Everyone knows that songs are protected by copyright. And copyright in fact plays one of the most important, if not the most important role in a musician’s career. So let’s find out how copyright works in the music industry, and what the consequences are if someone wants to take it away from you.

The copyright to any result of creativity arises to its author at the moment of creation of the work. Once a work has been created (text and sheet music have been recorded, or an arrangement or recording has been made), copyright protection comes into play. In many countries, work of authorship is not required to be registered with a particular national governmental authority, but in the United States, registering the work with the Library of Congress is the only way to ensure that the author can bring a lawsuit in the event of an infringement.

If both the lyrics and music for a song were written by the same person, everything is very simple – they own the copyright to the song as a whole. Things are a little more complicated in the case where the lyrics were written by one person and the music composed by another. Each of them is the author and owner of the rights in full to his work:

  • the author for the lyrics
  • the composer for the music

And then there are possible variants of events:

  • If the author of the lyrics and the composer agree to create a song together, they should sign an agreement stating who owns which copyrights. For example, the author of the lyrics can waive the exclusive rights to their lyrics, assigning them to the composer. Then the author of the lyrics will still be considered the author (within the meaning of the law) of the lyrics, but will not be able to dispose of it. Or everyone in this deal can retain the rights to their part of the song and receive equal income from the performance of the work and sales of its studio recordings.
  • If a producer or a record label is involved in the creation of the song, then, as a rule, all the exclusive rights to that song belong to the producer or the label (unless the contract says otherwise!).

This is where things get interesting! But before we get to the part where we tell you why your favorite artists are broke, let’s find out what the purpose of copyright is.

Purpose of Copyright

Copyright allows the owner of the rights to a song to decide how, when, where, and by whom that song may be used. One of the purposes of copyright is to enable authors to: make a living from their talents, receive a financial return on the time and energy invested in creating the work, and recognition of their authorship.

 

Copyright includes economic rights that give the author of the song the right to authorize, prohibit, or obtain financial compensation (in the form of equitable remuneration) for:

  • the reproduction of a song, for example, on a CD, online or in a movie
  • the distribution of copies of a song
  • the performance of a song in public (e.g. when a song is played in a shopping mall or a disco, authors/performers are paid a royalty)
  • broadcasting or otherwise making available a song to the public (i.e. via radio, TV or online)
  • the adaptation of a work

Note: Many of your favorite artists don’t write their own songs but perform and interpret others’ works. However, they bring their own unique style to the performance and therefore also have some copyright-like rights called related rights in their performance. Recording companies (officially called “producers of phonograms”) and broadcasters also have related rights. Each increases the value of a work in its own way, either through its own creativity or through know-how or investment of financial and organizational resources.

How Record Labels Make Artists Broke

Who hasn’t dreamed of a music career? Your face on every billboard in the country, crowds of fans, and tons of money. If you still dream of becoming a famous musician, don’t rush to google vocal lessons near me or the best beginner guitar in 2021. You may no longer want to learn an instrument or build a career in music after you learn why your favorite musicians are broke and that the same fate may await you.

 

As an artist, you have two career paths:

  1. Independently record your music at home
  2. Sign to a record label

Both options have their pros and cons. But today we’ll talk more about what happens if you decide to sign with a record label.

As streaming platforms have become increasingly popular, sales of physical media (i.e. CDs) have all but died. With the transition of music online comes new problems –

illegal file sharing. This causes the turnover and profits of record labels to decrease. So many companies are looking for ways to participate in other revenue streams generated by artists. This is quickly becoming the norm, and such arrangements are referred to as a 360-degree business model or a 320 deal.

One of the landmark 360 deals was the agreement made by EMI with Robbie Williams in 2002. Under this contract, EMI acted not only as a producer of phonograms, but also as a publisher, as well as participating in the revenues from live performances.

The 360 Deal

Why 360? The prefix 360 hints at the fact that in this type of contract the label takes care of the artist’s comprehensive development and promotion. The label is involved in all aspects of the artist’s career, including touring, brand development, marketing, PR etc., in exchange for a percentage of all revenue generated through all possible channels, not just music sales.

The advantage of this type of contract is that you get the label’s support in raising your income to the highest possible level. The disadvantage is that the label makes all the decisions to build your career. In terms of intellectual property, the record label either gets the non-proprietary copyrights to your works, or it tells you how to dispose of your copyright, and takes most of your money, including royalties.

Before launching an artist’s career, the record label gives them an advance payment, which can range from several hundred thousand dollars to several million. The artist spends this money to create an image and to get inspiration for his music – they may buy luxury clothes, expensive cars, and real estate. Then, when the music is created, it goes into distribution: albums are streamed on streaming platforms, YouTube, the artist goes on a world tour, and so on. How is the income distributed? The label will give back something like 20 percent of the revenue – if an artist made $8 million from one song, they will only receive $2 million back after taking out the advance and all the money they spent. Given this, the artist can get their hands on only a few thousand dollars.

Since the concept of “360 degrees” is relatively new, there are still no standard contracts, interest rates, as in the traditional business model. Each company develops terms for a specific performer. For example, according to the contract between Paramore and the label Atlantic Records, the label gets 30 percent of the profits from sales, concert activities, merchandising, sponsorships and fan club membership fees. In the contract between the rock band Korn and EMI, the label gets 70 percent from recordings and 30 percent from concert activities, merchandising and licensing. In the contract with Madonna, Live Nation gets 50 percent of licensing fees, 30 percent of merchandising, 10 percent of concert activities and nothing from media sales. But don’t forget that the rest of the money is also distributed among the artist, the author of lyrics and music, the producer, the distributor, and other parties involved.

Record Label or Independence?

Now you know why many of your favorite artists are broke. Most of the money that musicians earn is appropriated by record labels. You should think very carefully before entering into such an agreement as a 360 deal. It may turn out to be much more profitable to regulate all the revenue streams on your own.

However, 360 deal would be perfect for you if you:

  • do not want to do administrative work, you only like to create, compose, sing
  • do not have money for promotion 
  • do not want to wait for years and take risks, but want faster results

Anyways, think twice! Maybe it is the time to look for the best beginner guitar 😉