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Copyrights on Recorded Music

Who Owns Copyrights on Music?
When people talk about a song, they technically refer to a recording of a song. A song consists of two elements; the musical composition and the recording of the musical composition.[1] Songwriters create the lyrics and the instrumental composition while recording artists perform it. 

Each piece of recorded music contains a minimum of two copyrights: one for the musical composition and one for the sound recording itself.[2]

Usually, a song is created by more than one individual. On the composition side, there may be several songwriters/composers, and on the recording side, there may be more than one singer, other band members, a producer, etc. Absent of a written agreement, the main rule is that co-authors of a song each jointly own an equal undivided interest in the copyright.[3]The revenue from a song thus has to be split between everyone who has contributed to the making of the song, that is the musical composition and the sound recording.

The songwriters can be represented by publishing companies, and the performers by record labels. Publishing companies help songwriters to connect with performing artists to professionally record their songs in a studio. Publishing companies can also help songwriters to out-license their songs to media production companies such as film studios and advertising agencies.[4] The performers can be represented by a record label to help them with marketing, promotion, touring, distribution, connecting them with producers, and providing them with studio time.[5]

The major record labels (also music publishers) today are the “Big Three”: Sony BMG, Universal Music Group, and Warner Music Group. Collectively, they own more than two-thirds of the global market share of recorded music.[6] Commonly, the signing deal between the artist and the labels takes the form of a so-called 360-degree deal.  A 360-degree deal means that the record label gets a cut of all the revenue an artist generates – publishing rights to the underlying composition, usage rights to the sound recording, performance rights when the artist goes on tour, potentially even merchandise and sponsorships rights.[7]      

Alternatively, some musicians decide to represent themselves; they write their own songs and record them in their own studios. These artists are commonly known as indie (independent) artists. Streaming platforms like Spotify makes it easy to self-publish music without backing from a major record label. Typically, the indie artists sign up with a music aggregator such as CD Baby or TuneCore that distribute the artists’ work to streaming platforms.[8] On the plus side, the indie artists remain in full control of their work and attain complete ownership. However, the road to success may be more challenging without funding, signing bonuses, and promotion from the major labels.[9]

What Are Copyrights on Music?
Copyright law grants a bundle of exclusive rights to the copyright holder. Copyright laws can differ from country to country. There is no such thing as global or international copyright protection. However, nearly 180 countries have ratified the Berne Convention that sets out minimum standards for the rights of the creators of copyrighted work.[10]

Most national copyright laws state that a copyright holder can authorize or prohibit certain behaviors related to their copyrighted work, such as[11]

  • its reproduction in various forms
  • its distribution
  • its public performance
  • its recording
  • its broadcasting, by radio, cable, or satellite
  • its translation into other language

These rights are known as the copyright holders’ economic rights – the exclusive rights for the copyright holders to derive financial rewards from the use of his or her work. Beyond the economic rights, the copyright holder has moral rights which include the right to claim authorship of a work and the right to oppose changes to a work that could harm the creator’s reputation.[12] 

According to the Berne Convention, copyright protection is obtained automatically without the need for registration or other formalities.[13] Some countries nonetheless have a system in place to allow for the voluntary registration of works.[14]

What is Licensing?
The copyright holders can decide to enter into license agreements. Copyright holders have the exclusive rights to grant others permission to use their work and receive fair compensation for such use. In this way, intellectual property rights are converted into assets.

Licensing royalties is a vital source of income for artists and songwriters.[15]  Most licenses and corresponding royalties fall under four categories: mechanical royalties, performance royalties, synchronization royalties, and print royalties. We could add streaming royalties as a fifth category, but royalties from streaming are more of a hybrid between mechanical royalties and performance royalties.[16]

Mechanical royalties are paid to songwriters when their musical composition is copied and sold on a “mechanically reproduced” medium. [17]  Traditionally, record labels paid these royalties to songwriters when mechanically manufacturing CDs and vinyl records for their sound recordings.[18] Spotify and similar streaming platforms are also considered to copy and “mechanically reproduce” songs. They also have to pay mechanical royalties to songwriters when their music is streamed on the platforms.

Public performance royalties are paid to the copyright holders (both songwriters on performing artists) when their song is publicly broadcasted whether at a live performance or over the radio. Radio stations will usually pay performance rights organizations for blanket licenses that give them the right to play virtually any music in existence.[19] Music played over the radio in a restaurant or a bar is also considered to be a public performance in itself, which means that the venue has to pay the copyright holders for the use of their music.  Each stream on a streaming platform is technically a public performance because the songs we listen to are not owned by us (as with CD’s). Spotify has to pay public performance royalties to the right holders as well as mechanical royalties. 

Synchronization royalties have to be paid to the copyright holders, when their music is played in the background of a movie, TV-show, commercial, videogame, or any other kind of visual media output.

Finally, print royalties – a more uncommon form of licensing – are paid to the right holders, when their music is transcribed to a print piece such as sheet music.

Large music publishers and record labels can monitor their musicians’ work and administer their rights. However, usually, the national copyright collecting agencies do so instead to maintain efficiency and collective bargaining power.[20]

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[1] Andreas Fougner Engebretsen and Hallvard Kristoffer Boland Haugen (2018), The Music Industry on Blockchain Technology, pg. 5.

[2] O’Dair et. al. (2016), Music On The Blockchain: Blockchain For Creative Industries Research Cluster, Middlesex University, Report Nº 1, pg. 8.

[3] https://www.lexology.com/library/detail.aspx?g=152cdcf7-36b9-4f58-a473-95db73d65af5 (06-10-2020).

[4] Ibid.

[5] Ibid.

[6] https://musicandcopyright.wordpress.com/tag/market-share/ (opened 09-10-2020).

[7] Don Tapscott & Alex Tapscott (2016), Blockchain Revolution: How the technology behind Bitcoin is changing money, business, and the world. Toronto: Portfolio/Penguin, pg. 229.

[8] Engebretsen and Haugen (2018), pg. 7.

[9] Ibid.

[10] https://www.rightsdirect.com/international-copyright-basics/ (opened 03-10-2020).

[11] https://www.wipo.int/copyright/en/ (05-10-2020).

[12] Ibid.

[13] https://www.wipo.int/copyright/en/ (opened 03-10-20).

[14] Ibid.

[15] Engebretsen and Haugen (2018), pg. 8.

[16] Ibid., pg. 15.

[17] Ibid.

[18] Ibid.

[19] https://soundcharts.com/blog/performance-royalties-vs-mechanical (opened 07-10-2020).

[20] Wishnia,(2019), pg. 234.

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