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Contract Freak: The Nebulous World Of Agreements In The Music Industry

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10 March 1977. The Sex Pistols signing to A&M Records with Buckingham Palace behind them (Getty Images)

No matter whether an artist has a deal with a major or an independent label, they eventually comes across such terms as master and publishing rights agreements. Although the difference between the two is rather nebulous, the first type refers to the actual recording while the second one implies the ownership over the words and melody of a composition. Therefore the keywords one must be looking for when trying to distinguish between them are “recording(s)” and “composition(s)” respectively.

As the name implies, a master agreement is instrumental in any process that deals with master recordings such as a remastered album reissue. In 2022, The Cure released a remastered version of Wish, an LP that Robert Smith had been frustrated with for years due to unsatisfactory mastering. Well, his wish came true once all original members involved in the recording process as well as the label (read “owners”) agreed to alter the existing version.

The master agreement also comes under such names as recording agreement and includes such sub-categories as purchase agreement. The first type states that an author produces recordings for a certain company. According to the Musicians’ Union website, a standard recording contract contains twenty-one clauses, specifying commitments, royalties as well as warranties and undertakings among the most important parts. A purchase agreement confirms the buyout of masters from the previous owner, either another label or the band’s manager. Let’s say, TRO Essex Music Group, which possesses the copyright for T.Rex compositions, sold the ownership of Marc Bolan’s songs to a label hoping to buy a catalogue. A purchase agreement would be drafted.

The Musicians’ Union site defines a publishing agreement or songwriting agreement as “the document by which a songwriter assigns the copyright in their compositions to a music publisher in exchange for royalties and, in appropriate cases, an advance against those royalties”.

An encoded roll in the player piano.

A few agreements are subsumed under the umbrella of the so-called publishing contract category. The main purpose of such a document is to put down in black and white the number (percentage) of mechanical royalties charged by the owner and shared with the songwriter. The collocation “mechanical royalty” has been a legal term since 1909 when the Copyright Act was passed. However, the expression had been in parlance even before, referring to encoded, perforated sheet music loaded in player pianos. Anyone could reproduce a copy of the original music once they paid a mechanical royalty. Today the agreement known as mechanical licence grants another party the right to use a sample or make a cover version of the song owned by a specific label. With the advent of television and its further role in the pop industry, the copyright owners came up with the idea of synchronisation licensing agreement, also known these days as “sync”. This type of contract details the right to use the music in films, TV programmes or advertising. The deal defines the media and territory where the visual materials accompanied by the song/s can be broadcast/presented, the period of validity with terms being more limited in advertisement than in films, and exclusivity. In regards to this, the licence can be either exclusive or non-exclusive. The first means that one is given an exclusive right and therefore cannot license the product to other people while the second translates as the opposite.

Apart from the details of mechanical royalty rates, a publishing agreement includes a clause on performing fees. In the UK, this type of royalty, also known as performance income, is collected by the Performing Right Society, simply known as PRS. The fee is paid by a user to the owner of the song anytime it is performed in public including radio or a space such as a restaurant or bar where it might be played via streaming platforms such as Spotify or Pandora.

Although it seems that everything mentioned above doesn’t make any sense in the current digital reality, some types of contracts would still be quite handy. In a world where streaming dominates the music landscape, the tangible format of a good old performing and mechanical licence agreement gives more clarity. In 2021, Variety reported that the overall number of uncollected royalties from streaming services reached $424,384,787 that year. Digital Service Providers (DPS) such as Deezer, Spotify, Apple or Tidal send reports with the exact numbers of plays and downloads to the relevant collection society which bills the DPS accordingly. However, it is only signed artists who get their share of the pie as many societies don’t distribute the money directly to a songwriter but a publisher or an administrator instead. As self-released artists rely on distributors such as Distrokid and Tunecore, the standard rate ($0.003 to $0.005 per stream in the case of Spotify) means they still earn less than the signed musicians. Although independent songwriters get %100 of their income, it turns out to be way less than that generated with the help of a label and shared between the publisher and the author. Would be great if services such as Distrokid and Tunecore provided self-releasing artists with a copy of an agreement that states the exact royalty rates with regard to each DPS.

P.S. The story about The Sex Pistols and their tumultuous relationship with record labels is to follow.

Author

  • Irina Shtreis

    Irina Shtreis is a music writer, researcher and musician. Her byline has appeared in British publications such as MOJO magazine, The Quietus and Louder Than War. Irina has been a news editor of the latter since 2020.

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