign. Like any music contract, have someone who knows the industry look it over for you. There are generally accepted terms in manager's contracts and there are people who try to take advantage of a band's naivete. The best managers, i.e. professional, will hand you a fair contract. A fair contract is for a term of 3 years with an option period and 15-20% of the artists' total income. A fair contract will also have escape clauses for the artist such as, "if manager fails to secure a record contract within one year, contract is void," or "if artists' gross income fails to reach $X in the second year, artist may terminate this contract." A professional manager will agree to these type of provisions. An unscrupulous manager will take a large percentage, do little work, and not allow the artist to get out of the contract.

Most managers will demand (and get) power of attorney for the band. This means that the manger can sign his name and bind the band as if they signed themselves. This power is important, but once again, you must be able to trust your manager. You should specifically list what power the manager has to bind the band. It is advisable to limit his authority to spend your money to a specific amount. For instance, you may chose to give the manager power of attorney to spend under $800, but for amounts over that, he must consult with the band. There are infinite combinations, but the possibility for abuse is clear without these limitations.

The final issue in management contracts is that of assignability. Beware the contract that states that the manager has the power to assign his rights under the contract. This means that the manager can give her management rights to another person. This clause completely defeats all my criteria for selecting a manager. If you picked your manager based on my criteria, why allow the manager an opportunity to get out of the job of managing you and appoint someone else in his place? Insist that the manager not be allowed to assign the contract. A scrupulous manager will agree to this. She will either be with the band for the long haul or not at all.

Very truly yours,
Darrin E. McGillis

What is a Copyright?

2009-01-14T16:08:00.005-05:00

The question I am most frequently asked is whether a band has to send their material to the Copyright Office in Washington D.C. to keep other people from stealing their ideas. The short answer is no. As soon as you write down your lyrics or record your music (even on your portable cassette recorder), you have a copyright and no one can steal it. From the instant your material is "fixed in a tangible medium of expression" it is copyrighted and protected. By sending your tape to the Copyright Office, you are registering your copyright. So, if you hum a song in your head-no copyright; but, the minute you write it down or record-copyright. Once you put your ideas into tangible form, you have all the copyright you need to prevent someone from stealing your material.

What you do need to be concerned about is to being able to prove when you created the musical work. If someone does steal your material, you have to prove that you thought it up first. The most popular way to date your work is what is known as the poor man's copyright. This involves sending a copy of your tape or lyrics through the mail (certified return receipt requested) to yourself. When you receive the package in the mail, do not open it; save it in its unopened condition. What this does is put a date on the recording which would be the day you mailed it. If you had to go to court, you could give the unopened tape to the judge and prove when you created the work. This procedure, however, does not afford any legal protection. I never recommend this route to bands.

As soon as you have a copyright, you can use the copyright notice which is written "©". You do not have to register with the Copyright Office in order to use this symbol. Whenever you write your songs down or record them, always include your name or the band's name and the copyright notice. This puts the world on notice that you are claiming a copyright in the material. Since March, 1989, it has no longer been necessary to place the © sign before a copyright notice. Under prior law, if you did not place the magical © sign on your work, you lost protection. Even though it is no longer required, there are reasons why you would still want to use the © sign. First, there are other countries where the © sign is still required. You would not want to lose your protection in these countries. More importantly, it helps prospective users locate the copyright owner in order to secure the appropriate licenses.

Very truly yours,
Darrin E. McGillis

Record Contract Basics

2009-01-11T09:41:00.009-05:00

Record contracts come in many forms. This stems from the fact that there are hundreds of different record companies. From the so-called "major labels" (EMI, Sony, Warner, PolyGram, BMG or one of their related corporations) to "mini-majors" (A&M, Island and Virgin, in the days of their independence, were the most obvious examples) to the "independents", the contract depends largely on the type of record company offering it.

When you first see your contract, if you are like most bands, you immediately sit down and read it. However, you soon realize that it is written in a manner which defies grammatical english. Sentences run on for 14 lines, with little if any punctuation. There are terms and words which you have never encountered. Finally, the sentences constantly make reference to each other ("pursuant to 1(A)3(c)(ii)"). Where do you begin? The first place is with someone familiar with record contracts.

Often, a band will be aware of and have already negotiated the "deal points" prior to retaining a skilled manager on their behalf. Deal points are the basics of the contract: the advance, number of albums and royalty rate. However, the devil is in the details.

In all record contracts, you will be signing an exclusive agreement. This means that you will not be able to record for anyone else other than the record company during the "term" of your contract. The term is how long the contract lasts. Contrary to popular belief, record companies do not sign you and guarantee you seven albums. It may be a seven album deal, but nothing obligates the label to record seven albums. The seven albums means that the record label has the option to record seven albums. Typically, a record company will record one album and see how it does. If it sells well, they will exercise their option to record a second album. If the first album does not do well, the label usually drops you. Record companies require long term option contracts because if the band does do well, the label wants to make sure that the band stays with their company. Since they invested so much and signed the band in the first place, they want to be able to share the success of the band over a long period of time. For example, REM recently finished out the last of their options with their record company. REM's new contract guarantees a $10 million advance per album in the future. Try getting that advance for your first contract! Finally, the "territory" of most contracts is world-wide meaning that the record company has exclusive rights to your services as a band throughout the world.

I find that almost all bands initially form to make music, as opposed to make money. Think back to when you began, it was for the love of music and not money that was the motivating factor. However, when it comes to a record contract, it is about money. A record company puts a record out to make money. Creativity and integrity play a part, but it is a financial relationship.

In many contracts, the financial terms will run over 15 pages. The rule in record contracts is what the record company gives you with one hand, it takes away with the other. The fundamental touchstone of record contracts are "points." Points refer to how many percentage points a band will receive as their royalty rate. On a major label, this will run between 10 and 15 percent and typically 9 to 12 percent on a smaller label. The percent royalty rate is just the beginning however. The first question you should ask is, "a percentage of what?"

Generally, the royalty rate is based on a percentage of the standard retail selling price. You will get your full royalty rate for each full price CD or tape you sell through normal retail channels. Normal retail channels are usually record stores like Tower Records or Sam Goody. What about other places you sell your CD's? Record companies will pay you a fraction of your royalty rate for sales not through normal retail channels. For example, you may receive 75% of your royalty rate for sales outside the United States, 60% of your royalty rate for CD's sold below standard retail price (i.e. albums sold at a discount) and 50% of your royalty rate for sales through record clubs. In fact, most of your CD's will not be sold through normal retail channels. Although you may have a 12% royalty rate, you will only get a 6% royalty rate on record club sales. Confused yet?

Record companies try to make the royalty rate paid to artists as attractive as possible. They may give you a generous royalty rate. However, in addition to the reduced royalty rate on CD's sold outside normal retail channels, there are also many reductions in your royalty rate. I said that the financial terms are often 15 pages or more. Well, your royalty rate is on the first page and the remaining pages are all the reductions. It is impossible to determine how much a band will get for selling a CD without a calculator. When I manage a band negotiating a record contract, I sit down with them and show them the calculations to determine how much (or little) they will receive for each CD and tape sold.

There are entire chapters in books written about all the various deductions. I will mention but a few here. First, you get no royalties on records given away free for promotional purposes. A large deduction is the so-called "packaging" deduction. The theory behind this deduction is that the band pays for the packaging of the CD and tape. Typically, these deductions range from 15 to 30 percent of your royalty rate. In effect, a 12% royalty rate and a 25% packaging deduction lowers your rate to 9%. In addition, your royalty rate is often an "all-in" royalty rate which means that you must pay the producer out of your royalties. Typically, a producer will take 3 points (3%) which lowers your royalty rate even further. Your royalty rate is meaningless unless it is viewed in the context of all the deductions. A band can expect an average of $1.00 in royalties for each full-priced ($16.98) CD sold through normal retail channels.
Did I say the band was going to actually receive royalties? Not so fast. The other major concept involved in record contracts is the term "recoupment". Recoupment is a fancy word for pay back. Record companies expend a lot of money on bands. They pay for all the studio time, give the band an advance, promote the band, etc. All of this money is a loan to the band which the band must pay back. This is recoupment. The band pays back the record label out of their royalties. For example, if a major label spends $250,000 to record an album, the band must make over $250,000 in royalties until they receive their first royalty check. Once a band sells enough records to pay back the amount to the record label, the band has recouped and will receive royalties on future record sales. Approximately 80% of albums never reach this point which means that most bands NEVER receive any royalty checks. Do the math yourself, if you owe the record company $250,000 and you make $1.00 per CD, that is a quarter of a million CD's you must sell before you collect royalties. The one redeeming feature is if the band does not sell enough CD's to recoup, they don't have to pay the record company back. It does not come out of the band's personal pocketbook.

There are other places a band can make money when they have a record out other than royalties. In past articles, I have discussed publishing. There is also money from live personal performances (concerts). This is money that the band gets to keep-most of the time that is. Some record company contracts, particularly small independent labels who cannot afford to lose as much money as the major labels, allow the label to recoup money from other sources, such as publishing. Although this should be called robbery, the practice actually has a name and is called "cross-collateralization". This term means the band will not receive ANY money until the label gets paid back, i.e. the band is recouped. Of course, you don't need to sell as many albums to become recouped on an independent label, but this can come as quite a shock.

Now for the topic everyone asks about: "How much is my advance?" Not surprisingly, this question is also not as simple as it seems. In the past, record labels would sign a band and write a check to the band as a signing bonus and then pay and record an album. Some bands abused this and went over-budget on recording, much to the record company's dissatisfaction. To remedy this abuse, record companies developed the "recording fund." The recording fund is the recording budget AND the advance rolled into one. The contract states that you have one lump sum to record your album, and if you are under-budget, anything left over is your advance. If you want to stay at the Ritz and waste time in the studio, that means less money for you for your advance. This has proved a marvelous incentive for bands to be efficient in the studio.

How much of an advance is good? Once again, this depends on the label and the circumstances of your signing. Generally speaking, the larger the label, the more of an advance you should expect. In addition, the more interest in the band, the higher the price becomes. However, is a large advance always the best? There is much disagreement on this issue. Keep in mind, the more money you get as an advance, the more money you have to pay back (remember recoupment?) before you receive royalties. If you take a huge advance and your album does not live up to expectations, a label may be quicker to drop you and cut its losses. On the other hand, most bands who sign record contracts never reach recoupment so the advance may be the only money they ever get from the label so why not take as much as possible? There is no right or wrong answer to the size of the advance and I try to get a sense from my clients as to their feelings. Some have a "show me the money" attitude and others think about longevity within the industry.

These are a few of the main points in record contracts. Often, a contract will be over 40 pages long. Needless to say, there is a lot more in there than I have had a chance to get into. However, I hope this column has given you a better sense of how record contracts operate. Don't think that you have finally "made it" simply because you get offered a record contract. Often, it is a deal with the devil. There are many attendant drawbacks to signing a record contract. Most importantly, however, is to have someone knowledgeable about record contracts negotiate the agreement on your behalf.

Record contracts are routinely negotiated.

Very truly yours,
Darrin E. McGillis

Some words of advice from promoter Darrin E. McGillis to aspiring Artist

2008-12-27T16:11:00.003-05:00

This column is simply some general words of advice for aspiring musicians. These comments reflect only my personal experience and observation (over the past 20 plus years), and you will find people who will disagree with me. With that caveat, take it for what it is worth.

The first thing all musicians must do is act professional. The people who have power in the music industry (record labels, club owners, managers, etc.) are professionals. Music is their full-time business and their livelihood. They expect to be treated with respect. By acting professional, you immediately rise to another level in their eyes. When a musician calls me on the phone, I can tell in a relatively short period of time whether they are someone I should take seriously, i.e. professional. This sentiment is mirrored by countless other music industry insiders I have spoken with. Professionalism will take a band a long way.

A similar bit of advice is to educate yourself about the entertainment industry. Take time outside of creating music to understand the way the industry works. Reading the Resources page CLICK HERE on this site is one step in educating yourself. A little bit of knowledge will take you a long way.

The final element is lady luck and the right connections. There is just no substitute for it. It helps to be in the right place at the right time. Nothing you can do can increase this crucial element. However, faithfully following the suggestions provided by reading the Resources page CLICK HERE will lessen the need for luck. Professionalism, education and networking are all steps on the route to success.

Very truly yours,

Darrin E. McGillis