Assigning Copyrights of Indie Artists.
Labels always want to have control or ownership of the ‘sound recording’ of a track which is normally in the hands of the performing artist and author. When releasing a record with a label, they assign these rights to the label in exchange for royalty payments. These are called the artist royalties. As I have mentioned in my blog Types of Copyright for Indie Music, sometimes even the record producers are partial owners of copyright, along with the authors and the performing artist. In cases where a producer is also a copyright owner, there are producer royalties.
Modern music producers are often both the composer and performing artist of a record. The ‘producer royalty’ mentioned above refers to a record producer in the old sense, when a producer used to record a band where the band members were performing artists.
Labels need to have control or ownership of the ‘master recording’ of a finished record, in order to release it. When recording hasn’t been assigned to a label, the master rights are in the hands of the performing artist and the record producer. In exchange for royalties paid directly to the performing artist and producer, the label gets ‘sound recording copyright’. The producer royalty is sometimes paid out of performer’s royalty, because this ideally is part of the ‘recording costs’ and should therefore be covered by the artist and not the label.
A label is obligated to issue royalty statements or income reports at least twice a year or every six months. Payments are made only upon receipt of a valid invoice. If the label has not provided the income reports, be proactive in requesting statements and invoice, as labels will not pursue you to let you know they still owe you money. It is the responsibility of a publisher or manager, if you have one, however, they need to be well-informed of all your deals and accounting cycles in order to do their job. An occasional nudge may often be required.
Mechanical Licenses
Anyone who wants to reproduce or distribute your song, will need to get permission from you, the musical copyright owner. I have written about this in detail in my blog Alternative Income for Indie Artists. Every composer, lyricist or performing artist is a creator. A creator of art of one form or another. When you record a song or write lyrics, your work automatically becomes copyrighted. Copyright is a form of intellectual property. The one who creates, becomes the copyright owner. This right is automatically split equally if there are multiple creators; though owners are free to deviate from this equal share through mutual agreement. Copyright ownership rights are meant to give control over who can perform publicly, reproduce, create derivatives of and distribute work. Ownership rights can be fully transferred and assigned to others. Licenses of your music can also be granted to others. This is done typically in exchange for payments commonly referred to as royalties.
You issue the permission to reproduce or distribute your song through a mechanical license, and receive mechanical royalties in exchange. Record labels and performing artists request these licenses from the copyright holders to use their songs for actual recordings. Mechanical licenses can be issued directly by you or you publishers to the requesting party. There are also mechanical rights societies like the Harry Fox Agency in the USA that issue mechanical licenses.
As soon as a song has been recorded and released to the public, songwriters are forced to give out mechanical licenses for it, in the USA and many other countries. As I have written in my blog Publishing Income for Indie Artists, there are regulations of fixed royalty rates for certain licenses that have to be explicitly given or those that are compulsory to be granted, as determined by law. These type of licenses are called compulsory mechanical licenses and the royalty which has to be paid for them is called the statutory rate. For every copy of a song shorter than five minutes, the current statutory rate is $0.091. Because issuing monthly accounting statements of compulsory licenses is too much work, in practice, labels rarely acquire a compulsory license because it obligates them to issue statements.
The statutory rate is the benchmark for the maximum royalty rate anyone is willing to pay for a mechanical license and is therefore very important. If the writer demands a higher rate, the labels get the cheaper compulsory license.
This article is only about copyrighting your music and generating income from it. Do dive deeper into other subjects through the links that I have provided in this article. In my next blog I am going to write about assigning mechanical rights.
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