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  “A clear contender for the one indispensable work on the topic, this book delivers the goods. There is no one involved in the music business who will not learn and benefit from this ambitious work.”

  —NEW YORK STATE BAR ASSOCIATION

  “This book gives you the real deal on the way the music business really works, whether you’re new to the game or even if you think you’re a veteran—from contracts to touring, good and bad money decisions, and even creating a team no artists should do without.”

  —SEAN PAUL, ATLANTIC RECORDING ARTIST

  “An indispensable compass to guide you through the trials, traumas, and occasional triumphs you will encounter in that most unusual ‘life work’ called the music business.”

  —BRUCE LUNDVALL, PRESIDENT AND CEO OF THE BLUE NOTE LABEL GROUP

  “This book is like a map, showing how to avoid the danger zones in the music business.”

  —RIC OCASEK, RECORD PRODUCER, FORMER LEAD SINGER AND SONGWRITER FOR THE CARS

  “An absolute must for anyone interested in the music business. This is by far the most informative book on the business of music I have read to date, and it’s one that I’ll refer back to regularly.”

  —BIG HEC, RAPPER, PRODUCER, AND VIDEO MAGAZINE PUBLISHER

  “Attention classical musicians: this book is for you! In the rapidly changing world of the performing arts, it is more important than ever to understand fundamental business principles. This book explains it all—and will save you a lot of time, aggravation, and money.”

  —CHARLES LETOURNEAU, FORMER SENIOR VICE PRESIDENT, IMG ARTISTS ARTISTIC CONSULTANT FOR THE NAPA VALLEY FESTIVAL OF THE ARTS AND OTHER ARTS ORGANIZATIONS

  “Peter Thall has made it his business to know everything that’s worth knowing about the music world, and now he’s sharing it with the world at large. I’m frequently asked for the insider’s view of the industry, and I always point them to Peter’s very useful and informative book.”

  —ROGER FAXON, CHAIRMAN AND CEO, EMI MUSIC PUBLISHING

  “Whoever reads this book is getting expert advice from one of the most respected and knowledgeable players in the music industry today. I wish this book was available when I was looking to begin my career in the music business.”

  —DAVID RENZER, CHAIRMAN AND CEO, UNIVERSAL MUSIC PUBLISHING GROUP

  Copyright © 2016 by Peter M. Thall

  All rights reserved.

  Published in the United States by Watson-Guptill Publications, an imprint of the Crown Publishing Group, a division of Penguin Random House LLC, New York.

  www.​crownpublishing.​com

  www.​watsonguptill.​com

  WATSON-GUPTILL and the WG and Horse designs are registered trademarks of Penguin Random House LLC

  Previous editions were published by Billboard Books, New York in 2002, 2006

  Library of Congress

  Cataloging-in-Publication Data

  Names: Thall, Peter M.

  Title: What they’ll never tell you about the music busines : the complete guide for musicians, songwriters, producers, managers, industry executives, attorneys and accountants / Peter M. Thall.

  Description: Third edition. | Berkeley : Ten Speed Press, [2016] | Includes bibliographical references and index.

  Identifiers: LCCN 2016015721 (print) | LCCN 2016018133 (ebook)

  Subjects: LCSH: Music trade—Law and legislation—United States. | Music—Economic aspects—United States. | Copyright—Music—United States. | Band musicians—Legal status, laws, etc.—United States. | Popular music—Writing and publishing.

  Classification: LCC ML3790 .T43 2016 (print) | LCC ML3790 (ebook) | DDC 780.23/73—dc23

  LC record available at https://lccn.​loc.​gov/​2016015721

  Trade Paperback ISBN 9781607749745

  Ebook ISBN 9781607749752

  v4.1

  a

  CONTENTS

  Cover

  Title Page

  Copyright

  Preface

  Acknowledgments

  1 • INTRODUCTION

  Selecting the Right Attorney

  Personal Representation

  Deal Makers: Why You Need Them

  Deal Blockers: How to Get Past Them

  Staying the Course or Calling It Quits

  2 • INVESTORS The High Costs of Low Finance

  The Costs of Being Heard

  Of Investors and Investment Agreements

  Finding the Money

  Internet-Specific Offerings

  The Safe Harbor Disclaimer

  Getting the Right Advice

  Paying It Back

  Overcalls and Conversions

  Commissions

  Crowdfunding

  Should He Who Pays the Piper Call the Tune?

  A Backer Who Knows What He’s Doing

  3 • ADVANCES Why They Seem a Lot Like Loans (and Vice Versa)

  A Sad Story and a Happy Story About Advances

  Is One Person’s Money Another Person’s Motivation?

  4 • ROYALTIES Some Unvarnished Truths

  How the Royalty Pie Is Sliced and Who Gets the Pieces

  Recording Costs

  United States CD Album Royalty Calculation

  Payment on Less than 100% of Records Sold

  “New” Technology?

  “Special” Categories

  Two Diabolical Deduction Devices

  Reducing Mechanical Royalties

  Special Issues Regarding Controlled Compositions

  The Beat Goes On: Other Important Deductions

  Prepayment of Royalties

  The Myth of Royalty Escalations

  Free Goods

  Lost or Misplaced Royalties

  Chipping Away at Post-Term Royalties: Synchronization Licenses

  Accountings, Audits, and the Statute of Limitations

  How Responsible Should Record Companies Be?

  The Effects of Digital Downloading on Pricing and Royalties

  360 “Deals”

  The Digital Evolution

  5 • PERSONAL MANAGEMENT The Whys, Wherefores, and Watch Outs

  What a Personal Manager Should (and Should Not) Be Expected to Do

  Managing the Five Stages of an Artist’s Career

  Remakes

  KMMA: Keep My Music Available—At All Costs

  Choosing Your Manager

  The Question of Clout

  Paying Your Manager

  The Term of the Agreement

  Extending or Terminating an Artist-Manager Relationship

  Breach of Contract in Artist-Manager Agreements

  6 • MANAGING YOUR BUSINESS AND YOUR FINANCIAL FUTURE When “Show Me the Money” Isn’t Enough

  What a Business Manager Does

  Finding the Right Person

  Certified Public Accountants

  Auditing the Auditor

  What Kind of Business Is Being Managed?

  Should You “Do Business as” or Form a Partnership?

  Money Means Options: Resisting the “Keep ’Em Poor” Philosophy

  Managing Your Money

  Investing: Is Anyone in Charge Here?

  Making It and Saving It

  7 • WHEN YOUR JOB IS MORE THAN A GIG Employment Agreements and Disagreements

  Term of Employment

  Duties

  Reporting Lines

  Confidentiality and Competition

  Stock Options

  Perks

  Termination

  Working in a Foreign Land

  Relocation and Re-Relocation

  Visas

  Disability and Death
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  Provisions That Survive Termination

  Vacations

  Release and Settlement

  Employment Issues Specific to the Music Industry

  Variations of Royalty Calculations

  Employment Agreements with Celebrities and Others Otherwise Engaged

  Mail

  The Ownership of Ideas

  8 • RECORD PRODUCERS Are They as Sharp as Their Points?

  How 25% Can Equal 100%

  Cross-Collateralization: It Does Not Apply to the Producer

  Producers’ Royalty Provisions: The Basics

  The Producer as Author of the Sound Recording

  Producers and Neighboring Rights

  9 • GETTING YOUR RECORD HEARD A Practical Guide to Marketing and Promotion

  Marketing Tools

  The Goal-Oriented Campaign

  The Record Contract

  Do Record Companies Know What They Are Doing?

  Victim or Victor?

  Television Campaigns

  Radio Promotion

  Airplay and Payola

  The Same Old Song (Only the Coda Is New)

  The Beginning of the End?

  A Brief Look at the Promotional Picture—from the Artist’s Point of View

  10 • TOURING CONCERNS Trials and Tribulations

  The Club Tour

  The Grand Tour

  Sample Tour Budget

  Private Charter

  Elements of Touring Agreements: Commonalities and Idiosynchrasies

  11 • MERCHANDISING Your Band, Your Brand

  Tour Merchandising

  Retail Merchandising/Web Merchandising

  Confidentiality

  Compliance with Local Laws

  End-of-Term Inventory and Sell-Off

  Artwork and Photographs

  Coupling

  Life and Disability Insurance

  Piracy

  Audits

  12 • AUDITS Truth or Consequences

  Examining the Audit

  The Flow of Money

  Access to Registration Information

  The Black Box or “Something Is Abyss Here”

  Television Campaigns

  Interest Charges

  Statutes of Limitations

  Conducting Audits in Foreign Countries

  A Few Practical Suggestions

  The Right to Audit: A Contract Issue

  13 • MUSIC PUBLISHING The Odyssey of the Song

  What Is a Music Publisher—and What Does It Publish?

  Copyright: A Bundle of Intangibles

  Financial Secrets and Realities

  Mechanical Royalty Rates Outside of the United States

  Top Gun—a Top Buyout for Paramount

  The Administrating Function

  Family Ties (Too Close to Sue)

  When Your Publisher Forgets You

  Foreign Taxes

  At-Source Versus Receipts Deals

  The Black Box Revisited

  Copyright Reversions

  14 • WHEN RODGERS MEETS HAMMERSTEIN Determining Songwriter Credits

  Cowriting Agreements

  Cowriters Who Are Band Members

  15 • BEING YOUR OWN MUSIC PUBLISHING COMPANY Pros and Cons

  Self-Publishing

  Getting in Touch with the Copyright Office

  Why Bother Doing It Yourself?

  Acquiring Copyrights

  Reversion of Copyrights

  The Value of the Copyright

  The Impact of Administrating Costs on True Earnings

  The Cost of Giving Away a “Piece” of the Publishing

  16 • INTERNET ENTREPRENEURSHIP Doing It Yourself

  Competing with the Big Boys

  Artist, Songwriter, Performer—and E-Commerce Expert?

  Making a Living

  Stealing and Protecting Against It

  Dos and Don’ts of Internet Entrepreneurship

  Manufacturing and Distribution

  Kickstarting Your Career

  Podcasting

  Instantaneous Dissemination of Live Performances

  Creating a Website

  Which People Should Do It Themselves?

  A Word of Warning—and Encouragement

  17 • LOST, MISPLACED, NEGLECTED, AND ABANDONED Royalty Opportunities You Were Never Told About

  An Introduction to Neighboring Rights

  Broadcast Mechanicals

  Neighboring Rights in Our Own Backyard: Canada

  Lost, Misplaced, Neglected, or Abandoned: Which Category Are Your Royalties In?

  Show Me the Money

  Two Neighboring Rights–Friendly Countries: The UK and the Netherlands

  Neighboring Rights Collections Agencies

  Performing and Other Obscure Rights in Sound Recordings

  18 • URBAN MUSIC The Beat Goes On

  Roots

  The Milieu

  Urban Music: The Producer’s Cosmos

  Different Strokes for Hip-Hop Folks

  Rap as Protest

  The Importance of the Mix: Mixtapes

  Career Ceilings

  Hip-Hop and Pop Culture

  Business Management and the Management of Business

  The Changing Image

  Contractual Issues

  The Rap Coalition: Self-Help Exemplified

  Hip-Hop Rules

  19 • CLASSICAL MUSIC Dead or Alive?

  A Little History

  Demise or Rejuvenation?

  The Metropolitan Opera

  An Essential for Success: Spirituality

  New Life for an Old Genre

  The CD Arrives: Both a Blessing and a Curse

  The Internet: Is It the Answer?

  The Role of Record Companies

  The Composer-Artist: Special Considerations

  Classical Composers and their Publishers: Some Pitfalls and Some Options

  Classical Management

  Presenting the Singer

  Music Education

  20 • TERMINATION OF GRANTS OF COPYRIGHTS For Every End, a Beginning

  Basic Term of Protection

  “K-K-K-Katy”

  Termination of Grants

  Duration of Copyright: Subsisting Copyrights

  Who Can Terminate

  The Control of Termination Decisions

  The Rights Granted

  The Windows for Termination

  When Automatic Renewal Applies

  The Sonny Bono Term Extension Act

  Keeping Records

  The Technical Requirements for Termination

  21 • COMPLIANCE WITH COPYRIGHT LAWS Hints for the Corporate Counsel

  Intangible Rights and the Internet

  Licensing From Music Publishers and Sound Recording Owners

  Copyright Provisions Applicable to the Internet

  Term of Copyright

  Sampling, Borrowing, and Stealing

  Rights Management

  Dangerous Language Alert

  Music Clearance: The Music Industry’s Revenge

  International Issues: One-Stop Shopping

  So Your Corporation Has Also Decided to Become Adventurous?

  22 • CATALOGUE VALUATION How to Improve Your Odds at Winning Big

  Factors in Valuing Catalogues: An Overview

  Satellite Radio, Internet Radio, Mobile Phone Streaming, and HD Radio

  Evaluating Data

  Who Owns the Catalogue?

  Termination Issues

  The “Trunk”

  Who’s Sorry Now? The Blackbird

  23 • COPYRIGHT ISSUES A Sampler

  Changing Copyright’s Image

  Copyright Infringement

  Sampling

  The Impact of the Internet on Recording and Publishing Agreements

  How the Internet Has Provided Context for Songwriters’ and Publishers’ Search for Equitable Treatment

  The Internet Is Global: So What? I’ll Tell You What

  What Is to Be Done?

 
The Fairness in Music Licensing Act

  The Copyright Term Extension Act: A Lesson in Leverage

  MP3: How Two Letters and a Numeral Terrorized an Entire Industry

  Napster and Post–Napster

  The More Things Change, the More They Remain the Same (or Do They?)

  24 • COPYRIGHT Can’t Live with It—Can’t Live Without It

  Battles or Battle-Axes

  Copyleft (aka Copy Wrong), But Not Copyright

  The Clearance Nightmare

  Copyright and Personal Property

  Misuse of Copyright

  Some Suggested Solutions

  25 • SOLVING PIRACY IN THE 21ST CENTURY How to Avoid a Greek Tragedy

  Illegal Downloading

  When an Apple Boomerangs

  When Culture Trumps Commerce

  Copyright Owners: Power (Not) to the People

  What Would the Greeks Do?

  Conclusion

  PREFACE

  We are the music makers

  And we are the dreamers of dreams,

  Wandering by lone sea-breakers,

  And sitting by desolate streams,

  World-losers and world-forsakers,

  On whom the pale moon gleams:

  Yet we are the movers and shakers

  Of the world forever, it seems

  —ARTHUR O’SHAUGHNESSY

  There are enough agents, accountants, attorneys, managers, and music publishers, not to mention friends and family, who are more than willing—for love or money—to advise young artists (musicians, singers, and songwriters) in the pursuit of their careers.

  Most of this advice is well-intentioned—and it may even be timely and helpful. However, it may also be irrelevant to a particular individual’s circumstances. The reasons for this are manifold.

  Not the least of the problems in offering advice to young artists is the fact that they customarily have limited knowledge of the music industry. Unlike participants in other industries, the major players in the music business often enter the arena with neither a clear understanding of its workings and history nor the means to obtain the information that would convey such knowledge to them. The people who make up the heart and soul of the music industry do not usually know a break-even point from a producer point, a royalty from a prince, or a mechanical license from a synchronization license—in short, they don’t know their business. In the course of writing this book, I have discussed various chapters with senior executives in different departments of major music business companies. At the end of the discussion, all of them told me, in so many words, “You know, I learned a thing or two today.” This is not to criticize them. As an attorney who has practiced in the music industry for more than forty years, I learned long ago that managers and executives in the music industry, unlike their highly trained peers who choose to work in the financial or real estate worlds, rarely have the requisite background to function in the industry at an optimal level. Yet these managers and executives are ultimately responsible for making the decisions that will make or break their companies.