MOSHITO 2010

MUSIC LAW

AND

CONTRACTS

Nick Matzukis1 September 2010

WHO IS THIS GUY ?

Lawyer, author, drummer, educator, lecturer, consultant, event producer, businessman

Nick Matzukis

Nick Matzukis

MUSIC LAW AND CONTRACTS

"I wish there had been a music business 101 course I could have taken." Kurt Cobain, Nirvana

“The more you think you don’t need to know and look the other way, the easier it is for someone

to pull the wool over your eyes” - Gene Simmons, KISS

"The music business is a cruel and shallow money trench, a long plastic hallway where thieves and

pimps run free, and good men die like dogs. There's also a negative side."

Hunter S. Thompson, Rolling Stone/Author

Nick Matzukis

WHAT YOU NEED TO KNOW ABOUT MUSIC LAW AND CONTRACTS

(UNFORTUNATELY)

Chapter One - Introduction

Chapter Two – An Overview of The Music Industry and the Key Players

Chapter Three – An Introduction to The Record Business and Its Workings

Chapter Four - Where Does My Money Come From? Types of Royalties

Chapter Five – Copyright Protection Societies and Other Industry Organizations

Chapter Six - The State of The Music Industry (International and South African)

Chapter Seven - General Principles of Contract

Chapter Eight – The Music Recording Contract and Related Agreements

Chapter Nine – The Music Publishing Contract

Chapter Ten – The Artist/Management Contract

Chapter Eleven – Copyright

MUSIC LAW AND CONTRACTS

CONTRACTS GENERALLY

THE RECORD CONTRACT ITSELF

SOME RELATED AGREEMENTS

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MUSICIANS’ ROYALTIES AND INCOME STREAMS

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COPYRIGHT IN COMPOSITION (PUBLISHING)

PERFORMANCE ROYALTIES

MECHANICAL ROYALTIES

SYNC ROYALTIES

GENERAL PRINCIPLES OF CONTRACT

REQUIREMENTS FOR A VALID CONTRACT

Consensus Capacity Physical Possibility Legal Possibility Formalities

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GENERAL PRINCIPLES OF CONTRACT

1. CONSENSUS – OFFER AND ACCEPTANCE

Express (written or verbal) or Tacit Complete, clear and certain Intention (eg quotes) Offer and acceptance to person or group of persons Must be communicated (e-mail, post, phone etc) Offer can lapse (eg counter-offers) Misrepresentation and mistake Duress and Undue Influence

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GENERAL PRINCIPLES OF CONTRACT

2. CAPACITY

Age Intoxication Insanity Prodigality, Insolvency and Others

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GENERAL PRINCIPLES OF CONTRACT

3. PHYSICAL POSSIBILITY

Subjective or Objective

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GENERAL PRINCIPLES OF CONTRACT

4. FORMALITIES

Copyright transfers in writing

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GENERAL PRINCIPLES OF CONTRACT

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5. LEGAL POSSIBILITY (INCL. RESTRAINTS OF TRADE)

GENERAL PRINCIPLES OF CONTRACT

Caveat Subscriptor!

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THE RECORDING CONTRACT

(1) Term - how long the agreement will last;

(2) Product Commitment - what the artist will be obliged to record for the Record Company;

(3) Territory - whether the agreement is worldwide or only for certain specified countries, areas or regions;

(4) Advances and Recording Costs - what the artist will be paid in the form of advances (ie payment before delivery of the masters), and who will pay the recording and other costs;

(5) Royalties - what the artist will be paid in the form of record royalties, what those royalties will be worth, and when those royalties will be paid;

(6) Recoupment, Cross-collateralisation and Other Deductions - deductions from artist‘s recording royalties;

(7) Creative Issues - who will have artistic control over the product;

Nick Matzukis

Nick Matzukis

THE RECORDING CONTRACT

(8) Record Company Obligations - what the Record Company will or should be obliged to do;

(9) Ownership - who will own the recordings and for how long;

(10) Restrictions - whether there will or should be any restrictions imposed on the Record Company’s freedom to exploit the recordings (eg Pink Floyd v EMI)

(11) Group Provisions - if the artist is a group or a member of a group, what will happen if he or anyone else wants to leave the group and/or wants to record a solo album;

(12) Controlled Compositions Clauses - special provisions relating to the limits placed on the Record Company’s mechanical royalty payments to be made for each controlled composition; Termination and Other Clauses;

(13) Termination and Other Clauses – “out” clauses and other provisions.

THE RECORDING CONTRACT

Nick Matzukis

SOME CLAUSES TO FOCUS ON

The Royalty Rate

Advances, Costs and Recoupments

Packaging Deductions

Promotional Copies Foreign markets, singles, budget sales and downloads

Cross-collateralisation

The 10% Reserve

Controlled Compositions and other publishing issues

Release Commitment and Reversion Clause

Ownership, Exclusivity and Licensing

RELATED AGREEMENTS

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LICENSING DEALS

PRESSING AND DISTRIBUTION (P&D)

THE 360 DEGREE DEAL

Others relating to copyrights in the recording eg Joint Ventures, Loan-outs,

Development Deals, Independent Production Deals...

PUBLISHING CONTRACTS

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THE SONGWRITER AGREEMENT

DEEDS OF ASSIGNMENT

SYNC LICENSES

All agreements relating to copyright in the composition (as opposed to the

recording)

GIVE YOUR MUSIC AWAY?

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To Receive is Better than to Give (...overall, but perhaps indirectly – ask Lars Ulrich)

DRM - a failure (and possible contravention of the ATIA)

Record Company Business Models – Advertising (eg We7), Product Endorsements (China), Media (eg Powerage)

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MUSIC LAW AND CONTRACTS

“There’s a whole ‘nother vocabulary you have to learn, and most artists don’t have the desire to

learn it. They’re content to pay a large company and management to preside. God bless – you’re

missing out. Come on in – the water’s fine.” David Lee Roth – Van Halen

“You’ve got to be business savvy really, or else you get the p*** taken out of you."

Melanie B – The Spice Girls

MUSIC LAW AND CONTRACTS

Nick Matzukis

THANKS, FOLKS

May fame and fortune (and a decent

contract)be with you…

AVL Productions – Woodstock 2007