Sunday, November 15, 2009
Many people, although savvy in their own professions, do not understand the financial intricacies and huge inherent risks in the music business. Additionally, many people lack the patience it takes to see a return on music business investments. Frankly, the best investors are family members who do not mind risking their extra money to help a deserving artist.
From an artist’s perspective, the most important aspect of structuring the investment agreement is to specify the sources of all the returns and to limit it to just the specific areas upon which the parties have agreed. Will the investor be paid on record sales, live performance income, merchandise, music publishing, etc.? How does this relate to existing or future contracts? The other important aspects are to specify the duration of both the term of the agreement and the period for which the artist must ensure the investor’s income participation and ensure that the agreement does not interfere with any potential agreement the artist may enter into.
There are great Nashville stories about artists, who, in their early career, gave away more than 100% of themselves. While these cases can be amusing, they can lead to litigation, which is, of course, not so amusing.
In sum, both the artist and the investor must have a very clear understanding of the risks and obligations of such an arrangement
Monday, October 19, 2009
The article also contained some more interesting international twists on the formula. For example, in China, they suggest “hire an intern to start a discussion thread about your album on Douban.com”. In Japan, they suggest landing a song on the “featured Artist” homepage of Recochuko.com, Japan’s largest mobile music retailer.
Admittedly, many of these ideas are perhaps beyond the reach of artists who are just getting started but I found the sheer breadth and novelty of the article’s suggestions to be both eye opening and encouraging. I would recommend this to anyone trying to figure out how to market their music.
Monday, October 12, 2009
Tuesday, October 6, 2009
However, I must take issue with something Avalon said in a recent blog. In a post called “The New Team” (8/3/09), he basically advised new artists that they no longer needed lawyers as part of their “team.” I found this advice fairly short-sighted. While it is true that there are no longer the sheer number of record deals and publishing deals out there, there is no shortage of people with their hands out looking to make a buck off of young artists. These range from the traditional allies like managers and booking agents to a vast array of “new model” promoters, consultants, etc. Artists need lawyers to counsel them as to how to best work with and compensate these people. We are also called on to advise about all sorts of new “services” for artists; these seem to appear every day, and they range from brilliant technological developments to glorified pyramid schemes. Additionally, artists still have to deal with the basic issues of figuring out what the revenue sources are in the music business (i.e., how to get paid) and how to structure their internal agreements and protect their intellectual property.
With all that in mind, and hoping that I still had a place on the new “team,” I recently attended a Nashville Bar Association Continuing Legal Education Seminar entitled:
Challenges for the Entertainment Lawyer in a “Do It Yourself” World.
While I was pleased with the program in general, I was a bit disappointed that they did not address the topic raised by the title of the seminar, nor did they confront Moses Avalon’s assertions head-on. However, I was impressed by my friend Lynn Morrow’s presentation “Legal Challenges for the Indie Artist” during which she listed eighteen separate legal issues an independent artist should consider before releasing a record (I would reproduce the list here but Lynn wisely copyrighted her work).
One of the points Lynn made in her presentation is that now more than ever, if we as lawyers are advising independent artists, we are advising them as small business people and I think this is a really important mission. Years ago, I was on a panel myself with a number of well-known lawyers and judges, and one of the questions that came up was how do you prepare yourself to be an entertainment attorney. I said, among other things, that I found it helpful to develop a background in the general practice of law (e.g., knowing a little about business formation, divorce, collection law, bankruptcy, wills and estates, even landlord/tenant law – which comes up a lot more often than one might think). One of the lawyers on the panel (who shall remain nameless) blasted me because he thought that spending time on general practice basics was a waste of time in dealing with the entertainment industry. I disagreed with him then and I still do. Of course, if he has an endless supply of major label clients with the ability and willingness to pay him for the deals he negotiates for them, then I see his point, but it’s not really like that out here in the less rarified air of the real world. Plus, I know that as lawyers, we get a lot of satisfaction from helping clients set up and run their business the right way. This is one way I believe entertainment lawyers can remain relevant and part of the team as this new model of the entertainment industry develops. We are also the first person who gets called when the team falls apart.
Monday, September 28, 2009
The manager in question is Gregg Latterman, a well-known entrepreneur, who, among other things, founded AWARE Records in 1993 and has been responsible for discovering and elevating a large number of talented artists over the past two decades. Apparently, Latterman had some sort of deal with EMI Music which gave him a share of EMI’s cut of income (and perhaps copyright interest) from any writer he brought to the company.
The suit alleges that Latterman entered into an oral management agreement with The Fray in November 2004 and helped sign the band to EMI in July of 2005. The suit claims that the oral management agreement was reduced to writing in 2007.
The suit DOES NOT claim that Latterman took any portion of the band’s publishing. Rather, it claims that as a manager, Latterman breached his fiduciary obligation to inform the band of his deal with EMI. The suit references a clause in the Management Agreement which prohibits the manager from commissioning any “engagement or agreement under which Artist is employed by or otherwise engaged by Manager or any firm or corporation owned by, controlled by or affiliated with Manager.”
As one would expect, the causes of action spelled out in the Complaint are fraud and misrepresentation, breach of fiduciary duty, unjust enrichment, fraud in the inducement and breach of contract.
As is often the case, I am sure the backstory is fascinating. It is rare that disputes break out in public involving people with profiles as high as this. I am sure that one of the real issues here is leverage. When The Fray entered into their agreement with Latterman in 2004, they had little bargaining power and were in need of someone connected enough to get them noticed by and then signed to a major label and major publisher. Once a certain level of success is reached, the dynamic often changes.
An interesting question raised by The Fray’s lawsuit is how much they really knew about the relationship between Latterman and EMI. In the pleadings, they claim they thought he was receiving a “finder’s fee” from the company, and that in fact may be the case, albeit a highly lucrative one. It does seem hard to believe that were not somehow on notice as to Latterman’s deal with EMI.
However, this is also a cautionary tale for managers who attempt to fill different roles in this new environment. Nearly every management agreement ever drafted contains the above-described language prohibiting “double dipping” and managers should not attempt to circumvent the effect of the clause; they should be upfront in disclosing these arrangements to their artists.
I am betting this case will settle quickly. But one never knows…
Wednesday, September 2, 2009
Many people do not realize that not only their copyright, but also their royalty income (i.e., public performance royalties, mechanical royalties, synchronization royalties, performance royalties, etc.) are considered “property” for bankruptcy purposes, just like any other piece of property, tangible or intangible. When a debtor files a Chapter 7 bankruptcy seeking liquidation of his debt, this property is subject to collection by the U.S. Bankruptcy Trustee, whose job is to try and use these assets to pay creditors. These assets can be sold by the Trustee, by auction or otherwise, to satisfy debts.
This is a very real probability.
I have represented both songwriters contemplating bankruptcy and publishers and other investors who have purchased these rights from the Trustee. In many cases I have learned that the songwriters were never even made aware that they could lose their copyrights and their rights to royalty income in bankruptcy. Either their bankruptcy attorneys never told them, or the writers never volunteered the information to their bankruptcy attorneys. Either way, they lost the rights to income from some significant copyrights and in some cases, the copyrights themselves.
One should always consider the risks of losing their rights to royalty income from their songs before filing a petition in bankruptcy.
Monday, August 24, 2009
Like every Nashvillian, I was shocked to learn of Steve McNair’s awful murder on the 4th of July. I was surprised but not exactly shocked to learn that he had died without a will, and that in addition to the children he had with his wife, Mechelle, he had children from previous relationships in Mississippi (Steven L. McNair, Jr. and Steven O’Brian Koran McNair).
McNair reportedly earned over $90 million during his tenure in the NFL and owned property and held investments in both Tennessee and Mississippi. That means that at least these two states will be involved in the probate of his estate. To leave his wife without any clear picture of how to handle this is inconceivable. Worse, an action between the heirs could literally pit brother against brother and put the widow in a terrible position. None of this contemplates the horrible estate tax consequences of leaving so much money and property unsheltered.
All these possible hellish family scenarios could have been avoided by some simple planning, as could have most of the estate tax consequences.
It will be interesting and instructive to see how this plays out, but it won’t be pretty. This is why if you have children or if you own any assets at all, you need to do some estate planning.
Sunday, August 16, 2009
- from an article in today's New York Times magazine by Daniel Rudolph on the Beatles' new Rock Band game due out 9/9/9.
Sunday, August 2, 2009
First and foremost, a single song agreement is an assignment of copyright. Section 204 of the Copyright Act of 1976 says that any assignment of copyright must be in writing. Therefore, unlike certain verbal assignments that that occurred under the 1909 Copyright Act, you cannot assign your copyright in a musical composition unless you do so in writing. Also, except in very limited circumstances, you should never agree to assign your composition as a “work made for hire.”
Also, if there is more than one writer on a composition, and they are both/all assigning their copyright interest to the same publisher, the single song agreement is the document which details the writers’ percentages of the composition. It is important to note that the law presumes the splits to be equal unless specifically outlined. This split should be decided upon as near the date of creation as possible. I was once embroiled in a lengthy court battle over this very issue.
The next important part of the agreement is the warranty and indemnity provision. The writer must warrant that the work is original and will not infringe upon anyone else’s work. Remember that this does not apply to titles or ideas, although some writers apparently think otherwise.
The scope of the indemnity provision is extremely important to the writer. Unless he negotiates with the publisher to limit his liability against third party claims, he could end up on the line for all of the publisher’s legal fees, even if the underlying claim is frivolous. This is a very real possibility and should not be overlooked.
The next important section (and songwriter’s favorite portion, most likely) is the compensation section. Typically, the writer can expect to receive a portion of mechanical royalties, synchronization fees and royalties, public performance royalties (i.e., from airplay) and print royalties. The print royalty section is the most archaic section of the agreement and goes back to the days when music publishers were essentially print publishers who sold sheet music. Today, a songwriter would be lucky to have their work sold as a piece of sheet music. Mechanical royalties are the royalties that are generated from the sale of records (you remember records, don’t you?), compact discs and legal digital downloads. Synchronization royalties are the royalties generated from a “synchronization” of a song with a motion picture (movie, TV show, commercial, etc.).
Typically, a publisher splits all of this income with the writer under the terms of the single song agreement. Public performance income (radio, live performance, etc.) is paid directly to the writer by his or her PRO, or performance rights organization. The three PRO’s in the US are BMI, ASCAP and SESAC. Under a typical single song agreement, the writer has no claim to the publisher’s share of public performance income, or vice-versa.
The grant of rights provision can be critical to the writer. Usually, the writer will want to make sure that the publisher does not have permission to change the title, lyrics or music to a song without the writer’s consent. Also, the writer might want to limit the use of the work in certain kinds of films, commercials and/or political campaign. Without limiting language here, the writer has no control over these types of exploitations.
The next salient section is the accounting section. The writer wants to be sure that the publisher accounts to him (i.e., rendering a statement and a payment if applicable) at least twice a year. Additionally, most agreements allow the writer to object to the statement for up to one (1) year after receiving the statement. The writer should endeavor to increase that amount of time to at least two (2) to three (3) years. This period of time can fly by and you do not want to lose your contractual right to question a statement.
Another major issue in a standard single song agreement is demo costs. Some of these costs are almost always recoupable (that is, taken for reimbursement by the publisher from the writer’s share of royalties). The writer will want to be sure that he or she has a handle on what the costs will be. Understandably, keeping a handle on demo costs is also very important to the publisher.
Also, though this is rarely an issue, the writer will want to make sure the publisher cannot exploit the demo without approval from the writer.
Finally, this leaves the issue of a reversion clause. Most drafts of single song agreements omit the reversion clause, although, in my experience, the publisher will usually add this clause if requested. Essentially a reversion clause provides that if the publisher does not commercially exploit the composition within a certain amount of time, it reverts to the writer. This is fair, because in most single song agreements (as opposed to exclusive songwriting agreements) the publisher does not “buy” the song from the writer; his or her part of the deal is to get the song cut. Further, if the publisher cannot exploit the song, it is not really valuable to his or her catalog, yet it has intrinsic value to the writer.
It used to be easy to figure out the terms of a reversion. Exploitation used to mean that a song was recorded and released by an artist on a record label with national distribution or included in a film with some sort of synch fee. In the current environment, where anyone with an internet account can distribute nearly anything, this distinction becomes much more vague. The writer must pay special attention to this provision to ensure that he can live with its terms.
I hope this overview provides some insight into the workings of this document and proves there is no such thing a “just a standard single song agreement.” Although these agreements may seem similar in scope, each section of each agreement needs to be carefully reviewed.
Sunday, July 19, 2009
Saturday, May 30, 2009
In the first example , most people would immediately think that a case like that would be thrown out of court. While that may be ultimately true , remember the broad range of the internet. Essentially, my client is having to defend an action in a foreign state at great expense. As attorney Miriam Wugmeister said in the Wall Street Journal article I read “Though the likelihood of a plaintiff winning a lawsuit (of this type) is not high, you could go bankrupt just from defending against them.” Just to make matters more complicated, it also appears that the rules of personal jurisdiction as they apply to the internet are changing and expanding, after we thought they were fairly well settled.
There is something about the ease and instantaneousness of posting on the internet which makes it fairly certain that these cases will continue. Remember that the common law principles of defamation are not suspended on the internet, nor are the core principles of trademark law and copyright law.
Thursday, May 14, 2009
I read last weekend about the death of Barbara Ringer, who as the Register of Copyrights from 1973 to 1980, helped negotiate the massive overhaul of US copyright law that resulted in the Copyright Act of 1976. Although the seminal provisions of the Act are taken for granted today, Ms. Ringer is probably the person most responsible for codifying the termination of assignments provision of the Act, which allow authors and their heirs the right to reclaim their work, Although the 1909 Act had a variation of this provision as one of its tenets (in its two term approach) the system was abused and inherently unfair to authors and composers. The 1976 Act also codified the provisions of Fair Use for the first time. This paved the way for the decision in Sony v. Universal City Studios- certainly the most important technology case in the last 50 years
Ms. Ringer’s obituary in The Wall Street Journal quoted a law professor who opined that from a technological standpoint, the 1976 Act was obsolete from the moment it was passed. I disagree. I think that one of the great strengths of our copyright law is its ability to expand to handle each new technological innovation. although the challenges and possibilities presented by technology today could not have been imagined in the 1970’s.
Most importantly, I think that all artists owe Ms. Ringer a debt for her role in helping protect and secure their rights in their work.
Monday, May 11, 2009
I had a great opportunity several weeks ago. I volunteered to assist my daughter’s sixth grade class on their two day visit to Junior Achievement’s Biz Town. I wish that there had been something like this when I was her age (or even in college). Essentially, Biz Town is a miniature city where the student- citizens fill all the roles from banker to mayor to postal worker, broadcaster, restaurant workers, right down to the Chief Financial Officer of the pet food store.
If I understand the principal correctly, Biz Town is a model of “circular flow”. The kids learn how money flows from the government to the bank to local businesses, to individuals, back to business and charities and back to the government in the form of taxes. The cool part was that the students assumed all of the responsibility of business owners and consumers. They had to deal with every aspect of running their business from borrowing money to figuring out how to price items to sell. The kids I was watching actually had to deal with the fact that the bank screwed up their loan application, which necessitated nine trips back to the bank. They had to learn to act with grace under pressure. As consumers, they had to balance their checkbooks, pay taxes, deposit their paychecks and save money for lunch, etc. If a student was overdrawn, they couldn’t buy anything else. If a business didn’t make a profit, it went bust. It was fascinating to watch this little microcosm unfold over the course of a two day period. I think the students learned something truly valuable about the way the world works.
Back when I was in school, I had a vague conception of what Junior Achievement was. I thought that they sold things like leather key rings, bookmarks and other non-essential items. I had no idea that Junior Achievement had become so relevant and so much fun. This is a truly unique enterprise, which should be commended.
Tuesday, April 28, 2009
Attorney Wallace Collins wrote a great opinion piece in a recent issue of Billboard about the looming effect of Section 203 of the Copyright Act. This “obscure” section of the law recognizes an author’s right to terminate an assignment of copyright 35 years after the initial grant. The reason that it has been obscure up until now is that it won’t have an effect until 2013. The 1976 Copyright Act did not become law until
Thursday, April 23, 2009
I recently heard about a songwriter who lost his publishing deal because his publisher had run into financial difficulties; he had invested money with Bernie Madoff. I don’t know why I was surprised to learn that the Madoff affair had repercussions in Music City.
This reminded me that a decade or more ago, there was a well-known business manager/financial advisor in Nashville whose practice seemed to straddle the music industry and other “legitimate” professions. This gentleman had a guru like reputation for being both an astute investor and for helping people learn to budget their finances responsibly. Many of my friends and clients worked with him. I met with him once and he offered to work with me. I declined for a number of reasons. Mainly, I think I was self conscious about my own financial status and I didn’t want a third party who worked with many of my clients to know how irresponsible I was (at least that was my perception). However, I also had a lingering uneasiness: I just didn’t know how people with average incomes could budget and invest in such a way that over a relatively short period of time they could become wealthy. This uneasiness always veered between a lawyer’s healthy skepticism and the feeling that I just wasn’t sophisticated enough to understand the financial model. (I had a similar feeling when I took and dropped Economics in college). I have had the same feeling trying to figure out everything from various business plans during the dot com boom, to mortgage backed securities to Bowie Bonds.
It turned out that the Nashville money manager was playing fast and loose with his client’s money and his whole organization eventually fell like a house of cards, just like Madoff but with a little less drama.I don’t know the moral here. I do spend a lot of time thinking about human emotions, finances and greed. I read once that David Byrne was trying to write a song about economics…maybe he should write it as a country song.
Wednesday, April 22, 2009
The Wall Street Journal (which for some reason has become the best source for music business news) reported a few weeks ago that Universal music group and Google have reached an agreement that will allow Universal video content to be broadcast on You Tube and on a new stand alone site called Vevo, in return for a split of Google’s ad revenues.
This is genius and points the way that the music industry should be heading, a recognition of not only the ubiquitousness of technology but also of a shared interest. It also means that, in contrast to my own smug incorrect appraisal, the music video is not dead….far from it. The audience has simply moved away from cable television (why did MTV and VH1 stop playing videos? I can’t remember) and on to the internet with everyone else. All I had to do to confirm this was to observe my daughter watching Rihanna videos on You Tube with the same obsession that I had when I discovered that you could find old Small Faces and Stones videos on there.Google is certainly the most interesting paradigm shifter- from its audacious Google library project to the ongoing litigation with Viacom, there is no end to its impact on our contemporary culture and our evolving understanding of the nature of intellectual property rights. This new model also shows how it might help save record companies in the same way that Apple did, by overcoming perceived obstacles, then defining and properly exploiting a shared interest.
Friday, March 27, 2009
I also read yesterday that Dan Seals died. Many will remember him for his pop and country hits. I will remember him as a member of the Southwest F.O.B. and their great late sixties hit "The Smell of Incense".
Thursday, March 19, 2009
I have worked with Los Straitjackets since their inception something like 15 years ago. They are one of the top instrumental groups in the world. What impresses me most about this band is that they continuously think up ways to push the boundaries of their genre and they have taken the concept of surf instrumentals way beyond the beach. Their new album "Further Adventures of Los Straitjackets" has just been released on Yep Roc.
Plus, this picture cracks me up.
Friday, March 13, 2009
Saturday, March 7, 2009
I grew up in
Sunday, March 1, 2009
"The notion that radio is somehow harming property rights is silly. The artist is in essence an employee of the label and is supposed to be paid by the label."
I followed her up to the second sentence. I don't suppose that Ms. Rought has ever read a recording agreement, most of which make it explicitly clear that the artist is not an employee of the label. Nor do I believe that Ms. Rought has considered the thousands of artists who release their music independently. As I said above, I don't know how this debate can be resolved but I am certain that these absurd outdated assumptions need to be done away with.
Sunday, February 22, 2009
The other day, I had a potential client ask me an intriguing question. He was a writer/musician and wanted to know how to protect his work when he was collaborating with other people. More specifically, he wanted to know if he was creating work that was capable of copyright protection when he was recording music in the studio with other people. Essentially, he was adding keyboard parts to someone else’s work.
Friday, February 13, 2009
“We equally believed that those who stood against us held just as sacred convictions that were the opposite of ours and we respected them as every man with a heart must respect those who give all for their belief”
--Oliver Wendell Holmes
I finally finished watching Ken Burns' stunning documentary of the Civil War. I was struck by this quote from Oliver Wendell Holmes which prefaced the 8th episode of the series. This is something that we should try to remember in litigation, mediation and politics.
Monday, February 9, 2009
I am an inveterate collector of records and other things. So, I am always fascinated by stories of other collectors and their misadventures. I was horrified to learn the story of Randy Piper, whose rare collection of Jack Daniels whiskey and memorabilia was confiscated a year or so ago by Tennessee Alcohol Commission Agents who claimed that Piper was selling liquor without a license because he bought sold and traded Jack Daniels memorabilia with other collectors. This absurd abuse and waste of state power was apparently settled out of court by Piper agreeing to forfeit some of his collection to the state and paying a fine. An article in the January 21 issue of the Tennessean also mentioned that Piper had incurred attorney’s fees of $40,000.00
Wednesday, February 4, 2009
There was a great quote in the Wall Street Journal’s December 29th edition in an article about Bon Iver, written by Shelly Banjo and Kelly K. Spors. “The internet has been like the French Revolution for the music business,” says Panos Panay, founder and CEO of Sonicbids. “The aristocracy ‘has faded’ as the cost of distribution, production and even getting connected has come down. Now, he adds, anyone with a niche and devoted fans can make a living”.
Thursday, January 29, 2009
I have always had an attraction/repulsion relationship with New Years’ resolutions-while I am drawn to the concept of change and renewal, I hate the stereotypical pattern of adopting resolutions in January just to abandon them by February. Think of all the people you see on the treadmills at the YMCA during the first week of January and how they seem to fade away by the Super Bowl.
Friday, January 16, 2009
I enjoyed this article, from Rolling Stone's online site, even if it's not true. I never understood how those Bowie bonds could be a good investment, as much as I like "The Man Who Sold the World".
Theory or fantasy? David Bowie is to blame for the recession and the current credit crunch, the U.K. press reports Jan 13, 2009. According to a BBC Today host, it was the Thin White Duke, Ziggy Stardust, who opened the flood gates for the current economic problems, all thanks to his "Bowie Bonds." Back in 1997, Bowie issued "Bowie Bonds" as a way of getting his royalty money up front. He sold bonds of his future royalties to his fans for an immediate sum of money, figuring they'd be more patient about waiting for the royalties, plus it'd give them a stake in Bowie's catalog.
Economically, the term for this action is "securitization." The article speculates that banks were inspired by Bowie's foresight and started to do the same thing, except with mortgages instead of Hunky Dory. The plan was so successful for banks that they lowered the bar on who got loans, figuring a deadbeat would be the problem of whoever scooped up the security, or the bundle of mortgages. Repeat this and multiply it by several thousand and you're faced with one of the main reasons for the current recession.
We asked a friend of ours who works in real estate - and knows a lot more about these economic matters than we do - and he insists that "securitization" was taking place on Wall Street way before David Bowie masterminded his supposed scheme to cause a worldwide recession. In fact, the practice dates back to the 1970s, when "the U.S. Department of Housing and Urban Development created the transaction using a mortgage-backed security."
In short, our Wall Street source says, "There is no chance in hell that David Bowie inspired banks to package loans into securities, have rating agencies rate them AAA blindly and sell them off to high leverage hedge funds." We don't know what any of that means, but it takes the blame off Bowie's shoulders. - Rolling Stone.
Thursday, January 15, 2009
Butch was also an incredibly cool and decent human being. I always thought he spoke more like a jazz guy than a bluegrass player. When I read his obituary in Sunday’s paper I learned that Butch had been a croupier in Las Vegas before becoming a professional musician and this made perfect sense. He is going to be missed.
Wednesday, January 14, 2009
One of my favorite old Saturday Night Live skits involves Tracy Morgan and a fellow cast member as “street” lawyers who promise prospective clients that “ we gonna get yo money”. I always identify with those characters. No matter how dignified we try to make it sound, much of the practice of law involves trying to collect money for people. This is especially true in the music business where there is a constant need to police the stream of royalty income that is supposed to be paid to songwriters, producers, artists, etc. as well as commission income paid to managers and other participants. Then there is the matter of collecting the regular payments for goods and services in everyday commerce.
Tuesday, January 6, 2009
I like this quote from Jon Pareles’ article “Songs From the Heart of a Marketing Plan” in the