Music Business Essay Example

diverse repertoire enables them to market their music to diverse audiences.The origins of many of these major companies can be linked to the music of Hollywood and Broadway. Present-day publishers have a vast collection of songs from various genres worldwide, with thousands of songwriters in their catalogs. Warner/Chappell, as a representative, holds, manages, or sub-publishes over a million copyrights both domestically and internationally.

Today, full-line publishers are comprised of multiple divisions that cover various aspects of a writer's music. These divisions include handling recordings, distribution, sales, promotion, advertising, touring, and legal affairs. The diagram below illustrates the different divisions typically found within a full-line publishing company.

The administration division manages the firm's operations and business affairs. The accounting division keeps records of financial transactions, including money received from or paid to customers. They also manage loans given to artists signed under the label. When a band records an album under a label, it becomes a liability as expenses need to be incurred for recording, production, and promotion of the artist's music. Full-line publishers provide funding for these expenses and split profits equally (50-50) with the publisher and the writer. However, if the artist retains ownership rights to their songs, the record contract may include a controlled composition clause that reduces the mechanical royalty paid by the record label to the artist. This clause can result in a 75-25 royalty split favoring the record label. Artists who grant full rights to the record company's publisher are not subject to this clause. The artist remains a liability until they generate enough revenue to cover their initial investment. The royalty department, managed by an accountant typically, handles income received from

performances of copyrighted music.
This financial individual is responsible for various financial tasks, which include payroll management, accounts payable/receivable, insurance management, purchasing activities, and related operations. The copyright department may consist of one or more individuals who are accountable for important activities such as conducting a title search to determine the true owner of a work. It should be noted that claiming ownership does not automatically grant rights. Publishers often avoid blindly reviewing submitted music due to the complexity involved in this process. Disputes between publishers and writers can result in lengthy court battles, particularly when co-authors, previous publishers, revisions, etc., are involved. If there are any remaining questions after research conducted by the copyright department, a copyright attorney can address them if necessary. Depending on demand, firms may employ full-time attorneys for these matters.

In addition to their responsibilities mentioned above, the copyright department also registers claims of copyright at a cost of approximately twenty dollars per song and handles mechanical licenses for recording copyrighted work as well as synchronization licenses for using copyrighted works in firms. These tasks can be carried out either through the Harry Fox agency or by involving the copyright department directly. It is crucial for publishers to maintain up-to-date records of all copyrights owned including renewals, extensions, sales or abandonments.Monitoring copyright status is crucial for protecting creative works. Publishers often have a dedicated business affairs department that handles legal operations, employing specialized lawyers and attorneys who focus on copyright laws. These experts take legal action against infringements and may even negotiate new laws if needed. In cases where a full-time lawyer or attorney is not necessary, publishers can seek assistance from

external firms for legal matters.

The acquisitions division plays a vital role in contracting writers and acquiring catalogs from other companies. Publisher representatives travel across the country to discover talented artists who can contribute to their company's success, similar to scouts in the artist and repertoire (A) department. A representatives attend performances by renowned artists to evaluate their potential profitability for the firm. It's important to note that profits are shared equally among publishers, with significant amounts of money depending on an artist's success.

The acquisitions department also acquires catalogs from smaller firms, resulting in an oligopoly structure within the music publishing industry. The print publishing division focuses on tasks such as editing, engraving, artwork creation, catalog copying, and printing within the industry. This division is controlled by a few major firms.In this department, signed artists have the opportunity to collaborate with editors and arrangers in order to prepare their music for printing in various formats. This includes transcribing music into lead sheets or publishing a complete album in a book format that incorporates chords and guitar tabs for aspiring musicians to purchase. Once the music has been printed, it is then distributed.

In a full-line publishing company, the promotion division often holds the largest significance. The success of a work heavily relies on the promotion of both the artist and their music. It is even possible for artists without exceptional talent but with excellent promotion skills to achieve more fame than talented yet unadvertised artists. Producers, managers, and musical directors all play crucial roles in ensuring these artists' success.

Producers oversee the quality and sound of the music within recording studios to cater to its intended audience. Musical

directors may make decisions regarding arranging music during recording projects. On the other hand, an artist's manager takes care of their personal well-being.

Other departments involved in promotion handle tasks such as print advertisements, store displays, direct mail campaigns, and organizing special events. Once all necessary divisions have fulfilled their responsibilities—including acquisitions, administration, print production, and promotion—the distribution division takes over to deliver intellectual property-funded-copyrighted-recorded-printed-promoted music directly to consumers.
The distribution and sales division is responsible for distributing various merchandise, such as CDs, tapes, sheet music, T-shirts, to wholesalers and retailers who buy them in large quantities at wholesale prices. A rack jobber is a distributor of sheet music that deals with smaller quantities, usually less than one hundred at a time. Other methods of distribution include direct mail, catalog sales, and online sales. The full-line publishing industry also includes subpublishers and licenses. Subpublishers are given specific tasks by primary publishers who specialize in print or other services needed by the artist. Printing is a common service provided by subpublishers like Hal Leonard, Inc. and Warner/Chappell. In these contracts, the printer acts as the licensee and covers the cost of printing and distribution while the licensor receives a royalty on sales up to twenty percent of wholesale cost from the licensee acting as a selling agent. Full-line publishing firms cover administration, acquisitions, print production, promotion, distribution and sales along with subpublishing. While some companies may focus on certain areas, all components are necessary for profitability. Acquiring printed music or CDs from renowned artists is not an instant process; it requires coordination among various divisions within the industry.
The success of an artist in the music industry requires

immense dedication and hard work, allowing us to enjoy the intellectual property of songwriters worldwide. In the paragraphs that follow, I will discuss various types of music usage and their relation to appropriate music licenses.

Commercial broadcasts utilize non-dramatic music and are commonly found on radio stations, television stations, and broadcasting networks. To use this genre of music, a performance license is mandatory. ASCAP, BMI, and SESAC are performance rights associations responsible for gathering royalties for these licenses. Radio and television stations compensate royalties based on either per-song or a percentage of their overall income.

Other forms of music broadcasting also require a performance license. This includes establishments like restaurants, clubs, and background music services. These licenses can be acquired through an annual blanket license with a single fee. The rate for this specific license depends on factors such as the duration of entertainment provided and the establishment's gross income. The rights holder grants these licenses specifically for designated songs which are then subject to royalty collection by ASCAP, BMI, and SESAC accordingly.

For venues that aim to commercially broadcast non-dramatic music, it is essential to pay royalties to ASCAP, BMI, and SESAC. Additionally, non-broadcast performances featuring non-dramatic music also necessitate a performance license.
This text applies specifically to exclusive event performances that are not broadcasted elsewhere, such as live music in bars or clubs. The purpose of hosting live music in these venues is to entertain patrons and encourage them to purchase food and beverages. To ensure that songwriters and publishers can earn revenue from their song rights, a license is necessary. It is important to note that the responsibility of obtaining this performance license falls on the

venue, not the performing band themselves. However, bands only require a license if they earn money by performing another artist's music at a show.

Colleges typically obtain blanket licenses for bands to perform on campus without needing individual licenses each time, but national acts require special licenses. ASCAP, BMI, and SESAC collect royalties for commercial broadcast music, while the rights owner issues the appropriate license.

For private sales of phonorecords or videorecords, it is necessary to obtain either a compulsory or negotiated mechanical license. A compulsory license is granted when the rights owner initially does not give permission for recording a song and is more expensive than a negotiated license. The person recording the song can negotiate with rights owners for an inexpensive or royalty-free license.

In terms of music videos broadcasted on cable television, both synchronization and performance licenses are required.The text discusses the different types of licenses and organizations involved in managing music royalties for various contexts. The synchronization license allows timed or related use of music in relation to screen action, while the performance license is needed for broadcasted music. MTV, HBO, and USA have agreements with ASCAP, BMI, and SESAC to collect royalties for their television stations' use of music. The licensors of these contracts are the works' rights owners. In films, the ownership of music rights typically lies with the film producer rather than the composer. When individuals purchase or rent movie, music video, or other video software for home use, they require a synchronization license to make copies for sale. This licensing is usually issued by the producer or owner of the rights to the work. However, if composers retain these rights

themselves, they must issue their own licenses. The payment of royalties for these licenses is handled by organizations such as ASCAP, BMI, and SESAC. For motion pictures shown in theaters, a synchronization license that includes the right to exhibit becomes necessary. Commercial broadcasts require a separate license negotiation with publishers which often leads to high earnings through special use permitsAdvertisers are willing to pay significant amounts of money for using popular songs in their commercials, and these licenses usually allow them to modify the lyrics. If music is specifically composed for a commercial, a buyout deal may be granted that provides unlimited usage rights. Under special use permits, organizations such as ASAP, BMI, and SESAC would collect royalties for any music used. Licensing for merchandising tie-ins and computer software applications involves negotiation with publishers, similar to broadcast commercials. However, tracking the number of plays may not be possible in these cases. In such situations, a one-time fee can cover the entire license without additional royalties.

For businesses like Muzak that provide music services in shopping centers, flights, or hotel elevators, a transcription license is required from either the publisher or organizations like Harry Fox Agency or SESAC. Negotiations regarding royalty collection are conducted with ASCAP, BMI, and SESAC.

In dramatico-musical productions where music plays a crucial role in advancing the plot (such as Broadway shows), a grand right or dramatic right license must be negotiated directly with copyright owners. The composer of the show receives royalties from ASCAP,BMI,and SESAC for this type of use.

Licenses also need to be negotiated for public broadcasting stations and jukebox use.Television stations such as PBS and public radio engage in negotiations with

publishers to determine fees, while ASCAP, BMI, and SESAC are responsible for collecting royalties. Jukebox operators directly negotiate fees with copyright owners. The Jukebox License Office provides a blanket license covering ASCAP, BMI, and SESAC to jukebox operators. Copyright Act of 1976 encompasses the music used in cable television. This act consists of seven essential provisions that cover all aspects of copyright law and is adaptable to the industry's changes. It applies to recording, publishing, and every sector of the music industry. The Copyright office issues compulsory or negotiated licenses for secondary transmission use and distributes the generated funds among copyright owners. Rates for these licenses are determined and periodically reviewed by a Copyright Arbitration Royalty Panel (CARP). This ensures that outdated laws can be addressed through policy review to avoid any disadvantages caused by evolving industry standards. Songwriters benefit from this act in various ways: they receive extended duration of copyright protection lasting their lifetime plus seventy years ensuring continued income for their estates after death; section 101 of the act holds significant importance for composers, publishers, and movie producers as it addresses work made for hire.When an employer hires someone to create a work, the employer legally becomes the author and owner of that work. This benefits both songwriters and music publishers when they sign contracts, as they can share profits equally. The legislation also supports these individuals in navigating an ever-changing industry while ensuring fair compensation for their creations.

Section 106 of this act grants copyright owners Exclusive Rights in Copyrighted Works. These rights include reproducing and creating derivative works, allowing owners to expand their use. Copyright owners also have the right to

distribute copies or phonorecords through sale or transfer. This benefits artists, publishers, record labels, and distribution companies.

Certain types of works such as literary, musical, dramatic, and choreographic works have the right to be publicly performed. Additionally, these works can be publicly displayed. Furthermore, copyright law gives exclusive rights to publicly perform sound recordings through digital audio transmission.

The rise of the Internet has brought significant changes to the music industry and how these exclusive rights apply in the digital realm.The recording industry has been facing disputes, as seen with Napster, a website that facilitates online music sharing. Although Napster claims no responsibility for unpaid rights because they don't physically handle the music files themselves, they enable users to access and download audio files from other computers without compensating the artists and publishers for their rights. To address this issue and ensure proper compensation to rights owners, there is a reevaluation of music licensing policies underway. This topic also involves fair use in relation to copyrighted material, which is determined by guidelines provided by copyright law. These guidelines determine what can be considered fair use based on factors such as the purpose or character of the use (commercial or nonprofit educational), the nature of the copyrighted work, the amount used compared to the whole work, and its effect on potential market value. Fair use exceptions permit certain performances in nonprofit educational institutions for instructors and students, allowing face-to-face teaching activities and transmission of nondramatic literary or musical works. These exceptions are beneficial for students studying music professionally as it prepares them for their future careers.This resource allows colleges to freely teach and perform music and art within

the regulations of fair use. In the music industry, there are three main organizations that collect royalties for performance rights from businesses using music for promotional purposes. These organizations cover a wide range of venues such as clubs, concert halls, stadiums, bars, colleges, airlines, and more. The funds collected are then distributed to publishing companies who share profits with songwriters. These organizations also have legal authority to take action against venues that do not obtain proper licenses for copyrighted music usage. Various types of licenses are required for using copyrighted music including mechanical, performance, special uses, synchronization, and grand rights. One of the oldest performance rights organizations is ASCAP (American Society of Composers Authors and Publishers), established in 1914. ASCAP generates income from multiple sources within the music industry. This includes reciprocal arrangements with foreign licensing organizations which contribute 20% to 25% of their revenue. Additionally, approximately half of their income comes from television stations and networks. They also calculate annual fees based on a small percentage of adjusted gross income. ASCAP's membership primarily consists of composers and lyricists involved in Broadway shows, movie musicals,and popular songs.
To become a member of ASCAP, one must have at least one commercially recorded song available for rental or performed in media licensed by ASCAP. The organization operates with a board composed of twelve writers and twelve publishers. Both ASCAP and BMI are organizations that assess performances and provide compensation to their members based on various factors.

ASCAP takes into account the medium, broadcasting station, and television network when evaluating performances. They conduct census and sample surveys at locations with commercial airplay to collect data for calculating average royalty payments.

On

the other hand, BMI has a different financial structure as it is owned by stockholders. Its board of directors consists of several hundred shareholders. BMI has a diverse range of affiliates, including songwriters from different genres such as jazz, rhythm and blues, country, rock, and gospel. Unlike ASCAP, BMI has both writer and publisher affiliates.

To join BMI individuals must have written a musical composition that has been commercially recorded or performed. BMI offers higher payments for songs originating from Broadway shows or feature films. Additionally, copyright owners can receive bonus payments up to four times the minimum rate as their songs gain more plays or performances.

BMI heavily relies on income from overseas sources and has a significant number of foreign writers and publishers in Europe. For servicing foreign accounts they withhold 3.6% of the incomeSimilar to ASCAP, BMI also manages most licenses related to music performances. SESAC, on the other hand, is the smallest of the three performance rights organizations and believes that its smaller size allows it to better cater to the needs of their writers and publishers compared to larger organizations. However, joining SESAC can be more expensive for copyright owners.

SESAC takes pride in its technological leadership and has an advanced tracking system that accurately monitors the performance and recording of works by its owners. Unlike ASCAP's weighing system for royalty payments, SESAC uses a chart payment system based on chart positions in major trade publications. The success of a song depends on its position on the chart.

In contrast to ASCAP and BMI, SESAC is not bound by court consent decrees. Each organization has its own strengths and all three are essential

to the industry.

Musicians have the opportunity to join respected unions and guilds nationwide which provide numerous benefits. Although paying yearly dues may not seem appealing initially, these advantages can be invaluable in certain areas.

The American Federation of Musicians (AFM), which is the oldest trade union representing active musicians in the US, is one such union that musicians can join. However, AFM has experienced a decline in membership due to challenges in attracting younger members and legal constraints on collective bargaining.Union dues, which can range from one to five percent of union scale wages, serve as support for local and national activities that aim to ensure fair treatment and paid work for musicians. Many symphonies consist of union players, while the American Guild of Variety Artists caters to a diverse range of performers such as singers, dancers, comedians, ice skaters, jugglers, magicians, and more. This organization offers membership opportunities to performers at all levels and negotiates with venues on their behalf. Meanwhile, the Screen Actors Guild specifically focuses on actors, singers, and instrumentalists who appear on screen. Each organization has specific criteria for membership eligibility.

Musicians often choose to join multiple unions or guilds in order to enhance their chances of gaining sufficient attention required for success. Being a member of these unions grants various advantages as outlined in a Bill of Rights format. These rights guarantee proper payment and safe working conditions for musicians. They ensure that musicians receive a minimum wage commensurate with the time and resources invested in obtaining gainful employment and performing. Additionally, these rights protect musicians from harmful theatrical devices, demeaning costumes, excessive sound levels, inadequate travel arrangements,
second-hand smoke exposure,
irrelevant recorded music

before performances
and during intermissions.
Moreover,
musicians have the right to reasonable rest periodsThese organizations advocate for equal employment opportunities without discrimination based on race, ethnicity, age, gender, religion, culture, or political affiliations. They ensure fair negotiation and legally-binding contracts for all performers. The text discusses various aspects related to musicians and their rights, including the importance of intellectual property rights for compositions, performances, and recordings. It also highlights the need for minimum wage from gainful employment to cover essential expenses such as life, shelter, and healthcare adequately. Time spent on music-related activities like practice, rehearsal, preparation, post-production, and promotion should be compensated according to federally mandated minimum wages. Unions play a crucial role in protecting and benefiting musicians by enabling them to pursue careers in the performing arts while creating stability through full-time employment opportunities in music theatre and visual arts.