Portland, OR Musicians' Resources

Recording Contract Clauses

In this section, from time to time, I will analyze various contract clauses found in typical recording contracts and discuss how they affect the signatory musician. Below follows a list of recording contract clauses discussed:


WARRANTY SAMPLING CLAUSE

In the Warranty "Sampling" Clause below, the musician tells the Record Company that if s/he has used a Sample in the master recording being delivered that proper permission has been obtained for its use. A sample may be thought of as small digital clip of another's recording, which can digitally modified and placed anywhere and in any amount in the master recording.

A typical Warranty "Sampling" Clause reads as follows:

"... None of the Masters shall have been made by or include unauthorized Sampling. 'Sampling', as used herein, refers to the use and reproduction of pre- existing musical material, hereinafter "Sampled Material" which is owned or controlled by any person, firm or corporation other than Musician or would not otherwise be subject to Record Company's rights hereunder. Musician shall be solely responsible for obtaining all consents and licenses necessary or desirable in connection with the use and reproduction, and in connection with the licensing of the use and reproduction, of any Sampled Material in any Master hereunder, so that Record Company shall enjoy the full and perpetual rights otherwise granted to Record Company hereunder; at Record Company's request, Musician shall supply Record Company with fully executed copies of any such consents, licenses and other related documentation. Musician shall be solely responsible for and shall account for and pay to any and all persons, firms, corporations or other entities who/which own or control Sampled Material any monies or other compensation to which such persons, firms, corporations or other entities are entitled as a result of any use hereunder by Record Company of any Master embodying such Sampled Material."

In analyzing the above warranty sampling clause, several copyright issues are involved and must be addressed!

First we must look to where the sampled digital clip was obtained from. Second we must look at who controls the copyright in the underlying composition from which the sampled digital clip was obtained.

For example if the sampled digital clip was obtained from another album, compact disc, etc., the musician first would need to obtain a written agreement to use the sampled digital clip from the copyright owner of the sound recording. Typically this would be the record company that produced the original recording from where the sampled digital clip was obtained.

Next the musician would need to track down, and obtain, a written agreement, from the copyright owner(s) of the underlying composition that is sampled. This can prove difficult or problematic. For example, perhaps the copyright owners/composer cannot be located. Or perhaps there are multiple copyright owner/composers, in which case all their permissions would need to be obtained. What if some don't want to give their written consent? And how to you go about locating the copyright owner/composes? A good place to begin tracking down this information (i.e., names and address of the copyright owner/composers) is The Harry Fox Agency (if they administer mechanical licenses for the copyright owner/composers) or BMI, ASCAP or such other society that collects performance royalties for the copyright owner/composers. You can check these organizations' data bases on line.

How is the typical jazz musician affected by this clause? Well if you are the jazz musician who is combining jazz music and hip-hop (and using the sample), or are a reggae, rap or rock and roll musician desiring to use a sampled digital clip, then you will need to go through the above process to obtain the proper written permission from all parties involved. If you fail to do so and your record company gets sued for copyright infringement, you will be responsible because of your representations made to the record company in the above clause.

On the other hand, what if you are the jazz composer? In this case, be sure to make sure that your work hasn't been sampled without your permission. For if it has, you may be able to sue for copyright infringement, or better yet, negotiate a high paying license for your compositions use.

Better yet, if you need to clear a sample, you might want to engage Sample Clearance Ltd., 330 West 58th Street, New York, N.Y.

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THE CONTROLLED COMPOSITION CLAUSE

The Controlled Composition Clause addresses how much money a record company will pay its recording artist (in his capacity as a composer) for those of his songs which he records. Thus, every musician who records for, or licenses or sells his or her self produced master to, a record company should analyze the Controlled Composition Clause carefully. Recently, the Controlled Composition Clause has become vastly more onerous, especially as used by the major record companies and thus should be carefully reviewed. (See The Controlled Composition Clause: Is It Out of Control?, by David Moser in the Entertainment, Publishing and the Arts Handbook, 1997-1998 Edition, West Group). However, even in its more benign form this clause needs to be evaluated.

Typically the Controlled Composition Clause, in its more benign form, provides for the recording artist to grant his record company a mechanical license for the recording artist's own compositions at a reduced mechanical royalty rate then what currently is in effect. (see mechanical royalties.)

A hypothetical example of this latter type of "benign"(???) Controlled Composition Clause reads as follows:

"... Record Company is hereby granted a mechanical license for all Controlled Compositions, as defined below, embodied in the Masters at fifty (50%) percent of the minimum statutory mechanical copyright royalty rate in effect on the date of first release of Records containing such Controlled Compositions (the "Controlled Rate"). The term "Controlled Composition" means a Composition embodied in any Master delivered hereunder which is written or composed by Owner, alone or in collaboration with others, or is owned or controlled, in whole or in part, directly or indirectly, by Owner, or by any person, corporation, partnership, firm, or other entity in which Owner has a direct or indirect interest..."

Basically, in this type of Controlled Composition Clause, the recording artist is effected in two ways. First, and foremost, the recording artist would only receive one-half (fifty (50%) percent) of the statutory mechanical royalty rate in effect. While seventy-five (75%) of the statutory mechanical royalty rate is more typical in this type of clause, fifty percent is not unheard of. Nevertheless, try and obtain as high a percentage as possible

Secondly, the recording artist is also harmed in a less obvious manner. Because the mechanical royalty rate is pegged to the statutory mechanical royalty rate in effect at the time of "first release of Records" the artist will be harmed if the Record is sold many years after the contract is signed because the statutory mechanical royalty rate typically would be higher at that time. The statutory mechanical royalty rate is adjusted upwards every few years. Thus even if the recording artist cannot cause the record company to delete this type of "Controlled Composition Clause" the recording artist should, in any case, seek to have the mechanical royalty rate pegged to the rate in effect at the date of manufacture of Records rather than at the date of first release of Records.

The more onerous type of Controlled Composition Clause places a monetary restriction, a cap, on the amount of mechanical royalties it will pay to the recording artist. And, should the record company be forced to pay more than its prescribed limit, the clause allows the record company to deduct such excess from the artist royalties (as opposed to mechanical royalties) it pays the recording artist. As mentioned above, this type of Controlled Composition Clause is being used by the major record labels more frequently today.

A hypothetical example of this type of "capped" Controlled Composition Clause reads as follows:

"... Recording Artist hereby grants and will cause all applicable publishers to grant to Record Company mechanical licenses in the USA at the rates set forth herein ("Controlled Composition Rate") with respect to musical compositions written, owned or controlled in whole or in part by any member of Recording Artist or a producer or by a company affiliated with any member of Recording Artist or Producer ("Controlled Compositions") and embodied on records distributed hereunder. In respect of Full Price records, the Controlled Composition Rate for all musical compositions regardless of length shall be seventy-five percent (75%) of the minimum USA statutory rate for selections whose timing is five (5) minutes or less; and with such Controlled Composition Rate being determined at the time of first release of records embodying the composition concerned, subject to the following configurational ceilings for all musical compositions, whether or not Controlled: Nine (9) times the Controlled Composition Rate on Compact Disc Albums. In the event the actual aggregate mechanical copyright royalty rate paid by Record Company exceeds the maximum configurational ceiling for any record hereunder, Record Company shall deduct from any monies payable to Recording Artist hereunder (whether in respect of Controlled Compositions or otherwise) an amount equal to such additional payments. ..."

DISCUSSION ON CONTROLLED COMPOSITION CLAUSES TO BE CONTINUED........ CHECK BACK TO THIS AREA FROM TIME TO TIME FOR ANALYSIS OF ADDITIONAL RECORDING CONTRACT CLAUSES.

Due to the importance, and complexity, of contracts, musicians should consult with their local legal counsel before signing any documents.

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Copyright  © 2006 Jay M. Schornstein.  Site by dhjazzdesign