Cordero Law | Business, Entertainment, and IP Lawyers

The Importance of a Music Lawyer in Negotiating Music Producer Agreements

91��Ƶ Cordero — Sun, 09 Jun 2024 21:08:24 +0000

Introduction

The music industry is a dynamic and complex field where creative talent meets intricate legal frameworks. Music producers play a pivotal role in shaping the sound and success of musical projects, yet their contributions often hinge on well-crafted agreements. Music producer agreements are essential documents that outline the terms and conditions of the relationship between producers and artists, record labels, or other entities. Given the potential for misunderstandings and disputes, having a music lawyer to navigate these agreements is crucial. This article delves into the importance of music lawyers in negotiating music producer agreements, highlighting their role, benefits, and the significant impact they can have on a producer’s career.

Understanding Music Producer Agreements

What is a Music Producer Agreement?

A music producer agreement is a legally binding contract that defines the terms under which a music producer will work on a project. These agreements cover various aspects, including compensation, rights, responsibilities, and the scope of work. They are vital for ensuring that both the producer and the hiring party (be it an artist, band, or record label) have a clear understanding of their obligations and expectations.

Key Components of a Typical Music Producer Contract

Compensation and Royalties

Compensation terms in music producer agreements are crucial. Typically, producers are paid an upfront fee and may also receive royalties. Standard royalty points for producers range from , with the specific number often negotiated based on the producer’s reputation and the project’s budget. Advances, which are payments made upfront against future royalties, can be fully recoupable or half-recoupable, depending on the agreement.

Ownership of Master Recordings

In most cases, the artist or record label owns the master recordings, with producers rarely retaining ownership unless they reach a super-producer status. However, producers typically retain ownership of their compositions or publishing. This means they usually get 50% of the publishing rights for the songs created using their beats, ensuring they earn from the song’s success.

Credit and Recognition

Proper credit and recognition are vital for a producer’s career growth. Music producer agreements should specify how the producer will be credited on all platforms, including album liners, digital music services, and promotional materials. This ensures the producer receives appropriate recognition for their work.

Termination Clauses

Since most of the work is often completed before the agreement is signed, traditional term clauses are less relevant. Instead, the focus is on termination conditions, outlining scenarios where either party can terminate the contract, such as breaches or failure to meet specific obligations.

Common Challenges in Music Producer Agreements

Ambiguities and Legal Jargon

One of the primary challenges in music producer agreements is the presence of legal jargon and ambiguities. Contracts are often filled with complex language that can be difficult for non-lawyers to understand. This can lead to misunderstandings and misinterpretations of critical terms, potentially causing disputes down the line.

Unfair Terms and Conditions

Without legal expertise, may find themselves agreeing to terms that are unfavorable or exploitative. This could include low compensation rates, excessive control by the hiring party, or limited rights to their own work. Identifying and negotiating fair terms requires a deep understanding of industry standards and legal nuances.

Potential for Disputes and Litigation

Disputes over contract terms can arise from various issues, such as payment discrepancies, ownership conflicts, or breaches of agreement. Resolving these disputes can be costly and time-consuming, often requiring legal intervention. A well-drafted contract can help mitigate these risks by clearly outlining the rights and responsibilities of each party.

Sample Clearance in Hip Hop

For hip hop producers, the prevalence of samples in their beats adds another layer of complexity. Unless the producer shifts the burden of sample clearance to the artist, they are typically responsible for clearing any samples used. This involves legal and financial risks, as failure to clear samples can lead to lawsuits and financial liabilities.

The Role of a Music Lawyer

Focus on Music Industry Standards and Practices

Music lawyers possess knowledge of the music industry, including its unique standards, practices, and trends. This focus allows them to craft agreements that are not only legally sound but also aligned with industry norms. They can identify potential pitfalls and ensure that the contract terms reflect current best practices.

Negotiation Skills to Secure Favorable Terms

Negotiating a music producer agreement requires skill and experience. Music lawyers are adept at negotiating terms that protect their clients’ interests while maintaining a positive working relationship with the hiring party. They can advocate for fair compensation, appropriate credits, and other essential terms that might otherwise be overlooked.

Ability to Identify and Mitigate Potential Legal Risks

Music lawyers are trained to spot potential legal risks and address them proactively. This includes identifying clauses that could lead to disputes and protecting their clients’ intellectual property rights. By mitigating these risks, music lawyers help safeguard their clients’ careers and financial interests.

Benefits of Hiring a Music Lawyer

Protecting Your Rights and Interests

One of the most significant benefits of hiring a music lawyer is the protection of your rights and interests. A music lawyer will thoroughly review and negotiate the contract to ensure that your contributions are fairly compensated and that you retain appropriate rights to your work. This protection extends beyond financial aspects to include credit, creative control, and other critical elements.

Avoiding Costly Legal Mistakes

Legal mistakes can be costly, both financially and professionally. By hiring a music lawyer, you can avoid common pitfalls such as agreeing to unfavorable terms, overlooking critical clauses, or failing to comply with legal requirements. A music lawyer’s expertise can save you from these mistakes and their potentially severe consequences.

Enhancing Negotiation Power

Having a music lawyer on your side enhances your negotiation power. Their legal knowledge and negotiation skills can help you secure better terms and conditions, ensuring that your contributions are valued and appropriately compensated. This can lead to more favorable outcomes and long-term benefits for your career.

Peace of Mind and Professional Support

Navigating the complexities of music producer agreements can be stressful and time-consuming. By hiring a music lawyer, you gain peace of mind knowing that a professional is handling the legal aspects of your contract. This allows you to focus on your creative work while ensuring that your interests are protected.

How to Choose the Right Music Lawyer

Qualities to Look For in a Music Lawyer

Experience in the Music Industry: A lawyer with a background in music law will be familiar with industry-specific issues and standards.
Focus on Entertainment Law: Look for a lawyer who focuses on entertainment law, as they will have the relevant expertise to handle your needs.
Strong Negotiation Skills: Effective negotiators can secure better terms and conditions on your behalf.

Questions to Ask During the Selection Process

What is Your Experience with Music Producer Agreements?: Ensure the lawyer has a track record of handling similar agreements.
Can You Provide References from Past Clients?: Speaking with previous clients can give you insight into the lawyer’s effectiveness and professionalism.
How Do You Approach Contract Negotiations?: Understanding their negotiation strategy can help you gauge their suitability for your needs.

Building a Strong Attorney-Client Relationship

Clear Communication: Maintain open and honest communication with your lawyer to ensure they understand your goals and concerns.
Mutual Understanding: Ensure both parties have a clear understanding of the terms and expectations of the relationship.
Trust and Respect: Building a relationship based on trust and respect is crucial for effective collaboration.

Conclusion

Music producer agreements are crucial for defining the terms and conditions under which producers work. Given the complexities and potential pitfalls of these agreements, having a music lawyer is essential. A music lawyer brings expertise, negotiation skills, and the ability to protect your rights and interests, ensuring you receive fair compensation and recognition for your work. By choosing the right music lawyer, you can safeguard your career and focus on what you do best—creating music.

For more information, contact the business, entertainment, and IP lawyers at Cordero Law. Our approach is to provide top-tier legal services by working with our clients rather than simply working for them. Book a consultation with us now.

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The Legal Aspects of Production Deals: What Artists Need to Know

91��Ƶ Cordero — Sat, 01 Jun 2024 22:51:31 +0000

In the ever-evolving music industry, production deals play a crucial role in shaping an artist’s career. These agreements outline the relationship between an artist and a production company, determining the terms of their collaboration. Understanding the legal aspects of production deals is essential for artists to protect their interests and ensure a fair partnership. This article delves into the key components, common pitfalls, and critical differences between production deals and other music industry contracts.

What is a Production Deal?

A production deal is a contractual agreement between an artist and a production company. In this arrangement, the production company, rather than a traditional record label, signs the artist. The production company then invests in recording and producing the artist’s music, subsequently seeking a recording contract with a major label to distribute the music.

This type of arrangement allows production companies to discover and develop talent, while artists benefit from the company’s expertise and industry connections. However, understanding the intricacies of these deals is vital for artists to avoid unfavorable terms and maintain creative control.

Key Components of a Production Deal

Contract Terms and Conditions

The contract’s terms and conditions outline the duration of the agreement, typically ranging from two to five years. These terms specify the scope of the work, including the number of albums or songs to be produced, and the specific obligations of both the artist and the production company. Clear definitions in these terms prevent future disputes and ensure mutual understanding.

Rights and Obligations

Production deals specify the rights and obligations of both parties. This includes the , the use of the artist’s likeness, and the distribution of profits. Artists must pay close attention to these clauses to safeguard their intellectual property and ensure fair revenue sharing.

Financial Aspects

The financial aspects of a production deal are often complex, involving advances, royalties, and recoupment terms. Advances are upfront payments made to the artist, which are recouped from future earnings. Understanding how royalties are calculated and distributed is essential to ensure fair compensation. Additionally, the deal may outline who covers production costs, marketing expenses, and other financial responsibilities.

Duration and Renewal Clauses

The duration of the contract and any renewal clauses should be clearly outlined. Artists should be wary of overly long terms that may restrict their freedom to explore other opportunities. Typically, production deals have initial terms with options for renewal, contingent upon the performance and success of the produced music.

Upstreaming

A unique aspect of production deals is the concept of upstreaming. This occurs when the production company secures a distribution deal with a major label, allowing the artist’s music to be released on a larger platform. Upstreaming can significantly boost an artist’s career, but it’s crucial to have clear terms about the transition process and any changes in financial arrangements or creative control.

Common Legal Pitfalls in Production Deals

Unfavorable Terms to Watch Out For

Artists should be vigilant about terms that may not be in their best interest. This includes clauses that grant or impose unfair financial obligations on the artist. For example, a clause that allows the production company to indefinitely extend the contract without the artist’s consent can be particularly disadvantageous.

Importance of Clear Definitions and Clauses

Ambiguities in the contract can lead to disputes. It’s essential to ensure that all terms are clearly defined, including the scope of work, payment terms, and ownership rights. Artists should seek legal advice to clarify any confusing language and negotiate more favorable terms.

Examples of Common Pitfalls

Common pitfalls include hidden fees, unreasonable royalty rates, and vague language that can be exploited. For instance, a poorly defined recoupment clause might lead to unexpected deductions from an artist’s royalties. Artists should be aware of these potential issues and work with a lawyer to identify and mitigate them.

Differences Between Production Deals and Other Music Industry Contracts

Production Deals vs. Recording Deals

While production deals involve an artist signing with a production company, recording deals involve signing directly with a record label. Production deals often offer more creative freedom but may come with less financial security compared to recording deals. In a recording deal, the label typically handles all aspects of production, marketing, and distribution, whereas in a production deal, these responsibilities might be shared between the production company and the artist.

Explanation of the 360 Deal

A 360 deal is a comprehensive contract where the record label shares in all of the artist’s revenue streams, including music sales, live performances, and merchandise. Some production deals can be structured similarly to a 360 deal, especially if the production company takes on a significant role in various aspects of the artist’s career. This structure can be beneficial if the production company has the resources and expertise to enhance the artist’s overall brand and income.

Pros and Cons of Each Type of Deal

Production deals provide artists with the opportunity to work closely with a production company and benefit from their industry knowledge. However, they may offer less financial stability compared to recording deals. Conversely, a 360 deal can provide comprehensive support but may involve sharing a larger portion of the artist’s income with the label. Understanding these differences helps artists make informed decisions about their careers.

Negotiating a Production Deal

Tips for Artists on Negotiating Terms

Negotiating a fair production deal requires preparation and knowledge. Artists should be clear about their goals, understand industry standards, and be prepared to negotiate terms that protect their interests. It’s crucial to discuss all aspects of the deal, from financial terms to creative control, and to seek amendments to any clauses that seem unfavorable.

Importance of Legal Representation

Having legal representation is crucial during negotiations. An experienced entertainment lawyer can help identify potential issues and ensure that the artist’s rights are protected. They can also provide valuable advice on industry norms and help the artist secure a more favorable deal.

Key Points to Consider During Negotiations

Key points to consider include the scope of the production company’s control, financial terms, duration of the contract, and ownership of the master recordings. Artists should prioritize their creative and financial interests during negotiations. Additionally, the terms of upstreaming and potential 360 arrangements should be carefully reviewed and negotiated.

Conclusion

Understanding the legal aspects of production deals is essential for artists to protect their interests and achieve long-term success. By being aware of the key components, common pitfalls, and differences between production deals and other contracts, artists can negotiate better terms and ensure a fair partnership.

Contact and Consultation

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Top Reasons for Incorporating Your Band in New York

91��Ƶ Cordero — Mon, 23 Nov 2020 14:00:00 +0000

Most bands start because the members enjoy playing music, being musicians, and enjoying time with their bandmates. However, at some point, bands attain a level of success and, at that point, the band members should begin to think of their band as a business. That is the time to incorporate your band and become serious about the business of music. At Cordero Law, we are in the business of helping musicians and music professionals form their corporations properly and keep them in good standing year after year. Here are some of the top benefits of your band in New York.

Protecting personal and family assets — when incorporated, your band becomes a separate legal entity that has the ability to borrow money and enter into contracts; as a separate legal entity, debts and obligations of the incorporated band are obligations and debts of ONLY the corporation; in this manner, creditors cannot seize the personal and family assets of the band members to satisfy the obligations and debts of the incorporated band.
Reputational enhancement — forming a corporation is a strong signal to record labels and production companies that your band members are serious about your music and are business savvy; incorporating is a means of gaining respect in the music industry.
One key to success — musicians and artists succeed for more reasons than the power of their music; being serious about the business of music and having the respect of your music industry peers is another key to success and, as noted, incorporating provides this key.
Makes your band immortal — corporations can literally last forever; more practically, incorporating your band allows for band membership to change over the years without affecting the band’s continued existence; incorporating covers unexpected eventualities like death, disability, and/or divorce.
Ability to create a credit score/rating for the band — as a separate legal entity, an incorporated band can begin to build and create its own credit score/rating that is separate and distinct from the scores/ratings of the band members; this will make it easier for the band to rent equipment and enter venue contracts particularly if members of the band have low personal credit score because of debt issues like student loans or if band members have personal bankruptcies on their credit reports.
Tax benefits — under the tax codes, corporations have certain tax advantages not available to individuals like the ability to write off and depreciate capital expenditures; examples include expensive instruments and sound equipment.
Obtaining lender financing — like all revenue streams, royalty payments can be used as collateral for lender financing; incorporating your band facilitates possible lender financing; typically, this type of financing is not available for individuals.
Attracting investors — for similar reasons, incorporating your band might attract investors; investors invest in business vehicles like corporations.

Contact an Experienced New York Business Lawyer Today

For more information, contact the business, entertainment, and IP lawyers at . We can provide advice and counsel and can get your New York corporation established. Our approach is to provide top-tier legal services by working with our clients rather than simply working for them. Our law practice focuses on the music industry. Contact us via our online or by calling (212) 960-8890.

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Beware of Trademark Issues With Recording Contracts

91��Ƶ Cordero — Mon, 16 Nov 2020 14:00:00 +0000

At Cordero Law, we strongly advise our music industry clients to file for registration of trademarks related to their band, music compositions, and other artistic works. Trademark is another word for “brand.” Every band and musician has a unique and valuable brand — trademark — and creating, popularizing, and defending a brand usually involves great effort. As the US Trademark Office states, a trademark is a word, phrase, symbol, and/or design that identifies and distinguishes the source of the goods of one party from those of others. See general information .

However, after engaging in the hard work of creating your trademark, there comes the happy day when you are offered a recording contract or a music publishing contract. When that happens, great caution must be taken to maintain legal control over the band’s trademarks.

Generally speaking, recording contracts require that the band, musicians and songwriters give up — assign — any copyrights with respect to the music. That is normal.

However, every artist should be very reluctant to give up their trademarks. This can happen accidentally even if an artist is aware of the issue because a recording contract can use sneaky legal language. When an artist assigns a copyright or trademark, that means that the artist transfers ownership to another. This is what happens, for example, if you sell your house or car, you transfer ownership to the buyer. Instead of assignment of their trademarks, artists should insist on licensing their trademarks. A license is permission to use that does not grant ownership. A license can have a term, such as one year, or be perpetual. Licenses can also be exclusive, only one person/company has permission to use, or non-exclusive. For musicians, trademark licenses should be non-exclusive and of a limited term.

As said, legal language in recording contracts can be “sneaky” with respect to trademark assignment. Consider this provision in a hypothetical recording contract:

“Assignment of Copyright And IP — To facilitate distribution and commercial exploitation of the Work, BAND hereby assigns to the COMPANY all right, title and interest in and to the Music Recordings and the Work and all other intellectual property related to the Work. BAND grants a perpetual license to the COMPANY to use the likenesses and biographical information of the individual BAND members for the marketing of the Work.”

The “sneakiness” comes in the phrase “… and all other intellectual property related to the Work…” Trademarks are a type of intellectual property. With this language, the band will be required to sign a document assigning ownership of the band’s trademarks since the trademark is related to the music (or so the production company will argue). Note that the band members are also giving up trademark rights with respect to their individual likenesses.

As noted, musicians and artists WANT a production company to be able to USE their trademarks, without allowing the company to OWN them. The above contract provision should be changed to remove the language about “all other intellectual property” and language should be added stating something like: “BAND grants a limited non-exclusive license to the COMPANY to use BAND’S name and other trademarks.”

Contact an Experienced New York Music Lawyer Today

For more information, contact the business, entertainment, and IP lawyers at . Our entertainment law practice focuses on the music industry. We can help if you have questions about registering your trademarks, about recording contracts or about music licensing agreements. You need top-tier music industry attorneys to help with these complex legal matters. Contact us via our online or by calling (212) 960-8890.

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Another New Rule Announced by Ninth Circuit Likely to Cut Music Copyright Infringement Filings

91��Ƶ Cordero — Mon, 02 Nov 2020 14:00:00 +0000

Thousands of copyright infringement lawsuits are filed every year related to allegations of copying music or lyrics. To win a music copyright infringement case, the person filing the case must prove some sort of actual copying. In legal terms, the plaintiff must show “substantial similarity” between the plaintiff’s alleged original and the alleged copy.

One defense to music copyright infringement is a claim of independent or simultaneous artistic creation. This happens frequently. Imagine two songwriters living in different cities far apart writing a composition containing the same series of eight or 12 notes ascending the scale at about the same time. That is likely to be deemed independent creation.

To defeat a claim of independent creation and, also, to bolster proof of actual or indirect copying, one type of proof that can be offered is that the alleged infringer had access to the alleged original music. Imagine that we change our example and say the two songwriters live in the same city and, further, live next door to each other. The plaintiff might have evidence that, on some Saturday, he or she played the series of eight or 12 notes in a practice session that surely must have been heard by the neighbor. Then on Tuesday, the neighbor wrote a musical composition with the same series of eight or 12 notes. The spatial proximity and the temporal sequence can be used as indirect evidence of copying.

We can see a real-world example in a recent case from a federal court in Texas. See , Case Nos. 19-30400, 19-30889 (5th Cir. Sept. 22, 2020). In that case, Paul Batiste, a New Orleans musician, sued hip-hop artists Macklemore and Ryan Lewis for copyright infringement. Batiste alleged that Macklemore and Lewis copied one of his songs. Batiste argued that Macklemore and Lewis had access to his original song through “widespread dissemination” and because, once, the defendants played at a concert venue near a record store that sold Batiste’s music. The court rejected both claims. Batiste’s song was not popular and not widely known. Indeed, the court found that “all in all, dissemination of Batiste’s music was quite limited.” The court also rejected Batiste’s other argument. The court said that being near a store that sold Batiste’s records — along with 15,000 other records — creates only a “bare possibility” of access which is not near enough to prove music copyright infringement. Without proof of access, Batiste’s infringement claims were dismissed.

In many federal courts, there is a sliding scale of sorts with respect to access and the level of proof needed for “substantially similarity.” Generally, the more proven access to the original, the less similar the copy has to be to constitute copyright infringement. Legally, this is known as the “inverse-ratio rule.”

In a recent case involving Led Zeppelin’s “Stairway to Heaven,” the Ninth Circuit abolished the inverse-ratio rule. See , Case No. 16-56057 (9th Cir. En. Banc. 2020). In doing so, the Ninth Circuit has joined many of its sister Circuits. For example, the Second Circuit located here in New York, abolished the inverse-ratio rule decades ago. Skidmore is an important case since the Ninth Circuit covers most of the far western United States including California where vast quantities of music are created, performed and produced. In abolishing the inverse-ratio rule, the Skidmore court noted that the concept of “access” has been increasingly diluted in our digitally interconnected world. The court also noted that the inverse-ratio rule actually punishes songwriters and musicians whose music is less well-known. As such, the rule favors the famous over obscure. The court noted that nothing in the Copyright Act suggests that less popular artistic works deserve weaker legal protection than more popular works. In the end, the court held that even a high degree of access to an earlier work does not diminish a plaintiff’s burden of showing substantial similarity between the works.

Contact an Experienced New York Music Lawyer Today

For more information, contact the business, entertainment and IP lawyers at . Our approach is to provide top-tier legal services by working with our clients rather than simply working for them. Our entertainment law practice focuses on the music industry. Having a good music lawyer is essential for the success of new and established artists. Contact us via our online or by calling (212) 960-8890.

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The Kanye West Record Deal – Understanding His Tweets and Criticisms of the Music Industry

91��Ƶ Cordero — Mon, 19 Oct 2020 14:00:00 +0000

In September 2020, “Kanye West Record Deal” started trending. Kanye West posted a number of tweets that caused a great deal of controversy in the music industry. See BBC report . West made about a 100 posts and shared screenshots of pages from his recording contract. West complained that his record label was not allowing him to buy back his master recordings (which, at this point, he can afford). West also tweeted this statement:

“When you sign a music deal you sign away your rights. Without the masters you cannot do anything with your own music. Someone else controls where it is played and when it is played. Artists have nothing except fame, touring, and merch.”

West also noted that now, during the COVID-19 panic, artists have not been able to tour and give concerts. West said artists were starving without their master tapes and without the ability to tour.

Over the years, other artists have expressed similar views when it comes to recording deals. In 2015, Prince that:

“Record contracts are just like — I’m gonna say the word – slavery. I would tell any young artist… don’t sign.”

What is This Controversy All About?

When an artist signs with a record label, they sign a contract. Generally, there are not many substantive provisions in the contract that record labels are willing to change for new artists because they know they have the majority of the leverage when it comes to new artists and their first music deal. With respect to the master recordings, every record label contract contains a provision that states something like this: “Artist acknowledges that RECORD LABEL is the sole and exclusive owner of all Masters Tapes.” Often, the contract then has several paragraphs explaining that sole and exclusive ownership entitles the record label to:

Ownership of all duplicates and copies of the master tapes
Ownership of any video or other tapes made at the time and in the place was the master tapes were made
To manufacture, advertise, sell, lease, license, synchronize with any medium, or otherwise use or dispose of masters (with such rights generally being states as “for all time” and “throughout the Universe”)
To use and permit others to use the artist’s likeness and biographical material
To release records manufactured from the masters
To allow others to release records made from the masters without needing the consent of the Artist
To release songs/compositions as part of albums or other compilations
To publicly perform the music and/or allow others to publicly perform the music

Note that these provisions related to the label’s ownership of the master tapes is forever. This is what West meant by the tweet quoted above. Even though you performed the music, you have no rights whatsoever with respect to the recording or how the recording is used. As can be seen, record contracts are very one-sided.

In addition to criticizing the fact that artists are forced to give up ownership of their music, West tweeted criticisms of the common practice of record labels taking reimbursements from the royalty payments. These are generally called “recoupments.” A typical contract will allow “recoupment” of expenses like recording studio expenses and fees, mixing and mastering service fees, photography and graphic art design fees, manufacturing costs for records, discs or other media, rental costs for equipment, etc. One may legitimately wonder what the record company pays for that does not end up being “recouped.”

West’s solution to the Kanye West record deal controversy seems to be a union of music artists, something like the Screenwriters and Actors Guilds that operate in the film and television industry. Other artists have tried and those efforts have not succeeded. We here at Cordero Law will be watching developments with interest.

Contact an Experienced New York Music Lawyer Today
For more information, contact the business, entertainment, and IP lawyers at . Our approach is to provide top-tier legal services by working with our clients rather than simply working for them. Our entertainment law practice focuses on the music industry. Having a good music lawyer is essential for the success of new and established artists. Contact us via our online or by calling (212) 960-8890.

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Music Band Break-Up Agreements: A Few “Must-Have” Provisions

91��Ƶ Cordero — Wed, 14 Oct 2020 14:00:00 +0000

When a music band breaks up, the result can be as “messy” as a vicious marriage divorce. One way to smooth the process and avoid a lot of acrimony is to have the band members agree to a Band Break-Up or Band Divorce Agreement. Such agreements are becoming more and more popular. An experienced can help draft the agreement. A band break-up agreement should be negotiated and drafted early in the band’s existence, when the members are in good spirits and happy with each other.

Generally, a band break-up agreement should relate to ownership of the band’s corporate entity. We, here at Cordero Law, recommend that music bands create a corporation, limited liability company, or other corporate entity for conducting the band’s business and for holding title to the band’s intellectual and other property. Call us and we can quickly set up your New York corporate entity and ensure that it remains in good standing.

Setting up a corporation is important for several reasons. First, having a corporate entity signals to others in the music industry that the band is run by competent and knowledgeable individuals. Big business is operated through and music is big business. Thus, bands should operate through a corporate entity. Second, the corporate entity will prevent a break-up from interfering with the flow of royalties during a potential split. Third, corporate entities shield the personal assets of the band members from creditors who may sue to collect on business/corporate debts and obligations.

A band break-up agreement is made by and between the band members as owners of their band’s corporate entity. For example, if there are five members each owning 20% of the shares in their corporation, the band break-up agreement would relate to the ownership of those shares. The general purpose of the agreement is to establish, in advance, the conditions and mechanisms for how a band member can be bought out by the others or how the assets are to be divided among the members if there is a dissolution of the band. A band break-up agreement is also important for other eventualities such as the death of a band member, a divorce where the spouse might end up having some voting power and similar circumstances.

Aside from identifying triggering events, here are few other “must-have” provisions that should be negotiated for your band break-up agreement:

Price calculation formula — one key issue to negotiate is the price to be paid for the departing member’s percentage of ownership. Sometimes this can be a lump sum, but most often the price to be paid is a percentage of royalties. It is not always as simple as “I own 20% so I should be paid 20% of continuing royalties.” The band members should consider whether discounts or premiums should be included. For example, future royalties for previously recorded music often increase based on the increasing success of the band. A previous band member has no role in that increasing success and, thus, might legitimately be entitled to a smaller share of future royalties. By contrast, a lead guitarist or drummer or singer might legitimately be entitled to a larger share of future royalties.
Dissolution or continuation — band members should consider whether complete dissolution of the band and corporate entity is better than having the band/corporation continue on with new members; there are pros and cons.
Valuation methods — if there are specific assets owned or expected to be owned by the corporate entity, then likely a professional neutral appraisal will be needed if there is a break up. The band members should agree on the appraisal method and whether discounts or premiums should apply.
Payment methods — often, bands are “cash poor” when a break up occurs. Indeed, lack of revenue can be the final “stresser” that leads to the break up. Consequently, the members should consider payment methods and schedules. The members also might consider exploring and buying insurance products that might cover pay-out obligations.
Dispute resolution mechanisms — the band break-up agreement is intended to avoid disputes and disagreements, but that is not always possible. Thus, members should agree to a dispute resolution mechanism if there is a disagreement about price or valuation. One option is agreeing to mandatory arbitration. Arbitration has the advantage of being confidential which reduces the chances of the band’s dispute being publicized.

Contact an Experienced New York Business Lawyer Today

For more information, contact the business, entertainment and IP lawyers at . We can help draft your band’s break-up agreement and can get your New York corporation established. Our approach is to provide top-tier legal services by working with our clients rather than simply working for them. Our entertainment law practice focuses on the music industry. Contact us via our online or by calling (212) 960-8890.

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Understanding Actual and Statutory Damages for Music Pirating

91��Ƶ Cordero — Mon, 05 Oct 2020 15:35:07 +0000

Under the US Copyright Act of 1976, , there are two categories of damages that can be collected to punish music piracy. “Piracy” is known legally as “infringement.” The two categories of damages are:

The copyright owner’s “actual damages and any additional profits of the infringer…” (Section 504(a)(1)) or
An “award of statutory damages” from $750 to $30,000 per infringement (Section 504(c)).

In the case of “willful” piracy/infringement, the court can increase the amount of statutory damages to up to $150,000 per infringement. Note that the two categories are separate and that the copyright owner must make a choice between the two.

Sometimes there is confusion about why there are two categories. The answer is twofold — to adequately incentivize copyright owners to protect their copyrights and to prevent piracy by making piracy potentially very expensive.

An example demonstrates the difference between the two categories and why Congress provided the options. Let us assume, hypothetically, that a college student pirates several of songs written and performed by your band. You and the band still own the copyrights and the copyrights have been registered. Now let us assume you and the band file a lawsuit to collect your damages and punish the defendant. In legal terms, the “defendant” is the infringer (in our example, the college student engaging in music piracy). Generally, an online purchase of music costs about a dollar or maybe $1.50 per song. Let’s also assume that you the whole purchase price as the band’s actual damages. Assume, finally, that the student did not sell the pirated songs and the student made no profits that can be recovered.

In our example, if four songs were pirated, the actual damages would total to about $6.00. That is not very much money and there is very little incentive to sue the infringer. However, if statutory damages are selected, then the court might award $750-$30,000 per illegal download. Now the damages are $3,000 at minimum and could be as high as $120,000. The potential for statutory damages makes it worth the time and expense to file infringement lawsuits.

From the other side, consider the potential costs to the infringer. If actual damages were the only possible recovery, then about $6.00 would be the maximum amount that the infringer might have to pay in damages. That is not too much risk. Likely, persons engaging in piracy would take that risk. If you get away with the piracy, the cost is $0; if you are sued, you might have to pay about $6.00 (which is about what the pirates would have paid if they had bought the songs). That incentive structure encourages piracy. However, since statutory damages are available, the downside risk to the infringer is much greater. If the infringer is sued, the potential damages are $3,000 to $120,000 with the possibility of $600,000 being awarded if the piracy is deemed “willful.” The potential for statutory damages makes it very costly for the infringer and serves as a true deterrent. On the cost-benefit balance, it is better to buy the songs.

Contact an Experienced New York Music Lawyer Today

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Music Industry News: Update on the Mechanical Licensing Collective

91��Ƶ Cordero — Mon, 28 Sep 2020 14:00:00 +0000

As many know, the Mechanical Licensing Collective (MLC) is set to “go live” on January 1, 2021. Despite many worries that were expressed in 2018 when the MLC was authorized and despite delays caused by the COVID-19 pandemic, it appears that there will be no significant delays or requests to Congress for more time. It has been announced that the official MLC portal, designed for registering and uploading data to the MLC database, will be operational in October or November 2020. See report . The portal was supposed to be operational by the end of the third quarter 2020, but that deadline is fast approaching and, likely, the launch will occur in October or November.

In preparation for the portal launch, earlier this summer 2020, the Mechanical Licensing Collective launched two online tools to help songwriters, musicians, music publishers and others ensure the accuracy of the MLC database and prepare for registration. See report . The first tool is called the Data Quality Initiative (“DQI”) which allows for comparisons to be run on different data-sets to uncover and highlight discrepancies. In the lead-up to the official portal launch, MLC officials have prioritized eliminating errors and improving the quality of MLC’s data. Both are essential to smooth and efficient payment processing starting in 2021. The DQI is aimed at helping those with large libraries of songs and compositions.

The second tool launched this summer is called the Music Data Organization Form (“MDOF”). The MDOF is aimed to help what are designated as “self-administered” songwriters, composers and musicians. Basically, the MDOF is for independent artists with a small number of songs and/or compositions. The MDOF is designed to help registrants locate and gather the information that will be needed for uploading data to the MLC portal when it opens online in October or November 2020.

The MLC is another payment mechanism for musicians, songwriters, publishers and others in the music industry. The MLC is a compulsory blanket licensing arrangement that will collect and pay royalties related to use and performance of music by digital streaming and downloading services. There is no “opt-out” for musicians or others. But payment of royalties depends on members of the music industry registering with the MLC on their soon-to-be-launched portal. Owners must register and provide data for all their “musical works” including who owns the music, who owns the lyrics and who owns what percentage of works co-owned or co-written. The digital streaming and downloading services will pay the MLC and the MLC will pay musicians, songwriters and publishers. Currently, for unregistered musical works, royalties will be held for three years and then those royalties will be distributed to other composers, musicians and publishers based on their market share. In other words, if a musician does not register, he or she will not get paid and, after three years, someone else will get their royalties.

The MLC was authorized by the Music Modernization Act (“MMA”) enacted in 2018. Based on current projections, the MLC is expecting to send out the first set of royalty payments in the spring of 2021.

Contact an Experienced New York Music Lawyer Today

For more information, contact the business, entertainment, and IP lawyers at . Our entertainment law practice focuses on the music industry. We can help if you have questions about registering with the MLC or about other music licensing agreements. Licensing agreements are complex and you need to consult a top-tier music industry attorney for advice and counsel. Contact us via our online or by calling (212) 960-8890.

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Trademarking for Musicians: What are International Classes?

91��Ƶ Cordero — Fri, 18 Sep 2020 19:30:27 +0000

As a musician and artist, the thought of trademarking for musicians might have come across your radar. That is because building your trademark is essential for protecting your songs and performances from being used or rebroadcast by others. It may take time to build your brand, but once established, your trademark should be registered with the US Trademark Office. Two of the most common questions with respect to applying for trademark registration are, “What are of goods and services?” and “Why do I need to choose one (or more)?”

In simple terms, for trademark purposes, thousands and thousands of commercial goods and services have been standardized by the many trademark offices in countries across the world. There are several international treaties that apply to trademarks and one of those treaties created international classes of goods and services. These classes have been given a general number from 1 to 45. As an example, many performing artists choose Class 41 for services relating to live musical performances. However, Class 44 is the proper choice if you are a therapist wanting to trademark music therapy services.

Furthermore, within each category there are dozens, and sometimes hundreds, of subcategories. For example, with respect to Class 41, here are few of the subcategories:

Entertainment services, namely, live performances by a musical group
Production services related to musical performances
Production services related to musical videos
Organization of exhibitions for musical entertainment
Rental of musical instruments
Entertainment services, namely, planning arrangement for musical performances
Publication services related to musical texts
Music transcription for others
Music composition services
Providing services related to a website featuring musical performances
And many more

In general, are used with only limited categories of goods and services and similar trademarks can coexist if they are insufficiently different commercial channels. This is why Delta Airlines and Delta Faucets can both have trademarks with respect to the word “Delta.” The two businesses offer very different commercial products, and consumers will not confuse the two trademarks.

When a musician or artist attempts to register a trademark, the Trademark Office requires that the applicant choose one or more international classes with which the trademark will be used. It is important to choose the correct class of goods and services and to choose the correct subcategory. Both songwriters and performing artists will want to choose Class 41, but the subcategories will be different. Picking the wrong subcategory can lead to costly delays at the Trademark Office or even a denial. This is one reason to retain an experienced music industry trademark lawyer to help with your trademark application.

Musicians and performing artists are not limited to one choice. Indeed, many artists choose two or more classes of goods and services. There are additional costs since the Trademark Offices charges $225 to $275 for each extra class of goods selected with the application. But these extra fees are minimal when it comes to protecting your brand. Other classes that are often selected include Class 9 for recordings, Class 16 for printed music, Class 25 for wearing apparel like t-shirts and Class 21 for mugs, glasses, and certain household and kitchen items.

Contact an Experienced New York Trademark Lawyer Today
For more information, contact the trademark and entertainment lawyers at . Our practice focuses on the music industry. We have the experience to help get your trademark registered. Our approach is to provide top-tier legal services by working with our clients rather than simply working for them. Contact us via our online or by calling (212) 960-8890.

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