The music business—and therefore, your label’s business—is founded on the acquisition, use, and/or sale of copyrights to songs and the recordings of those songs. To understand this fully, it will be helpful to understand the basics of copyright and its relation to the music industry. Copyright is the legal right, established by federal law, of an author to control his or her intellectual creations, and to make copies of his or her original works. In the music industry, an “author” can be a songwriter or a recording artist who records the song. The law protects a songwriter, and recognizes him or her as the song’s owner as soon as the song is written down or recorded. The same is true for a recording artist, who acquires a copyright to the recording of a performance the moment that performance is recorded. Copyright allows songwriters and recording artists to protect and maintain ownership of their songs and recordings, or to transfer those rights to third parties, like publishing companies or record labels.
As suggested above, copyrights for written songs are separate from the copyrights for recordings of those songs. Publishing companies acquire the copyrights to written songs from a songwriter through a publishing agreement; record companies acquire the copyrights to sound recordings of those songs through a recording agreement. How does this work, and what does it mean for your label? Here’s an example.
Say the recording artist Madonna wants to record the song “American Pie,” originally written by Don McLean. As the author, Don McLean originally owned he copyrights to the song. However, he has transferred his rights to this song (and perhaps others) to a publishing company, Benny Bird Company, Inc. If Madonna is going to record this song, her record company, Warner Bros., must obtain a license (written permission) from Don McLean’s publisher, Benny Bird Company, Inc.
Under the terms of this license (called a mechanical license), Madonna will record “American Pie,” and her record company will pay Don McLean’s publishers a royalty for each copy of her recording sold. McLean will then receive a portion of that royalty from his publishers. This is called a mechanical royalty. The publisher will retain a portion of the royalty, based on its ownership of the song, which Mr. McLean has transferred to the Benny Bird Company, Inc. As the original creator of this particular recording of the song, Madonna will own the copyrights to this recording, but not to the song.
However, because Madonna has a written recording contract with Warner Bros., the label would own her rights to her recording of the song, and would pay her a royalty from its use. This is the other side of the copyright equation: Record companies, like yours, obtain the rights to recordings through contracts. Although the artist, musicians, and producer create the recording, these authors will transfer their rights to that recording to the record company.
To extend this example a little further, assume a film-production company wants to use Madonna’s recording of “American Pie” in one of its movies. The film company would have to ask Don McLean’s publishers, Benny Bird Company, Inc., for the rights to use his song in its film. The film company would also have to ask Madonna’s record label, Warner Bros., for the right to use her recording of the song. Either McLean’s publisher or Warner Bros. could refuse to grant these rights for any reason. In this case, the film company would have to find a different song and recording for its movie.
Your label will be faced with similar copyright and ownership issues, and it is important that you continue to study and understand how copyright laws affect the industry. You can read more about basic copyright issues in Music Copyright for the New Millennium by David J. Moser, or on the U.S. Copyright Office Website: www.copyright.gov.