5 Things to Look for in a Music Producer Agreement

So, you’ve found the perfect producer for your upcoming recording project. Great news. Now the producer sends over a 10-page contract full of legalese regarding record royalties, songwriting splits, SoundExchange revenues, producer advances and more. Before you enter the studio, here are some key points to look for and understand:

1) Who Owns the Masters?

First and foremost, you should own the master recordings once the producer fee is paid. In rare circumstances, the producer might own the masters or have some co-ownership interest, but that is definitely not the norm. Almost always, you should own the masters.

2) How Many Points for Your Producer?  

It is industry standard for your music producer to receive “points” on the songs they produce. A point is simply a percentage of record sales. For example, 4 points equals 4% of net record revenues from the masters produced by your producer. My advice: make sure that there is language inserted that allows you to recoup all expenses related to the production and exploitation of the masters before these points kick in. In other words, until you recoup all of your costs in relation to the masters, the producer doesn’t start getting revenue. Industry standard is 2-5% for points, either on the suggested retail price (SRLP) or published price to dealer (PPD). See my article here for more on SRLP vs. PPD.

3) Should Your Producer Get SoundExchange and Other Revenues?

I find that more and more producers are demanding a percentage of SoundExchange revenues on songs they produce. The same goes for other so-called “direct monies” or “flat fee” uses of the masters (film/tv placements, etc.). This is mostly a reflection of the modern realities of the music biz, as “points” aren’t worth what they used to be. Not all producer agreements include SoundExchange/Flat Fee revenues, but if yours does, make sure the language is clear and the percentage is fair. Typically, a fraction is used: whatever producer points you agree on (let’s say 4 as per above) divided by the artist’s record royalty flowing from the record label (let’s say 20%). So in this example, 4 divided by 20 gives a 20% SoundExchange/Flat Fee percentage to the producer. My advice: if you don’t know what the label royalty is or don’t have a label involved, the standard practice is to use a “deemed royalty,” which is simply a royalty that you and the producer agree on that’s based on industry standards (somewhere between 15 and 20%). I would cap the producer’s SoundExchange/Flat Fee entitlement at a specified amount, nothing over 25%. Obviously, lower is better for you as artist.

4)  Is Your Producer a Co-Writer of the Compositions?

This is perhaps the most important point to consider: is your producer a co-writer? See my article here for guidance on such a determination. I recommend that you have this discussion as to whether you intend to co-write with the producer before recording commences. I realize that sometimes co-writing just happens in studio, whether you plan for it or not, but it’s wise to discuss this ahead of time to ensure mutual expectations going in. My advice: If the producer is indeed a co-writer, you need to ensure that they assign administrative rights in the compositions to you. This will allow you to use and exploit the compositions without having to obtain the producer’s signature in each instance.

Insider tip: this exact issue was taken to the Supreme Court of British Columbia in the late 90s, when Sarah McLachlan was sued by her former producer Darryl Neudorf, who claimed he was a joint author of four of McLachlan’s early compositions. The takeaway from the court’s decision: if an artist and producer intend to co-write together, that must be agreed to before the recording process commences. Otherwise, the court will assume that your producer is not a co-writer.

5)  How Much Will Your Producer Be Paid?

The Music Producer Agreement should clearly define how much you are paying the producer, either per song or via an hourly rate. My advice: go with per song, otherwise you might be surprised by the bill at the end of the project. Typically, half of the producer’s fee is considered a recoupable advance against royalties payable to your producer. In other words, half the producer fee is considered a recoupable cost, and half is not. A typical timeline in terms of payment of the producer fee is half before recording starts and half upon completion.

Insider tip: the producer fee and producer points/SoundExchange entitlement are definitely intertwined. In other words, if you want to keep more of your royalties and SoundExchange (and can afford it), you can offer a higher per-song producer fee. The same goes the other way, if you are short on funds, you might be able to offer more on the other end. My advice: think big picture and long term, and don’t undervalue your catalog in the long term in exchange for a short-term break in producer fees.

There are many other important clauses in a music producer agreement, but this is a great start. As always, don’t hesitate to reach out with questions. My door is always open.

Do Musicians Need a Record Label in 2017?

I get asked this all the time. Do I need a record label to help my career? It used to be that a record deal was the holy grail of the music industry; the brass ring that all artists worked towards.

This is no longer the case. While record deals are still a vital part of the music industry, their role – and the role of the record labels offering them – has completely changed.

Record labels used to take the approach that for every artist that was a financial success, there would be nine failures. In other words, 10% of the artists paid for the 90% of artists that lost their labels money. In the glory days of record sales, there was enough revenue floating around for labels to hedge their bets and invest in artists over a period of years, with the hope that more artists would become financial successes.

This has all changed.

Record labels can no longer invest in artist development over long periods of time, and they are choosing to invest in fewer artists. Bottom line: labels can no longer afford to lose money on 90% of their signings. While Bruce Springsteen took three albums and a great deal of investment from his label to finally break through in 1975, he would not likely be afforded such investment if he came along as a new artist today.

Simply put: record labels want to sign acts that are already developed. There are exceptions, but this is the general trend occurring in the industry.

This begs the question: if a record label is only interested in you once you’ve done all the heavy lifting, do you really need a record label in 2017?

To answer that, let’s look at what record labels can still provide you.

First and foremost is funding. Record labels have always acted as the banks of the music industry, providing funding and investing in your career in ways that you cannot. In exchange, their charge an “interest rate” like a bank, in the form of record royalties, and increasingly, a piece of other revenue streams as well.

If you happen to have financial support from someone else, be it a rich uncle or a music-loving investor, then you need a record label less. Many clients of mine that have achieved great financial success go on to create their own label, and reap the benefits of regaining control of their recordings.

Assuming you don’t have such financial backing, the need for a label increases. The cost of recording a professional sounding album has definitely decreased in recent years, but it can still be considerable. The same goes for music videos. But if you have friends that are producers or videographers, or you can do it yourself, that makes you less reliant on label funding.

The second thing a record label provides is exposure. In the pre-Internet world, bands were much more dependant upon major label investment to gain exposure through old world media outlets of print, television, and radio. This has all changed. While you still need these mediums to some degree, they are less of a barrier to entry when promoting your music. You don’t need a record label to get through the promotional bottleneck that all artists had to squeeze through previously. You will still need some funding to service your single to radio and to hire a publicist for print and TV, but these services can be obtained outside of the major label system.

The third major service provided by a record label is distribution. In the pre-Internet industry, this meant physical distribution of your record to stores. This is less important in 2017, with only the biggest musical artists receiving large scale distribution to mega-chains like Wal-Mart and the like. You can release your record around the world with one click via services such as CD Baby. Of course, everyone else can do the same, meaning the real hurdle in 2017 is not distribution but exposure.

As with anything, it’s a question of degree. Major labels are a different beast than indie labels, and there are many mid-size labels in between. They all offer different services and demand different things in exchange. It really depends on where you are at in your career and what you need to take it to the next level. The takeaway: you do not need a label to get to the next level.

As always, email me with questions along the way.

How Your Music Makes Money (Part Two) – The Songwriting Copyright

Songwriting Copyright

How does your music make money in the modern world? While record sales are becoming less and less relevant, revenue streams generated from the Songwriting Copyright have greatly increased. This is because music is being used more now than ever before. This use generates money for the writers of the music.

The revenue streams flowing from the Songwriting Copyright include:

Public Performance Royalties

The owner of the songwriting copyright owns the exclusive right to perform or authorize others to perform the music publicly. These public performance royalties are collected and administered by a collection agency such as ASCAP or BMI in the USA, and SOCAN in Canada. “Performance” in the music industry can include any of the following:

  1. A performance of a song or composition – live, recorded or broadcast. For example, when a song is played during the broadcast of an NHL game. The broadcaster pays a fee to SOCAN, and that money flows to the writers of that song.
  2. A live performance by any musician. When your songs are played live at a venue by you or by someone else (as a cover), you get paid. Venue owners pay SOCAN specified fees, and those fees are distributed to SOCAN members based on set lists that the performing artists submit to SOCAN. So when OBS covers “Psycho Killer” during a live show, the writers of the song (Talking Heads) get paid. The same would happen if a band covered OBS.
  3. Performance through the playing of recorded music. This includes radio airplay and other similar performances. Radio stations pay significant fees to SOCAN every year for the right to perform recorded music on air, and these monies are paid out to songwriters based on the submitted playlists. So when my band’s recording of “Psycho Killer” gets played on radio, Talking Heads get paid.
  4. Music performed through the Internet. Similar to C, but for Internet broadcasts.

songwriting copyright

Mechanical Royalties

The author of a song has the right to be paid every time a copy of that song is made (or “mechanically reproduced”). So the record label or individual reproducing the song must pay the writer a fee per song, per copy manufactured. In Canada that fee is 8.3 cents and determined by an agreement between the recording and publishing industries, and the in US it is 9.1 cents and determined by legislation. Another real world example: when my band’s recording of “Psycho Killer” is sold on iTunes for 99 cents, 8.3 cents go to Talking Heads. If you are signed to a label, they should be paying you mechanicals for songs you write. If you are unsigned, contact CMRRA in Canada and the Harry Fox Agency in the USA for more info.

Synchronization Licensing Fees

Similar to a Master Use License, but for the writer and owner of the Songwriting Copyright. The synchronized song also generates performance income every time the television show, commercial, or film containing the composition is performed. In other words, the “backend” revenue from performance royalties can often far outweigh the “up front” sync fee, if the television show or film is played thousands of time around the world. A good example is the Cheers theme song “Where Everybody Knows Your Name”, which was written by struggling songwriter Gary Portnoy. The up front synch fee paid to use the composition in Cheers was quite modest, but the “backend” performance royalties as a result of Cheers airing so many times in so many countries has made Mr. Portnoy a millionaire several times over.

songwriting copyright

Private Copying Levy

Similar to the Blank Tape Levy discussed last issue. Money from the sale of blank CDs goes to songwriters across the country. If you are a songwriter, you are entitled to receive payments from this levy. Contact the Canadian Private Copying Collective to sign up.

Print Royalties

Print income is derived from printed copies of a song, from the sheet music. Sheet music consists usually of the melody notes and the lyrics which may accompany those notes. The copyright owner or administrator can license the right to print such sheet music to print publishers, in exchange for royalties. For most musicians, print income represents a small percentage of their total income from songwriting.

Lyric Display

Revenue generated by the display of your lyrics on a website. Paid to songwriter/composer by your publisher. While the right for composers to earn money based on the display of their lyrics is not new, the number of opportunities has exploded thanks to the Internet and the growth of licensed lyric aggregation sites like LyricFind.

There are many other miscellaneous revenue streams to consider in order to make the most of your career in music. YouTube revenue-sharing, ad revenue from Google Adsense, issuing samples of your music to third parties, creative fan funding campaigns, etc.

The music industry – and the way in which you can earn a living in it – will continue to evolve. As the saying goes, the only constant is change, particularly in the music business. The Songwriting Copyright will continue to be a major source of revenue for songwriters. As always, email me with any questions or comments.

Songwriting Copyright

What is an Artist Development Deal, and Should You Sign One?

Artist Development Deal

In the “glory days” of the recording industry (i.e. after Elvis, before the Internet), there was a very common type of deal offered by record labels called the Artist Development Deal, sometimes known as a “Demo Deal”. The idea was fairly simple: if a label liked you but didn’t want to commit fully with a record deal, they’d offer you an Artist Development Deal. I like to think of them as the ‘promise ring’ of the music industry: a commitment, but not taken seriously by anyone outside of the relationship.

What is an Artist Development Deal?

In theory, the Artist Development Deal was the best of both worlds for the artist: the commitment of funds and development from the label, without signing away your soul. However, there was often more to these deals than meets the eye. The deals often gave a significant cut to the label on live and publishing revenues, often involved horrible royalty payouts, and many times included a right of first refusal clause that made the commitment as significant as a full recording deal, without all the perks. Kind of like a promise ring with the consequences of an engagement ring.

These deals still exist, but the entire artist development infrastructure has changed. Long story short: the major labels are no longer paying for artist development. But who is? For the most part, artist development has fallen on artists, and record labels only become interested when an artist has built up a major following both on and offline. But there is a whole new industry emerging in the area of artist development, led by young entrepreneurs, small businesses, and music fans, as opposed to multinational corporations. In other words, the “new” Artist Development Deals are coming from startups trying to build a legacy, rather than protect one.

What does an Artist Development Deal look like in 2017?

The new Artist Development Deals range from mutually beneficial and artist-friendly to downright exploitive. What they have in common is the investment of time and resources by the ‘developer’ in the short term, in exchange for a piece of the artist’s revenue streams in the long term.

Here’s an example: in exchange for “developing” the artist for the next 3 years, the developer will be entitled to 15% of all revenues generated during the term, and 10% of all Sunset Revenues earned over the 10 years following the term (known as the “sunset period”). Sunset Revenues are defined as gross revenues earned during the sunset period from all master recordings and compositions recorded/released during the term, as well as revenue earned from all deals negotiated during the term but received in the sunset period (including sponsorship and endorsement deals).

What are the Pros and Cons of an Artist Development Deal?

One of the advantages of signing an Artist Development Deal is obvious: the developer should open up doors that otherwise would be closed, such as providing industry contacts, booking shows, helping develop your live show, song writing, image, and brand generally.

A clear disadvantage of the Artist Development Deal is that the revenue pie gets split further, so each band member earns less. If you sign with a manager or record label or publisher, the pie gets divided further. Now, you need all of these additional parties at some point in your career, so it’s a question of ‘when’ rather than ‘if’, whereas not every artist needs the help of an artist development team.

So that is the real question you need to ask yourself: to what extent can the developer truly “develop” your career? What are they offering that you cannot already do yourself? If self-managing isn’t something at which you and your band mates excel, you will benefit more from an artist developer, and sooner rather than later.

As always, email me with questions and comments.

Artist Development Deal

KD Chosen as Music & Law Columnist for SOCAN

Received some great news this morning. I’ve been writing articles on the music industry for years, sharing them here and getting them published every now and then in magazines like Canadian Musician and DRUM! Magazine in the US. Today’s breakthrough is particularly special, as I’ve been a songwriter for most of my life. SOCAN has chosen me to be their “Music and Law” columnist for their website!! I’m incredibly honoured and appreciative. My first article went live last week. Here’s to many more.

Interview with Music Box Artist Consulting

A big thank you to Bonnie McGrew and the great people at Vancouver’s Music Box Artist Consulting for choosing me for their Entertainment Law feature this week.

Click here for the full interview, and check out the entire Music Box site for more.

KD peace

The 3 Types of Music Publishing Agreements (and why they’re important)

Music Publishing

If you write your own songs, either with a band or on your own, or co-write with others, developing an understanding of music publishing is probably the most important thing you can do for your career.

That being said, music publishing is the most confusing aspect of the music business. The number of blank stares that return my gaze after I explain music publishing to a fellow musician is countless, and perhaps warranted. This stuff is complex.

I’ve put this blog together to help reduce the confusion.

Music Publishing Revenue

Pub 1

In every song, music publishing revenue and ownership is divided into two halves: the Publisher’s Share and the Writer’s Share, as per above. The circle as a whole represents the total music publishing ‘pie’ in a single song. The Writer’s Share always belongs to you, the writer, and it can never be assigned or sold. If you never sign a music publishing deal of any kind, you will retain 100% of the music publishing revenue and ownership in your songs, meaning you will own the full pie.

If you sign a music publishing agreement, you give up part of the Publisher’s Share, or the left half of the pie. Let’s look at how that might happen.

music publishing

The 3 main types of music publishing agreements are:

1) Publishing Administration Agreement

Often artists want to retain ownership in their music publishing, but hire a third party to exploit their catalogue of songs (through film/tv placements, etc.). A music publishing administrator also helps ensure that the correct amount of music publishing revenue from your catalog of songs is being paid and collected around the world. You’d be surprised how many commercials and films and video games use music and fail to pay the writers of the music. This is where an administrator can be your best friend, by ensuring your songs are generating the most music publishing revenue possible around the world.

If you sign a Pub Admin deal, the administrator does not acquire ownership in the copyrights in your songs, but administers them for a fee (ranging from 10-25%). You as writer give up a percentage of your music publishing revenue, with the hope that the administrator will help your songs generate more revenue to offset the fee. In the diagram below I’ve illustrated a 20% pub admin deal. The 20% only applies to the Publisher’s Share (the Writer’s Share is untouchable), so that’s 20% of 50%, or 10% of the overall publishing revenues generated by the Artist’s songs. The Artist retains full ownership of the full pie, but gives up 10% of the total music publishing revenue to the Pub Admin company.

Pub 2

2) Co-Publishing Agreement

The Co-Pub deal is the norm in the business today. The music publisher and the writer co-own the copyrights in the musical works and the music publisher administers the copyrights in the works. This is a deeper commitment than the Admin Deal, as the term is often longer…often equal to the life of the copyrights (which equals the life of the author plus 50 years!). In exchange for this deepened commitment, a music publishing advance for the Artist is normal. The standard Co-Pub deal involves half of the Publisher’s Share going to the Publisher, meaning we’re left with a 75/25 split in favor of the Artist (i.e. 50% of the Publisher’s Share half is given away, or 25% overall):

Pub 3

3) Buy-Out Agreement or a “Full” Publishing Agreement

Buy Out deals are not as common today as they were in the past, and are typically seen when a significant advance is being offered for the Writer’s catalogue. The Publisher owns 100% of the copyrights in the musical works and has sole administration rights. The overall split of music publishing revenue is 50/50, as the Writer is left only with the Writer’ Share of music publishing revenues from performances.

Pub 4

What Does a Music Publisher Do? 

Generally speaking, music publishers administer, promote, exploit and protect your catalogue of songs throughout the world. The two key revenue streams for music publishers are mechanical royalties (royalties from the ‘mechanical’ reproduction of the songs) and performance royalties (royalties earned from the public performance of the songs).

Any time you hear a song on the radio, at the grocery store, at a hockey game, or on a video game, music publishing revenue is being generated and collected (in theory) by a publisher on behalf of an artist.

Until the 20th Century, a music publisher’s main function was administrating printed music in all its forms. However, as 20th Century technology extended the use of music, so the responsibilities of publishers similarly widened to include the licensing of music on records, radio, television, films, concerts and, more recently, tapes, compact discs, satellite and cable distribution, karaoke, video games, computer software, CD-ROMs and other forms of multimedia, etc.

Publishers may also actively ‘pitch’ songs to other artists to record, or ‘plug’ songs to radio, tv/film, and other users.

What is Sub-Publishing?

Once you’ve signed with a music publisher, they will often hire other publishers in other countries to help exploit your songs and collect the revenues around the world. These other publishers are called Sub-Publishers. Often times your publisher will have pre-existing agreements with sub-pubs in every territory in the world.

The advantages of sub-publishing are obvious: the foreign publisher, ideally, has the necessary contacts to expose works in that territory and the administrative skills to collect subsequent royalties. Securing covers is part of the job, but having a sub-publisher ensures proper registration, licensing and documentation of a catalogue. Also, a sub-publisher can, through membership in local mechanical and performing rights societies, collect and distribute income generated by an original recording. Of course, major publishers with offices in many territories don’t usually require sub publishers.

Conclusion

The question remains: should you sign a music publishing deal? There is not a simple answer. I’ve seen more and more artists moving away from the confines of Pub and Co-Pub deals, and opting instead for the freedom of Pub Admin deals. The advances are often lower, but the flexibility and independence are appealing.

So the answer really depends on the reputation of the publisher involved, the current state of your career, the offer on the table, etc. Along with choosing a manager and record label, choosing a music publisher is one of the big three decisions you’ll make in your career. In other words: a decision not to be taken lightly! Call me with questions, and I’ll be happy to help. music publishing

Sign a Band Agreement Kids! Former Rolling Stone is stone broke

Mick Taylor

I was just sent an article from a friend you can read here about legendary multi-instrumentalist and former Rolling Stone Mick Taylor, who plays guitar and piano on two of my favorite Stones albums (Sticky Fingers and Exile on Main Street), among others. The article is a shocking and sad depiction of Mr. Taylor’s life, and the poverty-stricken state he currently finds himself in.

The article goes on to explain how this came to be, and how The Rolling Stones unilaterally decided to stop paying him royalties in 1982 based on advice from their new record label and publishing company, despite the fact that Taylor’s songwriting and musical contribution to some of the biggest Stones songs from this era is undeniable. Since then of course, the rest of the Stones have gone on to become multimillionaires and some of the most wealthy musicians in the world, and Mr. Taylor has received nothing.

If there ever was a real-life cautionary tale to sign a Band Agreement between you and your band mates, this is it! Go to the Resources page for more on Band Agreements and why they are so important. Had one been signed, Mr. Taylor’s entitlement to a portion of the songwriting and record royalties would be without dispute. As it stands now, his only hope is hiring a entertainment lawyer and suing, which will not be cheap. And because he is broke and the Stones so wealthy, getting this thing through court and to a decision will not be an easy task.

Rock and roll is a vicious game…