Donald Passman’s seventh edition of his book “All You Need to Know About the Music Business” is available in bookstores today.

Along with the material from the previous editions – the music industry structure, building a team, understanding copyright and publishing, and literally everything else you need to know about the music business – this new edition adds the latest developments from the rapidly changing music business, including:

* The new 360 model of record deals, wherein record companies share in nonrecord revenue

* The Copyright Royalty Board’s latest decisions regarding online transmissions

* The developing customs on new technologies such as streaming on demand, ringtones, and digital downloads

* Updates on recording and publishing deals, as well as film music

I don’t know what else to say about this book that hasn’t already been said. If you’re even thinking about pursuing music as more than just a hobby, you need this book. If you only get one book about the music business, this is the book to get.

Rather than writing a review, I think it suffices to list the thesaurus entries for “definitive.” This book is: absolute, authoritative, clear-cut, complete, conclusive, exhaustive, precise, and reliable.

GrindEFX is back, w00t! Over at Techdirt, Michael Masnick highlights an interesting development in machine-generated music: a company claims to have created software that can recreate musical performances by famous musicians, living or dead.

As described on the blog, “Zenph Studio’s approach is to work out how the musician and the instrument acts and responds, then get a computer to play that track again as a real-time, real-life performance, which in turn can be recorded using modern techniques.”

It’s essentially MIDI on steroids. Zenph claims that through its software process, it can capture the nuances of any performer’s style and translate that into an algorithm to generate new recordings of old songs – or make entirely new songs that sound like they were performed by a famous musician.

Leaving aside whether this is a good idea in the first place – how long before we have Kurt Cobain hawking deodorant? - Masnick concludes with what I can only describe as an excellent law school final exam question -

So, now, take this software that supposedly can perfectly mimic a certain musician’s playing, and have it record a song. Say it’s a new song. Who owns the copyright? What if it’s adding John Lennon to a Rolling Stone’s song? Who owns the copyright? What if it’s an old song, updated in some slight way? Who owns the copyright? What if it’s just the same song but “remastered”? Who owns the copyright? The legal questions raised by this kind of software are going to keep copyright lawyers busy for a long, long time.

Being the slightly sadomasochistic law student I am, I couldn’t resist analyzing the issues raised in this situation. I am not a lawyer, and this article is only for general informational purposes; nothing here constitutes legal advice.

Who owns the copyright in a new song created by this software?

So, there’s this girl you like, named Ann Tates. You, being a musician, want to write a song for her (”She makes me pancakes!”) Her favorite artists are Jerry Lee Lewis, Jimi Hendrix, and Yo Yo Ma. Let’s say (assuming the software eventually does this type of thing) that you create your new song with this software.

The song itself is entirely new, including all music, lyrics, and backing parts. But the piano part sounds like it’s being banged out by Lewis, the guitar sounds like something Jimi would play, and the cello part has the characteristics of a Yo Yo Ma performance.

As far as ownership of copyright is concerned, nothing in this situation changes the fact that you, as the musician, wrote and composed the song, so you would own the copyright. But let’s make it more interesting and say the computer program is more like Jammer or Microsoft Songsmith. Instead of actually writing the song yourself, all you have to do is pick the performers you want to emulate, select a music style, and hit ‘go’ – the program does the rest of the work.

Who owns the copyright now? Copyright protection does require only the barest “modicum of creativity“, but here all you’re doing is pressing a couple buttons – theoretically you could do this all day and generate millions of songs.

Intellectual Property attorney William T. Ralston explores the answer to this question in his 2005 article “Copyright in Computer-Composed Music: Hal Meets Handel.” (52 Journal of the Copyright Society of the USA 281). Noting the struggle that copyright law has had with new technologies since the very first Copyright Act, he points out that “no direct legal challenge to the status of copyright in a machine-generated musical work has been raised” to date. He comes to the conclusion that yes, a computer-composed musical work would be protected by copyright, and the user of the program (not the programmer) would typically be the owner of that copyright.

What if it’s adding John Lennon to a Rolling Stone’s song?

Remember that when you’re talking about recorded music, you’re dealing with two entirely separate copyrights – a copyright on the underlying music composition, and a copyright on the sound recording itself. While both copyrights might be held by the same author (for example, an independent artist who records her own songs), it’s important to note that copyright protection in one of the copyrights doesn’t extend to the other.

That is, you’re free to record yourself playing a song in the public domain – Beethoven’s 5th perhaps – and you would receive copyright protection on the sound recording, but that doesn’t stop anyone from recording their own version of Beethoven’s 5th. Your copyright protection on the recording doesn’t give you any exclusive rights to the underlying composition. The same is true for cover versions of songs – anyone and everyone can make their own recordings of a track. None of them have any claim to the underlying musical composition though. And because of the scope of copyright protection on sound recordings, none of them can sue someone else who made a recording of the same song for copyright infringement, no matter how similar the two recordings turned out.

Just like Sir Mix-a-lot, copyright law likes big buts. The ‘big but’ here is that while you get a copyright on a sound recording of someone else’s musical composition, along with the exclusive rights copyright gives you, you still need permission from the composition’s owner to reproduce, distribute, publicly perform, etc, (I’ve truncated the ‘etc’ in this list for simplicity purposes) your sound recording, since you are simultaneously reproducing, distributing, or publicly performing the songwriter’s copyrighted work.

Getting back to the original question, the answer is clear. Since the software is generating its own sound recording (rather than ’sampling’ the sounds from any existing sound recording), you would own the copyright on a sound recording of John Lennon playing on a Rolling Stone’s song. You would not, however, be able to do anything with that recording without the permission of John Lennon or the Rolling Stones (or whoever happens to own the copyright on the musical composition you’ve used).

What if it’s an old song, updated in some slight way? What if it’s just the same song but “remastered”?

The same answer for the previous question holds true here. Again, so long as you’re not actually using the sounds from the original sound recording itself, you would own the copyright on a new sound recording you create from an old song, but the owner of the copyright to the musical composition still retains his or her rights to the song itself. You would need permission from them before distributing, reproducing, or publicly performing your sound recording (or not, if you qualify for a statutory compulsory license).

If you have made changes to the original composition’s  ”basic melody or fundamental character,” you may need additional permissions from the composition owner for creating a derivative work. (’Remastering’ or altering the arrangement to the  ’extent necessary to conform it to the style or manner of interpretation of the performance involved’ does not create a derivative work.)

You may be fine under copyright law, but there are other laws too

Masnick was only asking about the copyright issues that come into play with the software described here. Appropriating an artist’s “style” of playing may implicate various state and federal laws concerning right of publicity or unfair competition, to name a few.

Bette Midler, Nancy Sinatra, and Bert Lahr are just a few of the celebrities who have sued after discovering someone else had used a “sound-alike” to create a new work that mimicked their vocal styles. Copyright doesn’t work here – you can’t copyright a vocal style. Instead, they sought remedies through other laws, including those mentioned above.

These types of claims are complex to analyze. Tort law varies from state to state – what might be a valid claim in California may not be in Wisconsin – and the elements required to plead a case under each law differ. And while you can’t copyright a vocal style, you may still find yourself losing your case if the claim you bring clashes with federal copyright law, as Sinatra found out.

Additionally, you have state common law copyright to contend with, as well as First Amendment implications that may protect certain transformative uses of a performer’s right to publicity! Are you getting a headache yet?

In short, recreating the performance styles of famous musicians using this software may not be legal in areas of the law outside of copyright. The same things that hold true for a vocalist’s right to some control over the use of her vocal likeness would hold true for a performer’s right to the use of his musical likeness. In most states, right to publicity extends to the heirs of a deceased celebrity.

If Zenph Studio’s software does what it says it does, it is likely that we will see some kind of legal challenge in the future from one of the performers it adds to its software.

Image courtesy of misterbisson

On September 8th, Apple unveiled its latest ‘innovation’ to help prop up the recorded music industry – the iTunes LP. For only seven bucks more than a regular digital album, you can get some pretty pictures and liner notes. Facepalm!

But the story doesn’t end there.

Last week, Brian McKinney of Chocolate Lab Records told Gizmodo that Apple was charging record labels $10,000 in production costs to release an album in the iTunes LP format – and indie record labels need not apply. Apple later denied that allegation and said it is working on releasing the specs for the LP format and making them available to all, indie and major labels alike.

Regardless of the outcome of this “he said she said” tempest, it amplifies the silliness of the iTunes LP format itself.

Several web developers have dissected the format to find that it is essentially HTML, Javascript, CSS, and multimedia content – a website. For a little more than the cost of an actual physical CD, you get to save files to your hard drive that largely mirror content you can find online, from the artist’s website itself to Wikipedia, YouTube, and others.

I’ve been unable to find sales figures for albums released as iTunes LPs, but I’m curious to see how successful (or unsuccessful) it has been to date. Until then, the question remains whether Apple’s initiative – jacking up prices to include nicely designed text and album art with digital music files – can connect with fans, especially as consumers are shifting away from the album as a default container for music.

Until Apple opens up the specs to the iTunes LP format, indie artists who wish to bundle additional content with their albums can stick with a tried and true format: the zip archive. For years, netlabels and some independent artists have simply added media and documents to zip files of album tracks and offered the complete package to fans.

Bandcamp (one of the best music hosting/distribution sites out there IMHO) recently began offering this feature to artists on their site. Types of content you can include are limited only by your imagination and file-size concerns – videos, images, pdfs, etc. And with a little web development skill, artists can replicate a centralized user interface for interacting with the album’s content just like the iTunes LP.

In 2007, Radiohead released its album “In Rainbows” with an interesting twist – along with traditional CD and vinyl versions, as well as 99 cent tracks on iTunes and other digital retailers, the band offered its own digital downloads of the album on a “pay what you want” basis.

While solid numbers are difficult to come by, the experiment appears to have paid off for Radiohead. Along with the huge amount of press the move generated, the band reported over 3 million combined sales (physical and digital), and “rumors, polls, and inside sources” suggest that the average person paid around $4 to download the album. It is also very likely the pricing model itself drove demand for the band – the deluxe edition box set of “In Rainbows” sold over 100,000 copies (at $81 a pop) when it was released three months after the digital release, and Radiohead went on to its most successful tour to date.

But what’s most interesting is how the music industry responded to this experiment – it didn’t.

Over at Music Think Tank, Keith Jopling asks, “Why didn’t ‘In Rainbows’ open the music floodgates?” He frames the question in a broad sense – why haven’t established bands followed suit with their own foward-thinking, innovative strategies? But for now, I want to focus only on Radiohead’s specific strategy of using the “pay what you want” pricing model.

Established bands are unlikely to adopt such a strategy – Radiohead had left EMI/Capitol and was on its own when it released “In Rainbows.” Call it inertia, risk-aversion, comfort with the status quo, the major labels and the artists they represent move at their own pace.

Emerging bands, on the other hand, are resistant to the “pay what you want” model for other reasons. The only reason it worked for Radiohead, they argue, is because Radiohead already has a huge and loyal fanbase – they could release paper plates and still make money.

So the “In Rainbows” experiment remains an anomaly. But does that mean that the “pay what you want” model itself is necessarily an anomaly? Or can indie musicians learn from Radiohead and find some success from asking fans to choose their own price?

Some have, actually. Magnatune, a hub for independent musicians, offers monthly subscriptions at a “pay what you want” price (although with minimums above free for streaming and downloading) – and splits its proceeds 50/50 with its artists. Again, recent sales numbers are scarce, but based on past numbers, the site seems to be doing well and growing, with several of its artists earning close to 5 figures a year.

Over at Music Think Tank again, Derek Sivers today offered this anecdote illustrating a band using the “pay what you want” model:

Terry McBride of Nettwerk told this story at a recent conference:

A band he was managing was doing the usual thing of selling CDs for $15. They’d mention it once or twice from the stage, and sell about $300 per night on average.

He asked them to try a completely different approach:

1. Say to the audience, “It’s really important to us that you have our CD. We worked so hard on it and are so proud of it, that we want you to have it, no matter what. Pay what you want, but even if you have no money, please take one tonight.”
2. Mention this again before the end of the show, adding, “Please, nobody leave here tonight without getting a copy of our CD. We’ve shared this great show together so it would mean a lot to us if you’d take one.”

It changes the request from a commerical pitch to an emotional connection. (Replace market mindset with social mindset!) Allowing them to get a CD for no money just reinforces that.

Terry said that the band did this for a while, and soon they were selling about$1200 per night on average, even including those people who took it for free! I think the average selling price was about $10.

But the important part came next:

Because every person left each show with a CD, they were more likely to remember who they saw, tell friends about it, listen to it later, and become an even bigger fan afterwards.

Then, when the band came back to a town where they had insisted that everyone take a CD, attendance at those shows doubled! The people that took a CD became long-term fans and brought their friends to future shows.

My advice for independent musicians is to not dismiss the “pay what you want” idea right off the bat. Keep it in your toolbox of business models. It very well may be viable, and may actually lead to more success than going the traditional route in certain situations.

Image courtesy of BockBilbo

Radio station to offer web streaming is not news. Web site to offer radio programming is.

CBS Interactive Music Group recently announced that it will begin offering music programming from Last.fm on HD radio stations in New York, Los Angeles, Chicago, and San Francisco beginning October 5th. The stations will effectively hand the broadcasting reins over to the crowd-sourced, music discovery site – bringing listeners “an eclectic mix of music aggregated and influenced by the service’s user-generated weekly charts, combined with live performances and interviews from the Last.fm studios in New York, and event updates.”

According to CBS, this is the “first time a music website has been transformed into its own broadcast entity.”

How to tune in?

Listeners will be able to access the station through multiple outlets including Last.fm and select CBS RADIO station websites; CBS RADIO’s streaming platform including its partnerships with AOL Radio and Yahoo! Music Radio, as well as mobile applications on the iPhone, iPod Touch and select Blackberry devices.  Music fans with HD Radio receivers in New York, Los Angeles, Chicago and San Francisco will also be able to interact with the multicast station broadcast on CBS RADIO’s WWFS-FM (102.7 HD2), KCBS-FM (93.1 HD2), WXRT-FM (93.1 HD3) and KITS-FM (105.3 HD3), respectively.

While this is an exciting and innovative development, the question remains whether HD radio itself can still catch on. Awareness of the format itself is very low; meanwhile, less than 10% of new automobiles come equipped with factory-installed HD receivers. CBS hopes this announcement – along with Microsoft’s soon-to-be-released Zune HD devices – will spur interest in the broadcast format.

Forrester Research recently released a report that lays out a “radical vision” to “save the music industry from the current Media Meltdown it finds itself in.”

While the actual report is only available to Forrester customers, the company’s blog reveals that the plan involves broad “music release windows,” similar to the chart on the right. “Premium” content is released first, followed by a “mainstream” release at a later time, and eventually wide dissemination to free and “feels like free” services.

Judging by comments on the Forrester blog and elsewhere, many scoff at the idea of regaining content scarcity through this staggered release approach. “What about pre-release leaks?” they ask. True, the industry has increasingly bumped up release dates of albums – Jay-Z’s latest came out three days early today – in part to combat the problem of early copies leaking onto the internet. But it’s important to keep in mind that large swaths of music listeners are not running around downloading leaked copies of albums off torrent sites.

It is also counter-intuitive when one looks at the movie industry and how the release cycle of a typical movie – which has been staggered between theatrical release, dvd release, and television release – has shrunk over the last decade or so.

I’m guessing, though, that the example illustrated in the graphic above is just that – an example. Rather than a one-size-fits-all solution, Forrester is suggesting an approach to music that doesn’t revolve around the traditional album release cycle (release an album – tour – repeat next year). They propose shaking off the “strait-jacket” of the album and thinking of all content generated by musicians and bands as product (backstage footage, mobile apps, merchandise) in order to create a “continual artist-fan relationship with artists delivering a steady stream of creative output.”

Sound familiar?

It sounds a lot like what the major labels had been talking about earlier this year at a 2009 NARM panel. And that discussion sounded a lot like what we here at GrindEFX have been saying.

Ditching the album format as the default container for music and releasing smaller blocks of music more often – that’s the 3P concept.

Building a continual artist-fan relationship to make money outside of selling non-scarce recorded music – none other than CwF + RtB = $$$.

So, while not exactly radical, Forrester’s report does indicate the direction the big players in the industry are heading toward, as well as validate what many of us on the sidelines have been saying.

The National Music Publishers’ Association filed complaints on Monday, August 24th against two companies alleging copyright infringement for their unauthorized use of song lyrics.

The companies – Motive Force and LiveUniverse – both operate web sites which allow users to read and search for song lyrics from thousands of songs. Both companies also use many “web 2.0″ features to allow users to access the lyric database in Facebook, iTunes, and other third-party applications.

A look at one of the complaints reveals that the Publishers’ Association is alleging, among other things, copyright infringement on the basis of unauthorized public display – one of the few times this particular exclusive right is relevant to musicians. The Association also alleges this infringement is not innocent: both companies, they claim, earn significant revenue from advertising, soliciting donations, and driving traffic to their other ventures.

Billboard reports that NMPA President David Israelite has been leading the NMPA in an effort over the last three years to protect songwriters’ lyrics by contacting hundreds of unauthorized lyric sites providing them opportunities to properly license their content or risk a lawsuit. Says Israelite, “Music fans are the biggest losers when licensed businesses, like LyricFind, Gracenote and TuneWiki can’t survive and prosper because unlicensed, illegal businesses are allowed to thumb their noses at the law.”

ASCAP, BMI, SOCAN, PRS, LOL, OMG, WTF. Welcome to the world of Performance Rights Organizations, or PRO’s. Why do we have them, what do they do, and why is it important for musicians to know all this?

Recall from our discussion of copyright that one of the exclusive rights of a copyright holder is the right to publicly perform her work. The performance of music has always played a large role in the public’s engagement with music. Before recording technology came along, public performance income for musicians was simple – get on stage, play, and get paid. Now however, songwriters and musicians can have their recordings publicly performed without having to physically be there. As a result, the licensing of public performances has become very important to musicians and serves as a major revenue stream for them.

The Public Performance Right

Before diving into the role of Performance Rights Organizations, let’s take a closer look at the public performance right itself. The United States defines a “public performance” of a copyrighted work this way:

(1) to perform or display it at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered; or
(2) to transmit or otherwise communicate a performance or display of the work to a place specified by clause (1) or to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times.

Most other countries under the Berne Convention define public performance in roughly the same way. As you can see, the definition is very broad. Today, it encompasses everything from live concerts to radio, television, in-store music at bars and retail shops, on-hold music, muzak, internet streaming, and so on.

The Role of Performance Rights Organizations

It’s extremely rare, but it does happen that individual songwriters engage in direct negotiations with venues or organizations for public performance licenses. The majority of the time, however, it is a Performance Rights Organization that handles all the licensing. Why is this?

Imagine a world without Performance Rights Organizations. You, as a songwriter, would like to get your song played on the radio. With over 10,000 radio stations in the US, that’s a lot of potential performance licenses to negotiate and keep track of. Or, if you’re a radio station, think of all the licenses you have to procure – one from every songwriter of every song you might conceivably play, not to mention the piles of tiny royalty checks you’d have to send out.

Performance Rights Organizations take care of this problem by acting as a go-between for the songwriters and anybody who wishes to publicly perform music. Individual songwriters and publishers sign up and register their music with the PRO, then the PRO’s issue blanket licenses to individual licensees allowing them to publicly perform any song in the catalog. The PRO’s track what songs are being performed, collect the license fees from the licensees and pay them out to the individual licensors.

You can see an example of how and where a PRO collects royalties on ASCAP’s website. Many other PRO’s have similar collection and tracking methods.

It is important to note that this is all PRO’s do. They are not “publishers,” nor do they promote any specific song in their catalog. Merely signing up with a PRO will not result in a songwriter receiving royalty checks. It is up to the songwriter and his team to actually get his song on the radio, or in ads, or performed in shows – the PRO’s job is only to make sure he gets paid once that happens.

(C) vs. (P) Again

Let’s back up for just one second and revisit our two separate copyrights in music. You’ll recall from our discussion on publishing that one can get copyright protection on both the musical composition and a sound recording.

This distinction comes into play in the US when it comes to Performance Rights Organizations. In the United States – unlike most of the rest of the world - sound recordings do not have a public performance right attached to them. That means only songwriters and publishers need join a PRO, since they are the only ones given a public performance right.

A hotly-debated bill currently in Congress would change that, recognizing a public performance at least for sound recordings played on radio. But unless that passes, recording artists (who are not also songwriters) are out of luck.

Not entirely out of luck, I should say. US Copyright law does recognize a very narrow public performance right for sound recordings – public performance by certain digital audio transmissions. These include satellite radio and certain internet streaming sites. The PRO responsible for licensing this public performance right is SoundExchange, and you can find more information on their site.

Make Sure You Get All Your Money

You may recall from our article on publishing that musical publishers often take a share of royalties a songwriter receives, including from public performance licenses. As a result of somewhat shady practices of music publishers in the past, many PRO’s, including ASCAP and BMI, will split the royalties it pays out, typically half going directly to the writer and half going directly to the publisher. The writer’s half is called the “writer’s share” and the publisher’s is – not oddly enough – called the “publisher’s share”.

If there is more than a single writer or a single publisher on a song, those royalties are divvied up by the PRO and paid out according to the percentages given to them on the song registration (percentages often worked out beforehand by the writers in what is known as a “split sheet”).

[Note: I have been unable to verify the information in the following two paragraphs with ASCAP or BMI or an entertainment lawyer - it represents only what I've found through researching their respective websites, so use at your own risk!]

Things get a little tricky when a songwriter is acting as his own publisher (remember that any songwriter without a publishing company automatically acts as his own publisher). According to the BMI website, if no publisher is listed on a song registration, then the publisher’s share automatically goes to the writer. ASCAP, however, holds onto the publisher’s share if no publisher is listed (at least for song registrations done online), leading to the unfortunate result of a songwriter acting as his own publisher only receiving half the royalties he is entitled to.

Until this changes, any songwriter acting as his own publisher who signs up for ASCAP needs to create his own publishing company to ensure he gets all his royalties. Check out this article by Donald Passman about setting up your own publishing company for one way to go about doing so.

ASCAP or BMI?

If you live outside the United States, the decision about which Performance Rights Organization to join is a simple one – typically, there is only one Performance Rights Organization in each country.

In the US, however, there are three: ASCAP, BMI, and SESAC. Not to knock SESAC or anything, but for the majority of songwriters, the decision comes down to ASCAP or BMI. Songwriters and publishers are prohibited from joining both (you’d essentially be getting paid twice for each public performance, taking money away from other songwriters and publishers), so many ask which one is better to join.

There is no clear-cut answer. You can find people who claim that one is better than the other for certain genres, or for the type of market your work is geared toward. Donald Passman, in his must-have book for musicians All You Need to Know About the Music Business, says about which society is best, “Hard to tell… In the comparisons I’ve seen, ASCAP seems to do a bit better in general, but for some compositions, BMI beats them.”

For  US musicians deciding on which organization to join, the best they can do is read through each organization’s site and decide on their own, or seek the help of their attorney or manager if they have one.

More Resources

• Performance Rights Organizations around the world – Wikipedia has a nice list of PRO’s in many major countries, with links to their respective web sites.

Previous posts in this series

• Music Business 101 – Copyright
• Music Business 101 – Copyright Registration
• Music Business 101 – Licensing
• Music Business 101 – Publishing

Image courtesy of Marfis75