PART 2: United States copyright law basics for musicians

PART 2: United States copyright law basics for musicians

In the prior blog post – United States Copyright Law Basics for Musicians we discuss what a copyright is, how copyright law protects musicians and how a musician can get a copyright on a musical composition.  In this blog post we will discuss how a musician can leverage their copyright to earn income from their musical compositions.

A musician can sell their copyright to make money by assigning ownership to another person.  The United States Copyright Office does not provide a form to transfer a copyright but the United States Copyright Office will record a transfer of a copyright.  Recording the transfer of a copyright with the Untied States Copyright Office is not mandatory but it does provide several advantages.  For instance: in certain circumstances a recorded transfer of copyright ownership will give the recorded owner priority over other claims of ownership that did not record their interest in the copyright.

The special circumstance of work for hire should be noted.  Work for hire is a copyright concept that can surprise musicians.  In United States copyright law Work for Hire means that when an employee creates a new copyrighted work, the employer is considered an author or the work and automatically gets the copyright.  This becomes a problem when a band is incorporated and the band members are employees of the band.  In that case the band will be considered the author and owner of the copyright on all the musical compositions produced by the members of the band.  If the musician leaves the band they have no copyright interest in the musical compositions they created while they worked for the band.

Because transfer of ownership is such a permanent change, many musicians are hesitant to sell their copyright.  Instead musicians will enter into an agreement with a licensing company.  Traditionally the written music is managed by music publishers and sound recordings are managed by record labels.  Licensing companies provide value to musicians by promoting and managing a musician’s creations, which allows a musician to concentrate on creating new music.  The licensing company sets up contracts and collects royalty payments on behalf of the musician.  The contract between a musician an a licensing company can vary greatly depending on a number of factors.  Traditionally a musician would transfer their copyright to the licensing company for a split of the copyright royalties, but it is becoming more common for musicians to retain copyright ownership and the licensing company to act as an agent of the musician.

Whether a musician signs with a licensing company or decides to manage their copyrights on their own, the revenue source for copyright music is royalties.  Mechanical royalties are paid based on the number of tangible copies of a CD or record are sold.  Performance royalties are paid based on the number of times a piece of music is played on the radio.  If a television show wants to use a piece of music, a payment could be negotiated for a sync license.   These are the three most common types of royalties but there are more.

The music business is a business.  It is a good idea for a musician to consult with an experienced copyright attorney to help them make sound business decisions.

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