Business Side of Music...Anyone?

[ventoux]

I have a family member who has written and played music for over a decade. He’s been in several bands but one band in particular has been approached by an agent who has offered him a contract to sell the rights to a particular song that one of his bands created.

He never paid much attention to the business structure side of the music business, it was just all about creating the music and playing at clubs…well, now apparently he’s had an agent call him and he’s been presented a contract to sell the rights to this song to a well-known national music company.

I’m a fish out of water here and I’m just trying to ascertain who my nephew should interact with first to understand the multiple things he needs to do to get the business side of his musical creativity set up.

If you can provide any assistance it’d be appreciated – thank you!

 

[rt-texas]

I have a family member who has written and played music for over a decade. He’s been in several bands but one band in particular has been approached by an agent who has offered him a contract to sell the rights to a particular song that one of his bands created.

He never paid much attention to the business structure side of the music business, it was just all about creating the music and playing at clubs…well, now apparently he’s had an agent call him and he’s been presented a contract to sell the rights to this song to a well-known national music company.

I’m a fish out of water here and I’m just trying to ascertain who my nephew should interact with first to understand the multiple things he needs to do to get the business side of his musical creativity set up.

If you can provide any assistance it’d be appreciated – thank you!

Get a lawyer, preferably with entertainment and music experience. At least a consultation and to look at the contract. Once sold, it's gone forever.

 

[Starsky]

He will need a music attorney, or he can work with a music licensing firm to license his music for use. If he is licensing his music for use in a program, there are companies who handle the music licensing for artists and will help them place his other songs too. The cost of the license depends on the use of the song. The more widely the song is used, the higher the fee.

If he is selling his song for someone else to record, he is selling his publishing, which is its own animal. If the band wrote the song collectively, they will have to figure out who shares in the publishing before they can 'sell' their song. Publishing is more statutory in nature, and a publishing contract will be very different than a mechanical use license or a band deal.

Publishing deals can involve an advance payment against future publishing royalties, and the more royalties that are anticipated, the higher the up-front payment could be. Companies can also offer to buy the publishing outright, which usually done with new songwriters without a track record in the form of a buy-out contract, or with experienced songwriters or major recording artists who have a back-catalog of songs that the publisher wants to own for themselves.

Songwriters are sometimes signed to longer-term publishing deals where they get a large up front payment against their future royalties to write songs for a label. One tenant of my friend just got a $1M songwriting contract to do exactly that! IMO, songwriters have the best job in the music business because someone else is working on selling your songs while you get to write new songs for other artists to sell. Most major labels now write songs by committee for their major acts. I feel like it's just another way for the labels to keep more of the money for themselves and less for the writers. The labels are endlessly creative at writing deals that benefit themselves over the artists.

 

[ventoux]

He will need a music attorney, or he can work with a music licensing firm to license his music for use. If he is licensing his music for use in a program, there are companies who handle the music licensing for artists and will help them place his other songs too. The cost of the license depends on the use of the song. The more widely the song is used, the higher the fee.

If he is selling his song for someone else to record, he is selling his publishing, which is its own animal. If the band wrote the song collectively, they will have to figure out who shares in the publishing before they can 'sell' their song. Publishing is more statutory in nature, and a publishing contract will be very different than a mechanical use license or a band deal.

Publishing deals can involve an advance payment against future publishing royalties, and the more royalties that are anticipated, the higher the up-front payment could be. Companies can also offer to buy the publishing outright, which usually done with new songwriters without a track record in the form of a buy-out contract, or with experienced songwriters or major recording artists who have a back-catalog of songs that the publisher wants to own for themselves.

Songwriters are sometimes signed to longer-term publishing deals where they get a large up front payment against their future royalties to write songs for a label. One tenant of my friend just got a $1M songwriting contract to do exactly that! IMO, songwriters have the best job in the music business because someone else is working on selling your songs while you get to write new songs for other artists to sell. Most major labels now write songs by committee for their major acts. I feel like it's just another way for the labels to keep more of the money for themselves and less for the writers. The labels are endlessly creative at writing deals that benefit themselves over the artists.

Thanks, Starsky --- Would BMI be a music licensing firm?

 

[Bamaman]

The music industry is in turmoil right now with the pandemic taking all the acts off the road and not making any money. Payments on $2 million buses continue with no income off concerts. Many songs have been written in the meantime, most often in partnerships with other writers. And the stars have recorded prolifically now that they haven't had anything to do but hang around their home studios.

Nashville is where the largest contingent of songwriters live, The chances of some obscure person in Minnesota wanting to buy a song from an unestablished songwriter is pretty slim. Sounds like a come on. Life right now is really, really tough in the music business.

 

[ventoux]

The music industry is in turmoil right now with the pandemic taking all the acts off the road and not making any money. Payments on $2 million buses continue with no income off concerts. Many songs have been written in the meantime, most often in partnerships with other writers. And the stars have recorded prolifically now that they haven't had anything to do but hang around their home studios.

Nashville is where the largest contingent of songwriters live, The chances of some obscure person in Minnesota wanting to buy a song from an unestablished songwriter is pretty slim. Sounds like a come on. Life right now is really, really tough in the music business.

Again, thanks Bamaman. I'm in Minnesota but nephew is actually in LA and the contract has been presented to my nephew, the agent has been upfront as to who's buying the music and it's a well known firm...however, never over till it's over. The terms of upfront payment and royalties, etc. are embedded in contract but the issue is that it's all moving too fast for him and he needs the business incorporation as well as publishing representation. Again, thanks.

 

[Starsky]

Thanks, Starsky --- Would BMI be a music licensing firm?

No, BMI is a non-profit performing rights organization - technically an artist co-op - that lobbies and represents musicians and songwriters in the collection of royalties and administration of copyrights. Artists will join one (just one) of the big three - ASCAP, BMI or SESAC (in Europe) - as the representing organization for royalty collections, and these organizations theoretically work to ensure that their artists' music that is used publicly is paid for. For example, they go to bars and other businesses who use music, to make sure they are properly licensed and pay appropriate fees to use their artists' music. They collect a small percentage off the top to pay for their non-profit operations. Pretty much every recording musician is a member of one of these rights organizations and generally they stick with them for life. This is completely independent of music licensing companies; however, the rights organizations will try to get their members' exposure and work as part of their mission.

Here's an example of a typical company that helps artists license their music - one [that I happen to deal with] of hundreds of similar firms. They work with their hand-picked roster of artists to place their pre-recorded music into productions, and they also collect all the royalties on the artist's behalf for the songs they license (for a fee). This is an example of music licensing rather than publishing, and it is how lots of talented artists in their home studios make a living. Labels can also do publishing deals with these companies to re-record an existing track for themselves, but it is not the typical arrangement. (The efficacy of these firms can vary widely. This particular company is run by a bunch of editors/musicians who can place their own company's music into the productions they are hired to edit; so there are lots of great time-sensitive opportunities that get sent out when new productions are scheduled.)

Publishing companies will take songwriters' demo material and shop it around to artists or other labels to record for themselves. They also can provide licensing and placement for existing songs they own; and in that way, often cross over into the licensing part of the business as well. Licensing music is very common, so a good music attorney should be able to handle this quickly and efficiently. It's not crazy complicated like they are signing a long-term recording contract - and you definitely don't want to over-complicate things - they just have to come to terms. The fact that an Agent contacted him makes me suspicious, since Agent's are usually just trouble. If a label, licensing firm, or marketing agency contacted him, it would sound more plausible. You might tell your relative to find out who the Agent is representing and how the song will be used. He could just be fishing to collect some up-front fees for a promise he can't deliver. (The ubiquitous Nigerian Prince learned everything he knows from the Recording Industry.)

 

[ventoux]

Starsky --- , interesting. It's my understanding that two labels did directly contact him and then the agent(s) came after that. I'm talking with my nephew tomorrow and I'll share with him what you've shared. I appreciate your insight and I'll take a look at Atrium to learn more. Also, for what it's worth if you have interest I'll let you know how this turns out in the end. Sincere thanks.

 

[Starsky]

Starsky --- , interesting. It's my understanding that two labels did directly contact him and then the agent(s) came after that. I'm talking with my nephew tomorrow and I'll share with him what you've shared. I appreciate your insight and I'll take a look at Atrium to learn more. Also, for what it's worth if you have interest I'll let you know how this turns out in the end. Sincere thanks.

Every transaction is unique, so don't take my feedback as gospel, just precautionary. He should just be carful and ask lots of questions to understand the deal completely; and have an attorney review any contracts. As the stakes rise, so do the costs; and there are lots of sleazy manager-types out there who - when they smell an easy opportunity - will scam musicians by offering sham representation to cut themselves in on deals. (A one-off publishing agreement hardly requires an agent.) The best place to start is to have a 1-hour meeting with a good music publishing attorney. They can advise about the proposed terms of the deal and also about the need for representation (or not).