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United States as of the date the applicable Master is or was initially released; and (iii) in respect of an EP, five (5) times the minimum statutory compulsory license rate applicable to a composition of less than five (5) minutes under the copyright laws of the United States as of the date the applicable Master is or was initially released (the “Maximum Mechanical Amount” herein)...” As you can see in this example, not only does the record company pay you less than what the law provides, it will only pay you for a maximum number of the songs you wrote. As set forth above, if you wrote more than 10 songs on your album, the record company will only pay you 75% of the minimum statutory rate for a maximum of 10 songs, or $0.6825 per album ($0.091 x .75 x 10). If you read this controlled composition clause carefully you may wonder why the mechanical royalties only refer to the United States and Canada. The reason for the geographic limitation is that the record company whose contract this provision was taken from was located in the United States and manufactured the compact discs and vinyl LPs in the United States. For labels that manufacture records outside of Canada and the U.S., mechanical royalties are based upon a percentage of the wholesale price of the record—not on a statutory per song penny-rate basis. In these countries, the mechanical royalties are paid on a percentage of either

is a large company based in New York City that acts as an agent for large music publishers and grants mechanical licenses to those songs it administers. If the publisher does not use The Harry Fox Agency as its mechanical rights agent, you will need to contact the publisher directly and get a mechanical license from them. Bruce here: At the risk of being redundant, a small dose of my personal history might help round out the above comments. I’ve been signed to both major and independent labels as a member of American Music Club, and as a solo artist on an independent label. Currently I own my own label and have developed an entirely new appreciation for just how much effort goes into the business side of releasing an album. More often than not, I haven’t received mechanical royalty payments for projects on which I should have been entitled to have received them. Again, it depends on the individual contract as to when and how these royalty payments might be made, but it also depends on the ethical behavior of the individuals involved. You might have a contract that pays a reduced mechanical rate (as Todd has indicated is the norm), but if the record company or other individuals involved in the money stream aren’t ethical, you may have to fight to get what should be yours. My best advice is that if someone is offering you a contract, even if you have to beg or borrow the money, get an attorney to represent your personal interests before signing. You may

Record companies risk their investments shrewdly. If they sign a band with one “key member” (as they put it), they’ll do everything in their power to make sure that key member is coddled while the rest of the band can very quickly find themselves hung out to dry.
retail selling price (RSP) of the record or the published price to the dealer (PPD). Under these formulas, all compositions on a record share in the aggregate mechanical royalty calculated under the percentage computation. For example, the mechanical royalty rate in the United Kingdom is currently 6.5% of RSP or 8.5% of PPD. As a reminder, the payment of mechanical royalties is made to the owner of the song, called the publisher. The publisher, in turn, will pay the writer his or her share of the mechanical royalties. If you wrote your own songs and have not transferred your copyright to anyone else, you are both the publisher and writer and will receive the entire mechanical royalty. However, if you are signed to a publishing, co-publishing or administration agreement, the publisher will receive payment of the mechanical royalties and account and pay you per the terms of your particular agreement. If you wrote the song with another person, you and your co-writer should determine how the mechanical royalties will be shared. You may be wondering what you need to do if you’ve recorded a song written by someone else (i.e., a cover). First, you will need to find out who owns the song and obtain a mechanical license from the publisher. If the song you recorded is considered a “standard”, a “classic”, or written by a commercially successful recording artist, it is more than likely that the publisher of the song has affiliated with The Harry Fox Agency to issue mechanical licenses on the publisher’s behalf. The Harry Fox Agency enter into an agreement with a band comprised of your best friends, but money and power can drive an awful wedge into the best of friendships. Record companies risk their investments shrewdly. If they sign a band with one “key member” (as they put it), they’ll do everything in their power to make sure that key member is coddled while the rest of the band can very quickly find themselves hung out to dry. Been there and done that, and I’ve seen it happen with colleagues, time and again. If an ethically-challenged individual or company has taken advantage of you, and you’ve signed a contract allowing them to do so, it’s your own fault. Next month we’ll follow up with the remaining three ways that individual songs earn you money: Performances, Synchronization, and Print. Todd Gascon (gascon@recordingmag.com) is a technology and entertainment attorney at ZentLaw in Sunnyvale, California. Mr. Gascon’s practice is focused in the areas of intellectual property law, including copyrights and trademarks, with a particular emphasis on digital media, music, motion pictures, visual arts and all entertainment issues relative to the Internet. For more information on Todd and ZentLaw, visit www.zentlaw.com. Bruce Kaphan (kaphan@recordingmag.com) is a producer/engineer/musician/composer who currently lives in the San Francisco Bay Area. For a discography and more information on Bruce, visit www.brucekaphan.com.
RECORDING SEPTEMBER 2010

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Recording - September 2010

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