MUSIC LAW BASICS

The term "Music law" is essentially a subspecies of what is known more generally as "Entertainment Law". Entertainment law is the body of law and legal principles that have developed and evolved in the course of conducting the businesses which are known as branches of the "entertainment industry."

Music law consists of a wide variety of legal concepts, rules, statutes, regulations, case law, practices, customs, and legal principles which have a particular application to the creation, production, distribution, and marketing of musical intellectual properties.

"Entertainment law" falls into two main groups:

Litigation: the law of intellectual property consisting of copyright law, trademark law, trade secrets, libel and slander (defamation), and the right of privacy and publicity; and

Transaction: laws pertaining to business organizations and commercial transactions including the body of law relevant to contracts, partnership, tax, corporations, securities, labor and international law.

The principal branches in the entertainment industry are, Music, Publishing, Motion Picture, Television, Sports, and Theater. Each of these subindustries has its own unique features and characteristics in common with the others.

Music law is, thus, a specialized area of entertainment law for one of the main branches of entertainment industry - the "music industry". The music business in turn is composed of many subdivisions including recording, publishing, concert promotion, talent management, and merchandising. The primary two are the selling of sound recordings and music publishing.

US copyright law bestows upon music creators/authors the exclusive right to a limited duration to exploit copyrights by transferring, lending or even selling one or all of the five bundles of exclusive copyrights, subject to certain exceptions and limitations. In return for these licenses, grants, assignments, and/or sales, the copyright owner receives monetary compensation called "royalties". Thus, "royalties" are monies earned from music and/or sound recordings from various sources.

There are four different types of royalties, each derived from a separate and distinct copyright. The four potential sources of royalty revenue in the music recording and publishing industry are:

(1) Mechanical royalties: paid from record companies for records, generally sold based on the exclusive right to reproduce and distribute copyrighted works.

(2) Public performance royalties: paid by music users for music in the operation of their businesses and broadcasts based on the exclusive right to perform publicly copyrighted works.

(3) Synchronization fees: paid by music users for synchronizing music with their visual images based on the exclusive right to reproduce and distribute copyrighted works and to prepare derivative works of copyrighted material.

(4) Print music income: paid by music printers for sheet music and folios based on the exclusive right to distribute copies of copyrighted material.

Royalties are collected depending on the nature and source of the revenues. There are four potential types of royalties in the music recording and music publishing industry:

(1) Mechanical Royalties: Domestic (US) mechanical royalties are collected by domestic record companies for records sold. Foreign mechanical royalties are collected from foreign a Performance Rights Organization ("PRO") by sub-publisher(s) for records sold in their territory. Sub-publishers also collect part of a royalty called a broadcast/mechanical in some countries.

(2) Performance Royalties: Domestic (US) performance royalties are collected by one of the three main Performance Rights Organizations (PROs): ASCAP, BMI and SESAC. These PROs issue blanket licenses to music users for publicly performing music from each pro catalog in the operation of their businesses and broadcasts. To ensure prompt and timely payment of performance income from a PRO, each songwriter, composer and lyricist and music publisher must first join as a PRO member and properly register their musical pieces and current whereabouts with the PRO.

Foreign performance royalties are collected by foreign, government-regulated PROs. To ensure prompt and timely payment of performance income from a foreign PRO, each music author and music publisher should enter into a "sub-publishing" agreement and properly register their songs and current whereabouts with the sub-publisher in each territory their musical pieces are performed. The foreign performance societies contact each sub-publisher in their territory and request they designate an agent for the performance rights in all their musical pieces. They then contact the users of those songs in their territory (e.g. local radio stations, nightclubs, TV, etc.), and grant them performance licenses to use all the music of all the sub-publishers they represent. The foreign PROs then collect and pay the publisher's share of performance income to sub-publishers, and pay the writer's share to one of the American PROs (ASCAP, BMI or SESAC), which then pays the artist.

(3) Synchronization Fees: Synchronization fees are collected by the author/writer and/or music publisher that grants a synchronization license to users or broadcasters of the music, which then create a derivative audiovisual work in the form of movies, TV programs, commercials, etc.

(4) Print Music Income: Print music income is collected by the music creator and/or music publisher that grants a print music license to music printers which then print sheet music or folios.