"Record companies, the way the whole thing works - they'll pee on your back and tell you it's raining, you know? "
In his early years Waits made the mistake of not having his songs properly protected. In later years this gave way to a lot of speculations about Waits owned copyrights. It's useful to first try and understand the basics of copyright laws.
A copyright is the legal right of a composer, writer or exclusive owner of an artistic work to control how that work is used. It is, simply speaking, the right to copy. This is important for creators such as writers and musicians because they don't usually sell their original work but copies of that work. When artists create works, they own them. As such, copyright is a separate set of property rights. Creators alone have the right to copy those works for sale, although they can also sell this right to others. When you buy a CD or a book you're not buying the original work, you are buying a copy. A portion of the money you pay goes to the creator and/or the owner of the copyright for that work. Copyright protection is available to both published and unpublished works. The copyright in the work of authorship immediately becomes the property of the author who created the work. A (musical) work is created when it is fixed in a copy (sheet music) or phonorecord (cassette tapes, CDs, LPs, etc.) for the first time.
For any given recording, there are at least TWO copyrighted works involved.< br /> First, there's the copyright in the musical work. That is, the lyrics and musical notes as they're written on paper. This copyright is typically owned by the songwriter and/ or music publisher.
Second there's the copyright in the sound recording, which is a recording of a performer singing or playing the particular song. This copyright is usually owned by the record company.
The origin of copyright law can be traced to Britain. In 1690 the English philosopher John Locke demanded an author's copyright and conducted a sustained campaign, the result of which was the world's first copyright act, the Statute of Anne of 1709. It became the foundation for all subsequent copyright legislation in the English speaking world. In 1952 the Universal Copyright Convention (UCC) agreement was signed by the English speaking world including the US.
Most of copyright has to do with commerce. In fact, one major reason it's there is that some people believe that if you let people have copyrights and make money from them, it strongly encourages the creation and exploitation of creative works. Copyright is also about control of one's creations. But still, it's all about money. So while a copyright holder can stop others from copying something, usually they would much rather find some way to charge for copying it. The interests of many rights holders can be involved every time a piece of music is used and every rights holder wants payment for use...
The only legal way to reproduce a piece of recorded music is to get permission from the owners of these two different copyrights. It's called, "obtaining a license". Obtaining a mechanical (audio recording), synchronization (film/commercial/television), or print (sheet/folio/reprint) license doesn't mean one actually owns the rights, it's only a permission granted.
|Lyrics and musical notes by the writer||Copyright in the musical work
(Songwriter and/ or publisher)
Copyright notice = ©
|Record for release|
|Performance by the artist||Copyright in the sound recording
Copyright notice = (p)
If one wishes to publicly perform musical compositions, one needs to contact one of three US performing rights organizations (music licensing organizations) created to represent composers and songwriter for the copyright in the musical composition. Performing rights organizations, are businesses designed to represent songwriters and publishers and their right to be compensated for having their music performed in public (to collect performance broadcast revenues.) By securing a license from a performing rights organization, music users (i.e., television and radio stations, auditoriums, restaurants, hotels, theme parks, malls, funeral homes, etc.) can legally play any song. Recognized U.S.A. Music Performing Rights Societies are: ASCAP, BMI and SESAC. Songwriters and publishers are paid royalties based on how much their songs are played. Only the author (or those deriving their rights through the author) can rightfully claim copyright.
Music Clearance is the process whereby permission (the legal right to use it) is obtained from the owner of a song (the people who wrote it) or a master recording (the people who recorded it), which one wishes to use in a production. There's a difference between a song and a master recording. For every song written, any number of artists may have made their own recording. This means that song rights are separate from recording rights. And more importantly, one cannot use any master recording without getting permission from the publisher(s) to use the song. Conversely, if one gains permission from the publisher, but is denied use of a particular master recording, one can always use a different master recording or record one's own master, with the publisher(s) permission. In order to clear a song, one negotiates with the publishing company. A music publisher, to generalize, usually acts as the representative of the composer for their individual rights in regards to anyone using their song. In order to clear a master recording one negotiates with the record company. Clearance of the master recording has nothing to do with clearance of the song. Publishing companies and record companies are almost always totally separate entities.
2. The Industry
One first needs to understand some basic principals of the music industry. The music business operates by finding and exploiting talent. This happens in many different ways. Money is made from selling records, videos, merchandising and concert tickets. Money is also collected and paid to the writer(s) each time their music is played on the radio or television or performed live in public. Essentially, everyone gets paid with the money that is made from album sales (records, videos, merchandising and concert tickets): the record company, the publishing company, the manager, etc. and they will all get a percentage of the record sale.
So if an artist wants to make a living out of his work, he would want this work to be recorded for release (vinyl, cassette, CD, etc.). He would want these records to be sold and make some big face money. One would need people to manufacture, distribute and sell the record. But how to find the manufacturer, distributors, retailers? How to collect royalties? How to promote the record? There's hardly any choice, a (beginning) artist needs other parties to have a record out. This means negotiating deals with companies in the industry.
|Writer/ performer||Personal manager/ booking agent||(Co) Publishing company/ sub publishing company/ administrator||Record company Record producer
|Record distributing company||Record stores/ retail||Consumer|
|RECORD SALES CASH FLOW|
2.1 Manager/ agent
As an unknown artist, one would have to find the right companies to work with. But that would almost be a mission impossible. All those record companies and their music business attorneys. Most of them not even interested in listening to a demo tape. So one would want to have a personal manager who knows the business, who has the right contacts, who knows legal business affairs. And maybe this manager could even be one's booking agent (a licensed and bonded musical agent who obtains club work, tours and live performances.) Cause touring could bring some very welcome quick cash. This manager would be the person to trust, the person who would take care of business. Ideally there would be an artist shopping agreement. This is an agreement between the artist and the manager (or publisher) to shop the artist for a recording contract with a record company (label).
2.2 Publishing company
Before the invention of the phonograph, songwriters earned income by relying on music publishers to sell sheet music of their songs. Even as radio and television replaced the piano in the parlor, music publishers continued to play an important role as popular singers continued to rely upon established songwriters to provide their material. Today, music publishers are concerned with administering copyrights, licensing songs to record companies and others, and collecting royalties on behalf of the songwriter. As soon as a work (song) is created in a fixed form the artist owns the publishing right (the right to have a song printed/ recorded) to that work. Publishing rights are worth money. An artist may want to grant (part of) the publishing right to a publishing company (or a record company) in a fair exchange of money or services. The main reason to consider a publishing deal is... money. Music publishers may be willing to pay a substantial cash advance for a songwriter's past, present or future material. In exchange, the publisher will own a percentage of that artist's musical copyrights and keep a percentage of money these songs earn (mechanicals = publisher royalty of record sales). Of course, publishers are unlikely to pay an advance unless they believe they can make a profit on the deal. Like everyone else in the industry, music publishers are in the business of buying something of an artist in order to sell it to others at a profit. Unfortunately, many artists do not realize how valuable their publishing rights are. The history of the music business is littered with sleazy promoters who paid pennies for songs that later generated millions in income. Through a publishing contract the artist grants the publisher full economic exploitation of the work, the publisher has to get the work published (i.e. recorded and slated for commercial release and distribution by a record company, or placed on a TV show which uses then broadcasts the song, or a movie that's gonna be theatrically shown or broadcast on TV or both) within a length of time. The publisher will negotiate with the artist for a percentage of the artist's publishing rights in return for money. The higher percentage of the publishing rights one owns, the more royalties one is entitled to receive. This is probably the most important business decision an artist will ever have to make. Foreign countries sometimes have different laws governing the collection and distribution of royalties. As a result, it is often necessary for publishers to enter into agreements with a foreign sub publisher to collect a songwriter's (mechanical) royalties in that territory. After the sub publisher takes a cut the rest of this foreign income (foreign monies) is divided between the publisher and the songwriter according to their agreement. Although sheet music sales have diminished over the years, many songs are still available in print form. These include books of songs by specific artists, instruction books or compilations of hits within a given genre. The music publisher issues print licenses and collects this income from the sheet music company, while the songwriter receives a small royalty derived from the sale of his or her song in print form. Whenever a song is used with a visual image (movie scores, commercials), it is necessary to obtain a synchronization license permitting the use of that song. Music publishers issue synch licenses to television advertisers, motion picture companies, video manufacturers and CD-Rom companies. A portion of this money is paid to the songwriter according to their agreement.
Tom Waits (1987) on advertising offers, 1987(25): "I get it all the time, and they offer people a whole lot of money. Unfortunately I don't want to get on the bandwagon. You know, when a guy is singing to me about toilet paper - you may need the money but, I mean, rob a 7-11! Do something with dignity and save us all the trouble of peeing on your grave. I don't want to rail at length here, but it's like a fistula for me. If you subscribe to your personal mythology, to the point where you do your own work, and then somebody puts decals over it, it no longer carries the same weight. I have been offered money and all that, and then there's the people that imitate me too. I really am against people who allow their music to be nothing more than a jingle for jeans or Bud. But I say, "Good, okay, now I know who you are." 'Cause it's always money. There have been tours endorsed, encouraged and financed by Miller, and I say, "Why don't you just get an office at Miller? Start really workin' for the guy." I just hate it... The advertisers are banking on your credibility, but the problem is it's no longer yours. Videos did a lot of that because they created pictures and that style was immediately adopted, or aborted, by advertising. They didn't even wait for it to grow up. And it's funny, but they're banking on the fact that people won't really notice. So they should be exposed. They should be fined! [bangs his fist on the table] I hate all of the people that do it! All of you guys! You're sissies!"
Publisher and artist can make all kinds of deals. It's not always about money only, it can also be about a promise to provide services in the exploitation, protection and collection of rights. And when it's about money, the artist can negotiate the advance to be given in front, or a share in future revenues. Inexperienced artists, with very little inner understanding of what's really involved, will typically give away their rights for an advance payment. The deal could also involve a song/ record shopping agreement between the artist and the publisher (or the manager). The deal would typically have a reversion clause inserted (rights will legally revert back to the artist if the publisher is unsuccessful in placing the song within the length of time). An inexperienced artist with no understanding of the business could easily not negotiate the reversion clause and therefore loose his publishing rights by signing the deal. A clever manager would of course have his own publishing company.
Nowadays not every artist needs a publishing deal, and some artists may be better off by avoiding traditional publishing deals altogether. Many different publishing options may be available to an artist today. In a co-publishing deal the artist (or the artist's publishing entity) co-owns a percentage of the copyright along with the publisher. Nowadays it is common for both parties to each own 50% of the copyright, though percentages can vary from deal to deal. In a co-publishing deal, the songwriter's publishing entity also receives a percentage of the "publisher's share" of income. An artist might also consider to form his own publishing company (self publishing) and merely wish to seek the administration services of a large corporate publisher (administration deal). In return for a share of earnings from royalties the larger company will take over the day to day business of administering the catalogue. A publishing administrator is typically paid by deducting a percentage of the income it collects on behalf of the artist. Even publishing companies themselves might want to focus on the commerce and dealing side of publishing and leave various administrative tasks involving copyright transfers and the registration of musical copyrights to an administrator.
2.3 Record company
A record company basically acts as a bank for the artist. Once signed to a label, a record company will loan the artist the money (recording advance) to record an album, to further develop as an artist, support the artist's concert tour, handle radio airplay, deal with magazines, newspapers and television. After the album has been finished, the record label will hook up with a distribution company to get the albums in the stores (some record companies may also be distribution companies.) All of the costs that goes into recording the album, artist development, artwork, tour support must be given back to the record label. This is what the industry call recoupable costs. In other words, the record label will give the artist all this money to do all these things in advance, but once the album starts selling, they are going to recoup the amount of money they loaned from the album sales until they are fully paid back.
The record company will have to agree upon the concept of the album. They will only loan the artist the money (recording advance) if they believe the album has enough commercial potential or prestige. With this advance the artist needs to finance: a studio, the instruments, the studio musicians, a professional producer and maybe an engineer and a production coordinator.
Tom Waits (1999)(27): "In those days, nobody would even think of sending you into the studio without a producer. In their mind, they gave you 30 grand, you might disappear to the Philippines and they never see you again. They're not giving you 30 grand, they're giving this guy who plays tennis and wears sweaters and lives in a big house, they're giving him the money and he's paying for everything. Just show up on time and stay out of jail."
The artist is entitled to record sales royalties. No record sales royalties will be paid by the record company until those sales have paid off the recording advance. After the publisher collects the royalties from the record company and takes its share of the income, a singer/ songwriter may be left with next to nothing. Record companies make their money not only by selling records. They have also paid for a mechanical license. Record labels are required by copyright law to obtain a license for each reproduction made of a composition or song. If a record label presses and sells one million copies of a song, they must pay the writer a fee ("mechanicals") for each copy they sell (statutory rate). Record companies can also make money by signing an artist's copyrights (in the sound recording) for the world, then licensing the copyright to different territories such as Germany, Japan and the USA. Some record companies don't record at all. They only license finished masters from other record companies, or they only sign artists who bring their finished tapes. If an artists wants to end the deal with a label, terms and conditions will have to be negotiated. In most cases the performing artist still owes the record company advances and recoupables. A record company will want to be compensated for these advances. Most artists won't be able to come up with this kind of money, so both parties will have to agree upon another deal. The record company might want to negotiate the artist's future mechanical royalties from previous releases. They also might demand an extra record to secure some more future royalties. In most cases the artist won't be able to come up with new material on such a short notice, so this is why one often sees a compilation album released before an artist changes labels (Asylum Years/ Anthology, 1986 and Beautiful Maladies, 1998). One might assume the artist receives next to nothing from the royalties for these releases.
Tom Waits (1999)(26): "I think you should fight for your independence and freedom at all costs. I mean, it's a plantation system. All a record company is is a bank, and they loan you a little money to make a record and then they own you for the rest of your life. You don't even own your own work. Most people only have a small piece of their publishing. Most people are so happy to be recording, which I was, you like the way your name looks on the contract, so you start signing. I got myself tied up in a lot of knots when I was a kid."
2.4 Distributing company
The record company is mainly concerned with financing, promoting and marketing the record. It's another field to actually: manufacture (pressing plant) and mass reproduce stock, sell and distribute an album to the public throughout the retail commercial marketplace. So the artist, but in most cases the record company, will want to obtain a record distribution company (distributor) to do so. Some record companies may also be record distributor for their own (or others) catalogue.
Courtney Love(28): "Somewhere along the way, record companies figured out that it's a lot more profitable to control the distribution system than it is to nurture artists. And since the companies didn't have any real competition, artists had no other place to go. Record companies controlled the promotion and marketing; only they had the ability to get lots of radio play and get records into all the big chain store. That power put them above both the artists and the audience. They own the plantation... Record companies stand between artists and their fans. We signed terrible deals with them because they controlled our access to the public."
|SOURCES OF INCOME AND PAYMENTS STRUCTURES|
|Record sales||Record company mechanical rights||Record sales revenues||Record company share|
|Songwriting mechanical license fees (mechanicals) paid by record company to writer (statutory rate -25%)||Writer share|
|Songwriting mechanical license fees (mechanicals) paid by record company to publisher||Publisher share|
|Mechanical royalties paid by record company to artist (depending on royalty points) minus recoupable costs and advance||Performer share|
|Publicly perform (broadcast) musical compositions||License from performance rights organizations (negotiated fees)||Public performance royalties paid to writer||Writer share|
|Public performance royalties paid to publisher||Publisher share|
|Public performance royalties paid to artist||Performer share|
|Publicly perform (broadcast) musical compositions in foreign territories||License from performance rights organizations to foreign pro's (negotiated fees)||Foreign public performance royalties paid to writer||Writer share|
|Royalties collected by foreign sub publisher||Foreign public performance royalties paid to publisher|
|Use of song with a visual image (movie scores, commercials)||Synchronization license (publisher)||Negotiated fees paid to publisher||Publisher share|
|Master use license (record company)||Negotiated fees paid to record company||Record company share|
|Sheet music, folio sales, lyric reprints in books||Print license||Negotiated print sales royalties paid to publisher||Publisher share|
|Artist touring||Specific agreements with record company||Touring revenues minus recoupable record company tour support||Performer/ band members/ touring personnel|
So, this is only the beginning... Dealing with copyright laws, managers, agents, publishers, record companies, distributors. Having to sign all kinds of complex agreements, and probably never being in a position to really negotiate.
In the early 1970's the music industry and copyright laws were even less transparent and less structured. So negotiating and dealing was even harder in those days. It's no surprise that till this day beginning artists, who are desperately seeking a breakthrough, and who have no idea of business legal affairs get to sign agreements they will later regret. Young Tom Waits was no exception.
- U.S. Copyright Law
- Copyright Society of the USA
- General information about Copyrights
- Music Library Association
- Music Publisher's Association
- ASCAP, BMI, SESAC
(6) Source: "Smelling like a brewery, lookin' like a tramp". Rolling Stone: David McGee. 1976
(7) Source: "Tom Waits, In Dreams". Exclaim: Michael Barclay. April/ May 1999
(8) Source: "Rambler" magazine. Rich Trenbeth. Chicago. December 30, 1976
(9) Source: "Mojo interview with Tom Waits ". Mojo: Barney Hoskyns. April 1999
(10) Source: "A Q&A about Mule Variations". MSO: Rip Rense. January (?) 1999
(11) Source: "Tom Waits Is Flying Upside Down". Musician, Mark Rowland. October 1987
(12) Source: "Wild Years, The Music and Myth of Tom Waits". Jay S. Jacobs, ECW Press 2000
(13) Source: "The Master Must Speak To You" . Interview with Captain Beefheart from Ptolemaic Terrascope #28 January, 2000
(14) Source: "Heartbreak on Wheels" by Ben Fong-Torres. Rolling Stone magazine. March 27, 1975
(15) Source: "Tales Of Wild Man Fischer". Message board for Brian's Wildman Fischer site.
(16) Source: Vibes Profile "Balancing act", by Sean Moore. Creative Loafing, 1995
(17) Source: "Captain Beefheart: The Biography by Mike Barnes". Cooper Square Press; ISBN: 0815411901; (March 2002)
(18) Source: "Only a Henske: The Judy Henske Story" by Paul Zollo. SongTalk, Spring 1991
(19) Source: "The Modern Folk Quartet / The Once And Future MFQ...". Goldmine: Nov. 30, 1990. Vol. 16 No. 24 Issue 270
(20) Source: e-mail message by Robert Cohen as sent to Splat's Zappa page. Copyright �1999 Patrick Neve
(21) Source: "Ray Collins/ David Porter interview". August 12, 1989
(23) Source: "Tom Waits: A Poet of Outcasts Who's Come Inside" New York Times (USA) by Jon Pareles. Copyright 2002 The New York Times Company. Date: Flamingo Resort Hotel & Conference Center, Santa Rosa, CA. February/ March. Published: May 5, 2002
(24) Source: "Waiting for the sun". Barney Hoskyns, 1996. Penguin Books. ISBN 0-670-85021-7
(25) Source: "Tom Waits Is Flying Upside Down (On Purpose)". Musician, Mark Rowland. October 1987
(26) Source: "The Man Who Howled Wolf ". Magnet magazine. Jonathan Valania. June/July, 1999
(27) Source: "Mojo interview with Tom Waits". Mojo: Barney Hoskyns. April 1999
(28) Source: "Courtney Love does the math". Salon.com. June 14, 2000
(29) Source: Jerry Yester interview June 8, 2007 as quoted in “Lowside Of The Road: A Life Of Tom Waits" by Barney Hoskyns. Faber/ Broadway, 2009
(30) Source: Joe Smith interview November 27, 2007 as quoted in “Lowside Of The Road: A Life Of Tom Waits" by Barney Hoskyns. Faber/ Broadway, 2009
(31) Source: Bones Howe interview March 13, 2007 as quoted in “Lowside Of The Road: A Life Of Tom Waits" by Barney Hoskyns. Faber/ Broadway, 2009