Music Industry Glossary

Working daily in the music business, as an entertainment attorney, a recording engineer and occasionally as a record producer, we have come to the conclusion that many artists are fairly clueless when it comes to the functions and responsibilities of certain key people in the industry. This brief glossary is intended to be used as a guide to assist the artist with the enormous amount of business decisions that they must face to help advance their career in the music industry. Just to make things interesting, we have also thrown in a dose of reality below a few of the descriptions.

Glossary

A&R:
The A&R (Artists and Repertoire) rep is the eyes and ears of the record label. This is the person that you want to please at the label, because he usually decides who is signed to the label and who is not. Reality: The A&R person is sometimes involved in producer-like activities such as choosing songs and sequencing of the record.

Advance:
A sum of money paid to an artist by a record company where the record company then keeps the Artist’s royalties until the record company gets its money back. (The process of keeping royalties to recover an advance is called recoupment.)

All-In Royalty Rate:
The “all-in” royalty rate is the rate paid to the artist, inclusive of the royalty rate payable to the Producer.

Artist:
The artist is the person or group performing the song in the studio or live venue. They may or may not write their own material depending on their songwriting skills.

Booking Agent:
The booking agent is usually responsible for securing and booking gigs for the artist.

Collective Work:
A collection of individual works which are independently copyrightable, and which may or may not be owned by different people.

Compilations:
A compilation is a collection of works which may or may not be separately copyrightable.

Compulsory Licensing:
Under the Copyright Act, compulsory licensing is an exception to the exclusive rights owned by a copyright holder. It allows a third party to obtain a license to use an artist’s work in cable television rebroadcasts, PBS broadcasts, jukeboxes, digital distribution of records and phonographs of non-dramatic musical compositions, even if the owner doesn’t want to grant the license.

Compulsory Mechanical License:
Section 115 of the Copyright Act provides that once a song has been recorded a copyright owner must license it to anyone else that wants to use it in a phonorecord in exchange for payment of mechanical royalties at the statutory rate.

Controlled Composition Clause:
A controlled composition is a song written, owned, or controlled by an artist (in whole or in part). A controlled composition clause is a clause in a recording agreement which places a limit on the amount of mechanical royalties the record company has to pay in for each controlled composition.

Copyright:
The term copyright, when used in the music industry, usually refers to the degree and type of monopoly an author will have over its works. Under the Copyright Act, the author of a copyright has a number of exclusive rights to the copyrighted work, which includes the right to do and authorize any of the following: to reproduce the copyrighted work; to prepare derivative works based on the copyrighted works; to distribute copies of the work to perform the work publicly; to display the works publicly; and in the case of sound recordings, to perform the copyright works publicly by means of a digital audio transmission.

Corporation (Loan-Out):
A corporation is a separate legal industry. The law treats the corporation itself as a person which can sue and be sued, distinct from the shareholders who comprise it. Because of this, artists frequently do business through corporations in which they are the sole shareholder in order to limit their personal liability. A corporation that an artist does business through is frequently called a “loan-out corporation” because the artist company will “loan-out” the artist’s services to the party contracting with the corporation.

Cross-Collateralization:
When multiple albums are cross-collateralized, the advance (as well as all other recoupable expenses, such as recording costs) for one album can be recouped against the royalties earned on all albums.

Derivative Work:
Under the Copyright Act, a derivative work is defined as a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, picturealization, motion picture version, sound recording, art reproduction, abridgement, condensation or other form in which a work may be recast, transformed or adapted.

Engineer:
The engineer usually takes direction from the producer and is responsible for operating the studio gear. This usually involves doing whatever it takes to transfer the producer’s sonic vision of the record to the final mechanical medium (CD, DVD, etc.). They can also assist the producer in matters such as studio selection. This category can usually be split up into several sub-categories including, tracking engineer, mixing engineer, mastering engineer and most recently, Pro-Tools engineer. Reality: On a local level, it is not uncommon for the artist to erroneously give producer credits to the engineer, nor is it uncommon for an engineer to assume additional producing responsibilities against the artist’s will. As an engineer, I always have plenty to do without having to worry about making sure that the vocals aren’t out of tune. I find this concept very similar to a major league quarterback being forced to throw the ball and receive it too. He may have the ability to do it, but it will only get you so far down the field.

Entertainment Attorney:
Call these guys “deal makers”, because they are usually the people who shop the artist’s material to the labels in an effort to score a “record deal”. They are also involved in contract negotiations between the artist and other business entities like labels and producers. Reality: Get one before you sign the bottom line!

Executive Producer:
Executive producer is usually a fancy name for the money person or entity. Although rare, I have also seen this title used for the identification of the assistant producer. Reality: The executive producer usually takes whatever money is left over from record sales, after all expenses, royalties and publishing have been paid out.

Free Goods:
It is important to have an understanding of free goods because it affects how an artist is paid. (This is because royalties are only paid for each record sold, and free goods are nonroyalty bearing.) There are two types of free goods. The first is real free goods, also known as special campaign free goods, which are records given away for free to dealers in order to encourage the dealers to buy the records. The other types of free goods are called normal distributive free goods. Some see normal distributive free goods as a disguised discount on the purchase price of a record given by the record companies to the dealers.

Independent Promoters:
Independent promoters are companies hired by record companies or by the artist to get records played on the radio whether meritorious or not inde promoters are frequently associated with the controversy surrounding “payola”.

Mechanical Royalties:
A mechanical royalty is a royalty paid to a song writer and publishers for their right to use the song in a record. The United States Copyright Office sets the benchmark for mechanical royalty rates. This rate is referred to as the statutory rate. For the period of July 1, 2002 through December 31, 2003, the statutory mechanical royalty rate is 8 cents for songs that are five minutes or less, or 1.55 cents per minute or fraction thereof for all songs over five minutes. However, most record contracts pay mechanical royalties on only 75% of the statutory rate. Further, recording labels usually have enough bargaining power to limit the number of tracks on which mechanical royalties will be paid to be 10 and 12. This limitation is made through the controlled composition clause of a recording contract.

Pay or play:
Pay or play usually stands for a clause in a recording contract which allows the record company to pay the artist a sum of money rather than recording the album.

Payola:
The term payola usually refers to a series of sometimes illegal activities (the most frequent being bribery of station managers and program directors) through which record labels increased airplay of their artists. Today’s inde promoter’s claim that they do not engage in payola, but rather have legitimate incentive and marketing agreements with radio stations which require the air play of certain songs a given number of times per day.

Performance Royalty:
A performance royalty is paid when a song is performed live on radio, on television, or in a movie. Performance royalties are collected by Performing Rights Societies.

Performing Rights Societies:
A performing rights society is an organizations that acts on behalf of music writers and publishers to license songs and collect royalties for their public performance (i.e., on the radio, on television, in a movie, in restaurants, clubs, bars, and other commercial establishments). Some performing rights societies provide users the ability to acquire a blanket license which allows users such as radio stations pay a single license fee for use of all of the songs in the societies catalog. The three principle performing rights societies in the United States are BMI, ASCAP, and SESAC.

Personal Manager:
The manager’s job is usually quite diverse. They are mostly responsible for advancing the artist’s career by way of advisement on business matters. They can do anything from choosing attorneys, advertising strategies, selecting booking agents, or even helping the artist evaluate songs. Reality: It is usually a conflict of interests for a manager and an agent to be one in the same, and there are numerous legal issues involved in this type of relationship.

Pressing and Distribution (P and D) Deal:
A “p and d” deal usually involves one record label’s albums being distributed through another labels distribution pipeline. Essentially, the first label will sell the records to the distributing entity for a wholesale price less a negotiated distribution fee.

Producer:
Typically selected by the artist, the producer is responsible for making the record or song “sellable”. This may involve picking out songs, assisting the artist with songwriting or even setting the mood of the session with candles or Christmas tree lights. The producer usually has an ear on the recording to make sure that it is sonically acceptable to the label and for radio. On most occasions, they also retain the burden of keeping the project on, or under budget. A good producer will usually see the project through, from pre production to the final mastering stage. Reality: The term “producer” is probably the most commonly used and abused title. In some genres of music (most commonly urban music), producer credits are typically given to the author of music or the “beat maker”. I have never really understood this practice, considering a “songwriter” credit usually yields a better paycheck. On a local level, the artist will sometimes assume the producing responsibilities regardless of experience, or worse yet, they may expect the engineer to produce the record without properly compensating him. It is extremely rare that this works out in the artist’s favor.

Publisher:
You can think of a publisher as a grocery store, and the song as the bread. A publisher will exploit your songs, in an effort to place it on a record, soundtrack or any other medium in order to earn you and them money.

Publisher/Publishing Company:
A publisher is in the business of acquiring and exploiting rights in musical compositions. A publisher or a publishing company works with a songwriter by issuing licenses and colleting royalties for use of the songwriter’s composition. (Known as administration rights.) Traditionally, the songwriter and the publisher split all royalty income 50/50.

Record One Royalties:
Record one royalties are usually applicable to producers. These types of royalties are called record one royalties because they are paid from the first record that the company sells. Some hot producers can get a royalty that is retroactive to record one. What this means is that the producer does not receive any royalties until recording costs are recouped. Once recording costs are recouped, the producer gets paid royalties from record one.

Road Manager:
The road manager is the person who takes care of the day to day business of a touring artist on the road. Reality: The road manager and “sound guy” are usually the same person for young artists on a budget.

Songwriter:
This is the person who either contributes words or music to the song. Due to the fact that songs are a hot commodity in the music industry, the songwriter and copyright owner are not always the same person.

Synchronization Royalty:
Sync royalties are paid when a song is used in conjunction with television programs, commercials and films.

Trademark or Service Mark:
In the recording industry, a trademark or a service mark usually involves band names or symbols which represent an artist or their band (think Prince). Trademarks are extremely important to the music industry because it is how the consumer knows which album to buy if they like a particular song. Could you imagine if there were ten bands called U2. It would be mass confusion to separate Bono’s U2 from the other nine. When settling on a band name, it is equally important to know that no other band is using your name. If you do begin to use a name that belongs to another band, this could constitute trademark infringement.

Work Made For Hire:
The term “work made for hire” refers to any type of copyrightable work, such as a composition, lyric, performance captured on recording media, which is (1) prepared by an employee as part of his or her job, or which is (2) specially ordered or commissioned as a contribution to a collective work, provided the written agreement between the parties governing the creation of the work specifically states that it is a work made for hire. Under the Copyright Act, the copyright in a work made for hire is owned by the hiring party - not the author or composer.

Patrick Olguin is a locally based recording engineer and record producer and his primary palette of colors is Velvet Tone Studios in downtown Sacramento. Scott Hervey is an entertainment attorney with the Sacramento firm of Weintraub Genshlea Chediak Sproul.