Arts and Management: the Principles of the Division of Royalties - Assignment Example

Student Name: Instructor name: Unit Name: Date: Arts and Management: The principles of the division of royalties and an in-depth analysis of the legal issues of an Arts and Management Project INTRODUCTION There are a number of principles that are relevant to the division of royalties between songwriters and musicians. Royalties are payments based on the usage that is made by one party, in this case the person who holds the license to a licensor in order to get the right of using a certain asset, which sometimes is an intellectual property. Royalties are agreed upon in terms of the net revenues of gross percentage that are derived from using an asset but there are other methods of compensation. There is a royal interest used in the music industry to collect a number of royal payments which denotes a percentage of future ownership production from specific leasehold. The function of the copyright’s office is to register copyrights and documents recorded which relate to copyrights. The office is also involved in giving songwriters and other bands compulsory licensing, where the licensing division is responsible for receiving royalty payments from these compulsory licenses. In regard to the division of royalties between songwriters and other members of a four-piece rock and roll band there are several issues to be taken into consideration are, the first being an understanding of how the royalties are distributed and collected for other types of licenses, since it is essential to distinguish between the publisher and writer’s share in the work that is copyrighted.1 All principles are the same for all types of copyright. For instance, if the songwriter is the initial claimant of the copyrighter, then he or she becomes the 100% owner of the rights that are found in copyright. If the publisher is the claimant of copyright, then he or she will collect the 100% of the royalties, at the same time retaining half of his publisher’s share and forwarding the rest to the songwriter. Generally, it is said that publishers are the ones who acquire the rights from songwriters on the basis of cash advances and payments against potential royalties. A songwriter may only sell a small portion of publishing (commonly referred to as co-publishing contracts) where the songwriter still retains the 100% of publisher’s and writer’s share. Additionally, there are a number of administration contracts in which a publisher acts as an administrator as well as an agent for the songwriter for an annual fee or the percentage of royalties collected. Co-publishers and publishers also deduct the administration fee from the share of the writer’s. A songwriter cannot also exclude the performance rights from the publisher because the 100% royalties collected are paid to the songwriter directly. The large interest that a publisher has in the copyright is spent while looking for the composition of the license. On the other hand, songwriters may give up to half of their copyright because the publisher is drained by the income of the songwriter2. The division of royalties between songwriters and other members of a four-piece rock and roll band is also paid quarterly by the publishers but this is negotiable. The band pays royalties to the publishers and to other organizations which have performing rights, who in turn pay to the songwriters on a contract basis. The general principle of the division of songwriters and royalties is that the owner of the specific work that is copyrighted has the right to determine how it should be used or played for that matter.3 Any other person should obtain permission through a license, be eligible for a compulsory license and be qualified for the free use of the song legally. Music royalties have also a strong link to other royalties of songwriters and the music band, in that they own an exclusive right to create music and license it for the independent performance of the corporate. The performing artists and recorders however, enjoy a set of royalties and copyrights from the selling of music recordings or music transmission. With the advent of songwriters and other members of a four-piece rock and roll band the question of music royalties is complex with considerable transformation. Furthermore, there are a different number of royalties when it comes to licensing and the manner in which they differ from one type to another. In the first use of license, the owner of the music has the pleasure of dictating the terms and conditions of royalties in which the licensee can accept or reject it. The economic demand and supply therefore governs the procedure of negotiating the rates. Similarly, there are no royalty rates that are fixed for the use of licenses for them to make use of existing song or band. The owner of the music or song owns it’s copyright and sets any rates in which the licensee can take it or reject it. There is also the government involvement in adjusting and setting of the royalty rates in both songwriters and other members of a four-piece rock and roll band, which only agrees to one type of license that is compulsory and allows the fabrication of the recorded music as well as distributed music compositions. The Copyright Royalty Board is currently responsible for setting up the royalty rates of the songwriters and upcoming bands.4 Songs are copyrighted in a number of ways. Firstly, the composition of the song is itself copyright in its own way and the right is owned individually by the composer or the songwriter. Secondly, the recording of the song is also the copyright owned by the recording company. Unlike other intellectual properties, music royalties have a strong linkage to songwriters, composers, and writers because they have the right to own restricted copyright to their own music and license it. The musical composition acquires the protection from the law by copyright that is immediate to the reduction to a tangible form not protected from the use of registered copyright authority, for example, the Copyright Office in United States administered by the Library Congress. Other than the copyright owner, no other person is supposed to employ or use music for his own gain without acquiring a license from the songwriter.5 Copyright law confers the holder of the music to exclusive rights. For example, the owner has the right to make more copies for the song through recordings or print. Secondly, he or she can distribute them to the public at a profit, the person also has the right to perform to the public, can display it whenever or wherever he wants it, and lastly, he can include some elements of original music as he so wishes. When the score between songwriters and other members of a four-piece rock and roll band are of a variety of people, then each one of them has the right to own the royalties. They have the right to print the music, performance rights or royalties from their own composition; synchronization where they can use or adapt a musical score from television; movies; and lastly, the mechanical royalties accrued from the recording of their own composition to tapes or CDs. In print royalties, the rate of printing music or lyrics often varies from the sales. On the other hand, the payment is made by the licensee and the publisher in an agreement that is non-exclusive to the publisher and may vary from 3-5 years. Songwriters and other members of a four-piece rock and roll band royalties do not necessarily accumulate to the composer of the songs, but it is shared with the person who is publishing on a 50-50 basis, and therefore, publishing the song encompasses a whole area of exploiting, promotion, administering of the music and not only obtaining the print rights, in form of folios, movies, piano’s, arrangements among others. The mechanical royalties obtained from the music are negotiated and royalty payment paid to the writer and the publisher for the recordings6. Therefore, the recording artists earn royalties from the sales of tapes and CDs, which in this case, the song writer is the recording artist, and the royalties from the sale of CD s add to the contract, in this case, the recording contract. In the music industry, performance royalties can also include those performances made public through a live web performance from the songwriter or the pop band. Also it can be a live or recorded performance. For music in its conventional form, royalties are paid to the publishers, record labels and composers of their own music on vehicles like radio, TV, and juke box among others. People who use the music also need to obtain a license from music societies. Performing rights organizations are responsible for giving license of the music, some of which are government owned or approved, in which the publisher, performer or composer have subscribed. The most important principle regarding the division of royalties between songwriters and other members of a four-piece rock and roll band is in relation to the fact that the performance rights organizations must make sure that individuals who compose, publish and write music receive payment anytime their music is publicly performed. This is because, copyrighted music cannot be performed in public without the copyright holder permission and so whoever broadcasts it must acquire the performing rights from the holders; sign a contract and the copyright owner then collects fees from individuals using the music. Most importantly, the copyright law recognizes the composers or writers compositions and gives them their property right which is why in effect it is called copyright because it literally means that the composers of the work have a right to receive payments for their work.7 In addition, when music is composed, the song writer is expected to license it to a publishing company and the artist then licenses it to his preferred recording company. A piece of this music generates five types of income namely: the performance royalties for the public performance; commercial royalties; print royalties; synchronization fees; for the music used in movies; and commercial royalties, obtained from the use of background music. Therefore, music law essentially provides all the practical advice and legal information that a music owner requires, in addition to finding music collaborations between musicians and other DJs.8 When it comes to arts administration and law there are also a number of legal entities and structures that a performer needs to be aware of. For example, the songwriter and the pop band in this case need to have registered the music under his or her name, which is one of the business acts. If there is any partnership between a songwriter and the recording company, then there must be legal entities that show the contract called the Partnership Act. The contracts are to be confidential, known only to the songwriter, pop bands and other publishers. They should also have a trademark for their own compositions, which is a sign, sound, scent or shape for their music. It is easier for the music owners to register their shapes, sounds and colors of their own compositions, phrases, invented words and logos as it makes their product to became registerable.9 They are also able to register their business and domain name plus any other identifiers including their personal telephone numbers. On the other hand, though, there are also unregistered rights which include business reputations, databases and any other confidential information. Therefore, copyright law happens automatically when sounds, words or images are put down to a material form by a songwriter or publisher. He is the author of the music and therefore, the owner of the copyright. Under the Australian Copyright Law, the originality test is low but at least it is improving day by day. Also, the patent system function is also not protected, since there are no steps required, where original works include data compilations.10 In Australia and United States, the telephone book stopped being an original literary work, but in Europe and United Kingdom, the telephone book is protected by the Copyright Law. This law lasts for a long but limited time, where the publication becomes the trigger of the copyright ownership in a musical, dramatic or artistic work. The copyright term is the author life plus seventy more years after his death. The moral right means that the author has the right of attribution and the right not to have his author falsely attributed and the right of integrity of authorship.11 The composer has therefore the right to claim the music authorship and has the right to object to any mutilation, modification or any distortion regarding his work. The law states that the author rights belong to him and is independent to the author’s economic right. Additionally, the moral rights belong to him even after the economic right has been transferred. It is also essential to note that infringement occurs when someone who does not own the copyright publicizes the work and transmits using a cable to subscribers. PART B The legal issues of a project in which an arts manager discusses the legal issues is a form of negotiation or dialogue that occurs between the art manager and the songwriters, where they intend to reach a common understanding in order to come with one understanding to a common gain. When talking about the legal issues, both parties tries to come into terms that will favor them by the end of the process they will reach at a compromise. When an arts manager discusses the legal issues, it must be contentious with the law in the sense that they must be put down in some of the element s of contract which includes its capacity, offer, acceptance, the intention to create a legal relations. However, the contractor should be independent where the legal issue is the contract for services which the usual for small groups practices in other areas. The risks associated with these include third party liability and inadequate liability. Under the Copyright Act of 1968, section 35, it states that the copyright owner is the author who in this case is the dramatic, musical, artistic owner, expect if the work was a contract based between the employee and the author, then the copyright will belong to the employees.12 Nevertheless, there are a number of exceptions if the author is employed by a magazine or a newspaper, then the author becomes the rightful owner of the work or music. An art manager can discuss legal issues in terms of contract service where the copyright music in the line of employment belongs to the employer.There is also protection right against wrongful dismissal under the national employment Australian law which governs its employment rights. The manager can also talk about the selling of the right to copy legally to other copyright owners. Additionally, the songwriters and the pop band can acquire or give out their licence to one or more people for a specific purpose or period, in return of a fee to get a license. All the copyright rights are granted by the life of the copyright in return of a royalty fee. Under the Australian Consumer Law it is stipulated that an individual must not trade or engage in business that is most likely to mislead people. There is also an industrial award that governs the Australian employment fixed by the Australian law in relation to agreements. In art administration, the art manager is in charge of the arts organization in order to fulfil its mission. The general duties of an art manager is therefore, to talk legal issues to the songwriters as well as market, publicise, manage budgets, evaluate, and fundraise on behalf of the songwriters.13 Arts administrator works for both arts and cultural organizations like galleries and museum but at the same time talk’s legal issues concerning music owners and copyright owners. The manager manages and monitors the technology music based programs and must always remain aware of the direction to which the music industry is taking, in order to help them the composers and songwriters in their career. He advises them on legal issues concerning contracts and licensing that they need to address when they release their music. When he talks about royalties, he advises them on mechanical royalties where recording artists and companies makes money out of the sale of their recordings, but there is calculation of the royalties between publishers and composers. The royalties are said to be paid by a recording company, to the publisher and then pays the composer his part of royalty. For example, in Australia, the royalties are paid on statutory rates where the rate increases by the change in consumer price index. The statutory rate of a song which lasts eight minutes earns $124 for each record sold. There are also legal issues that are negotiable when it comes to negotiating rates, especially when the writer is the owner of the recording. However, royalties concerning artists are complex and a contentious issue to discuss in the music industry. Calculations may appear simple but artists are paid royalties between 8-25% of the initial retail price. Some of the legal issues that affect a recording artist are free goods, where an artist earns royalties from the exact number of his or her recordings, excluding those given away for free. There is also a return privilege where the cassettes or CDs return a 100 percentage interest, meaning that the recording stores do not have to worry of the recordings that they cannot sell. The internet royalties is the new type of royalty that has opened up recently, where the recording companies treat downloads as the new music technology meaning that the royalty reduces from 20-50%. Therefore, the artist only pays a 10%on the sales of their recordings and paid 5-5% of every download. The United Nations Universal Declaration of Human Rights is also important as it states that everyone has the right to freedom of expression and opinion, which includes the right to hold one’s opinion without interference, thus seeking and receiving ideas and information through the media. In Article 27, it also states that everyone has the right to participate freely from the cultural life, thus enjoying the arts and to share the scientific benefits and advancement. The songwriters also have the right to the protection of their material and moral interests that result from any artistic, literary and scientific production.14 Additionally, the manager should also talk abut the unregistered rights, for example, copyrights and circuit layouts. There is also other legal rights information that a songwriter needs to know when starting a project like the trade secrets which are said to be confidential and other databases, recognised in European Union, dynamic or fixed, but they are not registered. In terms of the project name, it must be registered since 80% believe that the business name is the trademark and its registration prevents other individuals from using the name. Its design must also be original and new, relating to only matters of pattern, ornamentation, shape or configuration. Similarly, copyright is a legal concern where it gives a person the right to copy or reproduce something but does not protect ideas, but rather protects the form of expression.15 Therefore, the songwriters needs to have a certificate of registration of the project, contract of employment, constitution, resolutions and the general law at hand. The Art manager is therefore, responsible for maintaining and establishing the organisational structure of the project and ensuring that their decisions are implemented without delay. He should also provide a timely advice to the songwriters or owners of the project. There are matters which should be dealt with under the constitution organization like the terms of office, the right to vote, indemnity and identifying and avoiding conflicts of interest and duty. Some of the duties and responsibilities that are relevant to entertainment and Arts are statutory acts which includes the accident compensation insurance and act, and liquor and health act.16 Art activities are based on short-term or independent contract, where there are statutory obligations that should be practiced, in regard to starting a project and have legal consequences. As a music manager, he should also invoke issues of licensing, song registration, creative matters and royalty collection. Legal issues begins with paper work, in which registration process of a project is a tedious and a boring job that only an Art manager can enjoy. The performing right society monitors and collects the songwriters and publishers royalties, paid to them whenever the song is played on either television or radio. All radio and television stations, normally pays millions of dollars to the ASCAP or other organizations, a fee called blanket license, to allow them to broadcast any songs they feel like. When a song is registered by the publisher, the performing rights society collects and pays the performance royalties direct to the songwriters and the publishers. Songwriters are only supposed to register their music with only one society, where their Art manager helps then choose. The societies will only pay an equal share of what the performance royalties they get to both the publisher and the songwriter. Other types of royalties that a songwriter should know of is that type of royalty paid when a song in put in an album to be released commercially to retail stores or legally made for downloading. The procedures are not the same with other countries, for example, in Australia, the mechanical royalties is paid to the publisher by the recording company but the artist must first of all license his song. After the song is licensed, the publisher can then include the song to the record label in a particular album. The royalties are paid according to how many copies are sold, and therefore, the payments rights and rates set down this type of license.17 The Art managers should also talks about the advanced technology and licensing of other revenues like the ringtones, which the songwriters should have a separate license for the use of ringtone. The ringtone popularity among the teenagers explains why this is a source of income and getting bigger and bigger everyday. In United Kingdom, the publisher normally issues the license to the phone carriers or the company which is offering ringtones. The income is then collected by the society responsible for the collection rather than being paid directly to the source. Therefore, the songwriters and the pop band should be aware of the fact that a separate license is needed for collecting royalties that are generated by DVD format. The income is the same for both UK and US, but in UK the royalties, the society is the only responsible organization that can collect royalties. However, the work of the Art manager or the publisher is to protect the rights of the songwriters by formally registering their songs for copyright protection. In United Kingdom, copyright is said to exist automatically in any recorded or written work, but to register a song is a good way of claiming the ownership in case of a dispute. It benefits the songwriter if his or her publisher plays the devil’s advocate to make sure the rights of the songwriter are properly granted and established. In Australia, one of the biggest legal issues is when the publisher wants to license a song to a recording company. The recording label can decide to pay less than the exact amount of the mechanical royalties than it is required with the United Kingdom copyright law. They do this by making the songwriter sign the documents, which will allow the recording company to pay the songwriter a low royalty rate on few albums. By asking the songwriters to accept the small amount of money than they are entitled to receive, these companies make a lot of millions from the mechanical royalties each year. In addition, the statutory law does not apply in United Kingdom, this is because the rights are easier to protect and manage. A UK publisher still registers the song in the correct manner with all performance and mechanical societies in mind to ensure the songwriter gets timely and proper payment of his royalties.18 So, through licensing and registration, songwriters are able to collect royalties from all sources, as well as synchronization royalties, which often occur as one-off negotiation fee when the music is put into a moving picture. Any experienced Art manager will be able to advice the songwriters and the pop band on such legal issues, since he is the one responsible for negotiation of the license and sync fees. He is responsible for collecting all the income streams from all sources. In creative exploitation of the songs, a publisher tries to pitch the songs to the advertising agencies, which in this case they can bring opportunities to the songwriters both financially and artistically. Some songwriters prefer to work alone while; others prefer to form a duo, explained by the fact that sometimes one finds many of them crediting to one song. The Arts manager should therefore, advice them on legal issues when to be taken when the songwriters decide to collaborate throughout the recording process. They should also be aware of the number of shares that they are likely to get in the contribution, and if possible they should put it into writing, and have it signed by all the contributors. This will avoid problems in both registration and licensing which will affect how and when they get paid. In terms of legal issues, the songwriter is entitled to get 50 percent and the person who delivers the lyrics the other percentage.19 A band agreement or sometimes called a partnership agreement is a commitment that is signed by songwriters and other members of the band in order to deal with their everyday realities of professional and legal musical acts. Problems do arise when it comes to issues to do with money, and therefore it is important to legally put it to paper how the group will deal with failure and success of the business.20 A reason as to why bands have come up with a legal agreement. Some bands live to regret the fact that they left everything to unspoken agreement and later turns to problems especially when egos, money problems and jealousies cause the band to breakup and end up in law suits. It is therefore, important for any partnership to legalize their limited corporation by working with the law, in terms of signing the appropriate contracts to acquire copyright ownership. The real money from the music is made from the successful exploitation of the songs that are copyright. If the songwriters and the pop bands want harmony with the group, they should legally agree on whoever writes all the songs, as well as come up with a fair system of dividing up the songwriting royalties. The issue of sharing the loss and profit considerations should also be legal concern between the band members and the songwriters. The Arts manager should never leave this crucial issue behind because all the band members can be equal partners and divide the loss or profit equally. They can also to put it to paper the distribution of debit and profit loss based on the percentage owed by the corporation. The ownership of the name of the group is also a concern, because there have been a thousand law suits concerning the members of the groups who fight overt the ownership of the name of their band. This being a small issue should be solved by several meetings of the band, instead in a court of law. The band and the songwriters should therefore bring up such issues and more so, put it to paper that no one should use the name of the band after they break up regardless of how many more members are still in the band. The law states that, the name of the band can only be used by a majority of the group like four of them if they were only seven of them. The lead singer is the only one allowed to use the name despite of who he is performing with. Additionally, the music law states that only the owner of the song can use the name of the group as long as they are performing together with the lead singer. The songwriters and the band should therefore, seek legal advice, as they focus on the most important dealings with publishers and recording companies. In the amendment of the band agreement and the songwriter all the above explained legal issues should be put forward and most importantly, put to paper as an actual agreement.21 Conclusion In summary, royalties are payments made by a party that holds a license to the licensor in order for him or her to use his intellectual property. They are agreed upon in terms of net revenues and royal interest that is used to collect royal payments, which can be referred to as a percentage of future ownership production. However, the main aim of the copyright’s office is to register documents and copyrights relating to the songwriters who own the copyright. In the band agreement, the rights of the songwriter and all the legal issues surrounding it need to be explained succinctly and put to paper as an actual agreement to prevent any discord within the band. Among the legal issues include the signing of the contract, the ownership of the song, the ownership of the band’s name, the percentage each of them is entitled to get, among others. Music is big business and thus fertile ground for conflict and consequently, it is imperative for an Art manager to discuss the legal issues concerning a project to songwriters and other members of the band so as to reach a common ground and prevent legal tussles that if not nipped in the bud, can easily clog up the legal system unnecessarily. BIBLIOGRAPHY ARTICLES/ BOOKS/ REPORTS Bessler, I, ‘Songwriter’s market,’ (2007), Cincinnati, Ohio, Writer's Digest Books Boynton, Robert S, ‘The Tyranny of Copyright,’ (2004), New York Times, January 25, Sec. 6, p. 40 Culp, C. L, ‘The art of risk management: alternative risk transfer, capital structure and the convergence of insurance and capital markets,’ (2002), New York, NY, Wiley. Donaldson, Michael G, ‘Clearance and Copyright,’ (2003), Beverly Hills, Ca.: Silman- James Press Halloran, M. E, ‘The musician's business and legal guide,’ (2008), Upper Saddle River, NJ, Pearson Prentice Hall Helen Dwight Reid Educational Foundation, ‘The Journal of arts management and law,’ (1982), Washington, D.C., Helen Dwight Reid Educational Foundation Koelling, Jill Marie, ‘Digital Imaging: A Practical Approach,’ (2004), Walnut Creek, Ca: Altamira Press Oppenheim, Charles, Ed, ‘The Legal and Regulatory Environment for Electronic Information,’ (2001), Tetbury, U.K Stein, T. S and Bathurst, J, ‘Performing arts management: a handbook of professional Practices,’ (2008), New York, Allworth Press Stim, Richard, ‘Copyright Law,’ (1999), Delmar Learning Taubman, J, ‘Performing arts management and law, (1981), Supplement to volume I and Volume I, New York, Law-Arts LEGISLATION 1995 Trade Mark Act The Amendment Copyright Law The Australian Consumer Law The Australian Copyright Law The Copyright Act of 1968 The United Nations Universal Declaration of Human Rights Read More