o Terms of Clause:§ The standard provision in all record contracts§ “controlled compositions = songs the artist writes and controls· Label only agrees to be responsible for paying 75% of the statutory rate (our reduced rate ¾ concept) on a maximum of 10 controlled compositions· With clout an artist may negotiate to get a label to pay for an additional 2 non controlled songs covered by record coIf all publishers agreed to reduced rates for 10 of 14 songs and full rate for 2 more songs just 2 songs are leftLets say those last 2 songs are licensed at full stat the mechanicals overage record co has to pay = 18 cents per unit which will be charged to artist royalty account per unit soldNow lets say none of the publishers agreed to reduced rates per controlled comp clause then the overage is .4095 centsAdvanced Contract Terms:· 1972 sound recordings added to copyright· Ownership of the master recordings: record labelo In the contract, record companies have always stated that they “own all masters in perpetuity, throughout the universe”· Reversion (a negotiable/optional clause)o If an artist has massive clout they may be able to negotiate with a record co. to have the ownership of masters “revert” back to artist within a specific number of yearso –the number of years in this case is completely negotiable examples might be 10-35 years (the reversion date) if recouped. IT IS RARE TO GET A REVERSION CLAUSE FROM A RECORD CO.o Pre 1972 Act revision there was no copyrighto But masters are covered by copyright lawo Current actual term of copyright ownership law: authors life +70§ Record companies can argue that artist is not an author because it is a work for hire-label pays and technically has creative controlo Who is legal author of the masters?§ Artist created them§ Label paid for them, at inception· Recall that as of 1976 act- termination rights and work for hireo When an author transfers his copyright to another entity, a right of termination right is available to the author 35 years later· Labels contracts began to say that ownership was the greater of either 1) in perpetuity or 2) work for hire· If it is a work for hire, it would legally make the record company the author of the masters from inception and avoid the artist getting a right of termination. So they get a 95 year term· But can masters be works for hire in these contracts?o Cases have not been tried yet to determine if this is enforceable. Act was effective 1/1/78 so the earliest chance for an artist to reclaim masters under rights of termination-2013o If future cases say masters from a record contract are notworks for hire then masters can revert back in 35 years (due to termination rights)360 Deals: aka multiple rights deals§ Should record deals be limited to just the subject of records? (one kind of product)§ How does artist benefit from a record deal? Who builds the artist’s brando Increases longevity of label and artist relationship i.e label gets more moneyo Songwriting/publishing, merchandizing, touring, sponsorships, fan clubs, acting, appearanceso Label creates a value so artist can get all these deals§ 180 Dealso Just records and publishing§ 260 dealso Record, publishing, merch§ In a 360 or 270 or 180 deal a label wants about 20-30% (10-35%) of certain non-record income sourceso “Passive Interest” = label has no control over the rights; artist(manager/attorney) makes the deals-label just wants percentageo “Active Interest” = label provides those service in order to earn those percentages§ Merchandising: negotiable· T-Shirts, stickers, posters, sponsorship deals…§ Historically was not common to discuss in recordcontracts because name and likeness are not sound recordings§ Band name, logos etc. = trademark! § Labels today argue that they are marketing artists name and celebrity too…customer might buy merch as often or more than records based on those efforts360 Deals New Issues Arise:o How much $$ will really be left for artisto Should artists team (lawyers, manager, etc take less of a % from artist for their services…this is unlikelyo What other kinds of companies could perform this 360 service?o Concert promotion companies (e.g Live Nation)o Management companies (they don’t invest and give artist advance money)o Just say DIY (no label) + hire all (label-like other services) independently? And artist keep