For Composers and Lyricists
The job of a composer and lyricist is to create. It is very common for creators to leave the business of their creations to managers, agents, and lawyers. These professionals are generally well versed in the specifics of registering works for copyright and handling the transactional matters of licensing and selling copyrights. However, it is critically important for the future of your songs that you yourself have a basic understanding of the workings of the copyright laws and the legacy you are leaving for your heirs. Planning ahead for the ongoing management of your compositions and keeping careful and detailed records of copyright registrations, licenses, and grants will help ensure the smooth ongoing administration of your works. Your compositions are not only your legacy to your children and grandchildren; they are an important part of America’s cultural heritage. If you understand the rights and protections afforded to the author and his/her heirs by the copyright laws, you will be able to enhance the economic portfolio of your compositions. Careful safeguarding of musical copyrights helps to prevent the abuse of treasured works and ensures that the compositions receive the honor and appreciation they deserve.
Before you can determine the scope of the rights you have inherited and the potential for expanding the catalogue in the future (including claiming renewal term rights and/or terminating prior grants) you need as much information as possible. In a perfect world, the composer would leave you a file cabinet filled with precise information regarding the status of his or her musical compositions. The file would contain a complete list of songs written in whole or part by the composer, the identity of any co-writers, certified copies of all copyright registrations and renewal registrations, certified copies of all notices of termination served by the composer, an up-to-date copyright search report, and copies of all contracts entered into by the composer relating to the compositions (including agreements with co-writers, music publishers, performing rights organizations, managers, motion picture producers, record producers, and similar documents). However, it is the rare composer who is so attentive to the minutiae of copyright administration. Often, you will have to reconstruct the history of the composer’s work before planning for the catalogue’s future.
The Future Administration of Your Musical Copyrights
How Do You Administer Your “Recaptured” Compositions
Upon the effective date of termination of a grant, the songwriter or his/her heirs will identify a publisher for purposes of administering the music publishing rights in the song. At the outset, it is customary for this entity to be the songwriter’s or heirs’ wholly-owned publishing entity (be it a corporation, partnership, or d/b/a for the writer or heirs). The long-term administration of the compositions is generally handled in one of three ways – the catalogue may continue to be handled by the songwriter or heirs (self-published), the catalogue may be administered by a third-party music publisher, or the catalogue may be sold to a third-party music publisher.
In the event the songwriter or heirs decide to personally administer future exploitation of the catalogue, the copyrights in the compositions will be retained by the songwriter or heirs. The self-publisher will handle all requests for uses of the compositions as well as the marketing and proactive exploitation of the catalogue.
Alternatively, the songwriter or heirs and their publishing entity may enter into an administration agreement for a term of years with an unrelated music publisher (either the original publisher or a third-party music publisher). In this case, the copyrights in the compositions will be retained by the songwriter or heirs. The music publisher will be authorized to administer some or all of the music publishing rights in the compositions, subject to contractually established parameters (such as approval rights for the songwriter or heirs), deduct agreed-upon fees, and remit the balance to the songwriter or heirs. The amounts retained by the music publishing administrator, the advance and/or guarantee payable to the songwriter or heirs, and the scope of the rights granted to the music publishing administrator will be established in the negotiations between the parties.
Sale of Catalogue/Co-Publishing Agreements
Finally, the songwriter or heirs and their publishing entity may elect to sell all or a portion of the recaptured copyrights (or an interest therein) to an unrelated music publisher (either the original publisher or a third-party publisher). The sale of a partial interest in the copyrights is known as a “co-publishing” arrangement. While such a sale is usually for the life of copyright, it is possible to negotiate a sale for a limited term of years with a contractually established reversion date. The songwriter or heirs will usually retain the right to receive the writer’s share of the royalties generated from the catalogue and in the co-publishing situation, a portion of the publisher’s share of the royalties. The author or heirs may also elect to sell all or a portion of the writer’s share of the royalties.
Remember, if you sell the copyrights in the songs that you own as a result of exercising your Section 304(c) termination right, you will not be entitled to subsequently recapture the rights under Section 304(d). Bear in mind also that a purchase price that seems substantial at the time of sale may prove to be inadequate in hindsight. You should carefully consider the options of self-publishing your catalogue or entering into an administration agreement prior to electing to sell your copyrights.
For Music Publishers
Musical compositions are the key assets owned by a music publisher. Clearly, the business of publishing focuses on the exploitation of these assets. However, it is essential to the long-term vitality of the business that the publisher understands as much as possible about the underlying rights that accompany the assets. The ability to anticipate the possible statutory termination, contractual termination, or reversion of a composition will enable the publisher at a minimum to plan for a possible diminution of its catalogue and provide the publisher with information necessary to maximize the potential for reacquiring rights. Publishers in the market to acquire musical compositions similarly should conduct an in-depth evaluation of the current and future legal status of the catalogue. Legal due diligence is as important as financial due diligence in attributing a value to a potential acquisition.
For information regarding the
reproduction of all or a portion of this
publication please contact:
Lisa A. Alter
Alter, Kendrick & Baron, LLP
Third Edition. Lisa A. Alter, Esq.