Music Industry

Music Industry

1. (1) Industry Overview

   • Artist writes and/or performs songs
   • Record label enables artist to record and distributes
     • Assigned copyright by artist
   • Managers responsible for long/short term planning
     • Fiduciary and contractual duty to artist
   • Producers oversee direction and sound of record (not the person that makes the arrangement for the recording under s. 9(2)(aa), i.e. the record company)
   • Industry associations protect member's rights (e.g. union), and lobby on musician's behalf (e.g. against piracy)
   • Collecting societies - calculate and receive royalties due to members
     • Determine which is relevant by consulting s. 16
     • PRS (Performing Right Society) [s. 16(c)]
       • Monitor public performance of songs and pay royalties to the rightsholder
       • Applies to PERFORMANCES of the UNDERLYING work, not the sound recording
       • Rights holder assigns performance rights to PRS
       • Covers live venues, radio play, TV broadcasts of live performances, online and jukebox
     • MCPS (Mechanical Copyright Protection Society) [s. 16(a)]
       • Applies to COPIES of the UNDERLYING work (not the sound itself)
       • The MCPS gives a license to those that want to copy the underlying work, e.g. record companies – and a royalty is then paid to the right holder
     • PPL (Phonographic Performance Limited)
       • Collects royalties when the SONG (not underlying work) is played in public
       • Playing or showing in public of a sound recording [s. 19(3)]
       • Where a sound recording of a performance is played in public the performer is entitled to equitable remuneration [s. 18(2D)]

2. (2) Exploitation of Copyright

   • Assignment must be in writing signed by assignor [s. 90(3)]
   • License can be exclusive or non-exclusive
     • Only exclusive licensee has right to sue [s. 101]
     • Exclusive license must be in writing [s. 92(1)]

3. (3) Recording Agreements

   • Deals with live performances and sale of recordings for the purpose of public exposure and income
   • Term
     • Usually for fixed period of 1 year with options to extend
       • May also be extended until artist meets minimum recording commitment
   • Acceptance
     • Depends on recording being technically/ commercially satisfactory to the label
       • Measured against previous recordings
       • Must be reasonable
   • Release commitment
     • Must be released within set time (usually 6 months)
     • Prevents sterilisation
     • Breach should give artist right to terminate
   • Grant of rights
     • Give right to exclusive recording services of artist and the product of those services
     • Generally worldwide but if label has limited global access, restrict to those where it can penetrate market
     • Assign/license rights to label (label will insist on assignment of copyright in sound recording)
       • Gives right to exploit on any medium, whether known or later invented
       • Copyright in recording lasts 50 years from creation [s. 13A(2)]
   • Leaving members (give label notice, give option to terminate/ continue recording)
   • Payment
     • Advance (generally given on signing agreement, starting recording, release, etc.)
       • Deduct costs (recording, tour, production, etc.)
     • Royalties (generally 10-20% of dealer price)
   • Ancillary rights (e.g. who gets remuneration for merchandise)
   • Artist warranties
     • Commit exclusively to record company
     • Assign relevant IP rights
     • No 3rd party rights are infringed by work
     • Act in good faith

4. (4) Publishing Agreements

   • Gives right to do restricted acts by granting rights [s. 16]
     • Arists usually assigns derivative rights to publisher
   • Provide for exclusivity and territory
   • Publisher is obliged to market/exploit the work and pay royalties (and small advance)

5. (5) Management Agreements

   • Duties and Responsibilities
     • Advising on creative direction
     • Day to day arrangements
     • Liaising with professional advisors
     • Negotiations
     • Advising on agreements/contracts
     • Fiduciary duty
   • Key Terms
     • Term (not excessive)
     • If exclusive, ensure duration not too long or restraint on trade
     • Consideration (% of commission)
       • Manager should be able to retain costs reasonably incurred that are identified in agreement
         • Not including overheads that are not specifically incurred due to acting on behalf of the client, e.g. the manager’s office space
     • Termination
     • Manager should be authorised to act reasonably on behalf of the artist but should not be able to enter major contracts on the artist’s behalf

6. (6) Legal Issues

   • Restraint of Trade
     • Zang Tumb Tuum v Johnston
       • Excessive options to extend (7 options and only the label could terminate)
       • No release commitment and still owning copyright
       • Restrictions on performance (required consent)
     • Silvertone v Mountfield
       • Inequality of bargaining power (and quality of legal representation)
       • No release commitment
       • No commitment to exploit work
   • Undue Influence
     • Armatrade v Stone: Ongoing relationship with manager so didn't seek legal representation - undue influence
     • O'Sullivan v Management Agency: relied on manager, didn't obtain legal advice
     • Nicholl v Ryder
       • Solicitor arranged for artist to sign contract on drugs - solicitor later became aware of this but did not protest as believed agreement in best interests of artist. Undue influence argument failed as lawyer was aware he was on drugs and his knowledge of the unenforceability at the time was imputed to the artist, so the agreement was effectively affirmed