Music Royalties

I recently represented a talented young musician in his negotiations with an indie label. The label wanted to manage him as a producer. The musician wanted to make sure he was getting a fair deal and also wanted to be able to independently pursue other musical endeavors (for example, he also had a band, but he did not want the band to be managed by the indie label). Both my client and I learned a lot about music industry contracts, and I wanted to share some of that knowledge over my next few blog articles.

One area that we got into during the negotiations was royalties. Royalties are how a artists, producers, labels, etc. get paid when their music is used for a commercial purpose. Royalties are tied to intellectual property rights—in other words, the person or business entity that “owns” the song is the one who gets paid the royalties.

There are actually a few different types of intellectual property rights tied to musical works. First, there is the musical composition itself. This is the notes, beats, lyrics, etc. (anything that can be written down on sheet music). Then there is the musical audio recording. This is the finished product, the song you hear on the radio or in your streaming music app.

Artists who get involved with labels, publishers, etc., need to make sure they are very careful about how their contracts outline intellectual property rights associated with their work product. Preferably, the artist gets to keep all rights associated with the composition and the recording, but that sort of deal cannot always be negotiated. Many times, a label may try to sign an artist or producer to a contract that involves “work for hire,” meaning the musician gets paid a one-time fee and the label owns the music (along with any rights to publish it, collect royalties for its use, etc.).

Ultimately, getting into any of these contracts can be complicated and daunting . It is best done with the advice of counsel. With all the excitement and glamor of the music industry, it is easy for an up-and-coming musician to rush into the first deal offered by a label; but it is important to remember to tread cautiously. Any true artist has spent hours and hours perfecting her craft, and so she should be paid fairly for her artwork and should not easily give up control of the intellectual property rights associated with it.