The Cheat Sheet: Copyright Licensing

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by Flip Michaels

"Wrong, Buckaroo!"
Dave Scott, Chairman/CEO, TM Century Inc.

After researching and writing March's Cheat Sheet, I received a letter from a very kind reader. That reader, Dave Scott, feels I should have gone an inch deeper into the muddy waters of infringement. So, after taking a shower, I gave him a call. He had a valid point, and I'd like to thank him for sharing his insight with The Cheat Sheet. You'll find Dave's letter, in its entirety, on page 17. Check it out!

We move on now with part two of our three-part series covering Copyright Procedures, Licensing, and Broadcast Royalties. This month it's:

Part Two: LICENSING

You've copyrighted your material. Now, under the laws of music publishing, you have rights. The rights to a composition are divided into two groups:

1. Small Rights - rights for when the royalty rate or payment is specified either by law or by one of the national agencies or societies representing composers and publishers. For example, ASCAP (American Society of Composers, Authors and Publishers), BMI (Broadcast Music, Inc.), SESAC (Society of European Stage Authors and Composers), or the Harry Fox Agency. These rights include mechanical royalties from the sale of vinyl, tapes, CDs, and DATs; broadcast royalties (Part Three in this series), and performance royalties.

2. Grand Rights - rights for when the payment or royalty must be negotiated (between the publisher and the user). These rights include synchronization, advertising, printed production use, and many more that are categorized as transcription uses. Anyone who wants to use the composition in one of these following ways must secure the corresponding license from either the publisher or agency that handles that type of use.

Got it? Good.

Now you know your rights. So let's take two steps forward and then one step back.

Income from a composition is derived in two ways. Writer's Royalties and Publishing Royalties. Writer's royalties are for composing the music or authoring the lyrics (normally 50% of total income). Publishing royalties are for merchandising/selling the composition to various users (by using your rights) granting licenses, collecting and distributing fees and royalties (normally the other 50% of total income). One step back, by purchasing the right to use the composition in advertising a product (via advertising licenses) a profit is made. That is a publishing royalty.

Next.

There are many types of licenses...print, synchronization, dramatic, etc.. And all of them cover the transcription uses we discussed earlier. But to define each of them and their individual limits could fill a book, easily. Therefore, we'll discuss the most common, Mechanical licenses.

The publisher has only one power over mechanical licenses to a composition: deciding who is granted the "first mechanical license." This license may be denied to anyone, but once it's granted, law dictates that to anyone else who wants to make copies of the composition for any kind of distribution, they must be issued a compulsory license by the publisher. This means it can be made without permission or payment; the license allows the mechanical copies to be produced. A compulsory license can only be denied if the publisher (after hearing the newly recorded version) feels it will damage the name or reputation of the composer or composition, thereby lessening the future earning potential of both.

Whew!

Just like copyrighting procedures, licensing is a very muddy territory. I have only "attempted" to cover some details and definitions, but I assure you, there is much more information then I have provided.

REFERENCES: Having two great references can give you the "proper" guidance you require in protecting your own work and using others.

How To Protect Your Creative Work, by David Weinstein (New York: John Wiley and Sons Inc., 1987)

The Business of Music (5th Ed.), by Sidney Shemel and M. William Krasilovsky (New York: Billboard Publications, 1985)

Next month, I'll finish this series of three and cover BROADCAST ROYALTIES. I truly hope this information has briefed you, a kind of shortcut to getting the essentials. A Cheat Sheet! Like driving home after work and passing a cemetery with a sign saying "if you were dead, you'd be home already."

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