How to Make a Living from Music Second Edition By David Stopps Creative industries – No. 4 H o w t o M a k e a L i v i n g f r o m M u s i c H o w t o M a k e a L i v i n g f r o m M u s i c 3 T A B L E O F C O N T E N T S PREFACE 7 INTRODUCTION 9 DEFINITIONS 16 CHAPTER 1 19 WHERE THE MONEY COMES FROM 19 1.i Authors 19 1.ii Performers 19 CHAPTER 2 22 BUILDING A TEAM 22 2.i Authors 22 2.ii Performers 24 CHAPTER 3 26 COPYRIGHT AND RELATED RIGHTS 26 3.i Rights for Authors 30 3.ii Rights for Performers 31 3.iii Rights for Phonogram Producers 32 3.iv Licensing and Assignment 32 3.v Exclusive Rights and Rights of Remuneration 33 3.vi Making Available 34 3.vii Limitations and Exceptions and the Three-step Test 35 3.viii Fair Use and Fair Dealing 36 3.ix Moral Rights 37 3.x National Treatment, Term of Protection and the Public Domain 38 3.xi Copyright Registration 40 3.xii Trademarks 40 3.xiii Two Copyright Laws that support Authors and Performers 41 3.xiv Creative Commons 42 3.xv Copyright Infringement and How to Stop It 43 3.xvi Carrot, Stick and Education 44 3.xvii Creative Heritage Project 48 H o w t o M a k e a L i v i n g f r o m M u s i c 4 CHAPTER 4 49 COLLECTIVE MANAGEMENT AND COLLECTION MANAGEMENT ORGANIZATIONS (CMOs) 49 4.i Why is Collective Management Necessary and what is its History? 49 4.ii The Importance of Correct Registration of Works, Performances and Recordings 51 4.iii Functions and Governance of Collective Management Organizations 52 4.iv Collective Management Organizations Databases and the Concept of a Global Repertoire Database (GRD) 53 4.v Collective Management Organizations for Authors 55 4.vi Authors’ Public Performance Collective Management Organizations 55 4.vii Authors’ Mechanical Income and Mechanical Copyright Collective Management Organizations 58 4.viii Related Rights Public Performance in Sound Recordings Collective Management Organizations 60 4.ix Featured and Non-Featured Performers 65 4.x Home Copying Levies 66 CHAPTER 5 68 A SHORT HISTORY OF THE MUSIC INDUSTRY 68 CHAPTER 6 72 ARTIST DEVELOPMENT AND ARTIST MANAGEMENT 72 Choosing a Name 72 Artist Management 73 Artists seeking Management 73 A good manager should: 74 Managers Seeking Artists 75 Short-Term Letter of Agreement 76 Long-Form Artist Management Agreements 76 The Importance of Independent Legal Advice 79 Verbal Agreements 80 Legal Limitations and Implied Terms for Verbal Contracts 81 Alternative Agreements 81 Production and Publishing Agreements as Alternatives to Management Agreements 81 CHAPTER 7 85 BAND AGREEMENTS 85 Legal Status 85 Issues covered by Band Agreements 86 Dispute Resolution 88 H o w t o M a k e a L i v i n g f r o m M u s i c 5 CHAPTER 8 89 STARTING A RECORD LABEL – BECOMING AN INDEPENDENT PHONOGRAM PRODUCER 89 CHAPTER 9 93 ARTIST & LABEL FINANCING – CROWD SOURCING 93 CHAPTER 10 97 SIGNING TO A PHONOGRAM PRODUCER 97 Advances and Recoupment 102 360 Degree Agreements 103 Website and Fan Database Ownership 103 CHAPTER 11 104 STUDIO PRODUCER AGREEMENTS, RECORDING, SAMPLING & MASTERING 104 CHAPTER 12 107 MUSIC PUBLISHING 107 CHAPTER 13 112 MUSIC IN FILM, TV, ADVERTISING AND VIDEO GAMES 112 Music in Films 113 Music in Television 116 Music in Advertising 117 Music In Video Computer Games 117 Library or Production Music 118 Commissioned Music 119 Tips for placing music in Film, TV, Advertising and Video Games 119 CHAPTER 14 122 LIVE WORK, TOURING AND MERCHANDISING 122 Getting Started as a Live Artist 123 Sound and Lighting 123 How to Get Live Work 124 Street Performances and Busking 126 The Next Stage 128 Booking Agents 128 Tour Managers 130 Building a Touring Team 130 Visas and Work Permits 131 Freight Agents, Shipping and Carnets 131 H o w t o M a k e a L i v i n g f r o m M u s i c 6 Travel and Hotel Arrangements 132 Insurance and Force Majeure 133 Security 136 Accounting 136 Per Diems 137 Festivals and Conferences 139 CHAPTER 15 143 Merchandising 143 CHAPTER 16 147 SPONSORSHIP AND BRANDING 147 CHAPTER 17 152 THE DIGITAL REVOLUTION 152 A Short History 152 Digital Rights Management and Technical Protection Measures 155 Digital Marketing and Distribution 157 Building a Fan Base 166 Social Networking 170 Facebook 171 Ensuring Content Gets Seen 175 Twitter 179 YouTube 182 Case study – The Young Tigers 186 The Future 190 ANNEX A 195 DEFINITIONS AND INDEX 195 ANNEX B 220 EXAMPLE OF A SHORT-TERM LETTER OF ENGAGEMENT 220 ANNEX C 223 EXAMPLE OF A LONG-FORM ARTIST MANAGEMENT AGREEMENT 223 ACKNOWLEDGEMENTS 237 FURTHER READING 239 Books 239 Information and Networking 241 Conferences 242 ABOUT THE AUTHOR 243 H o w t o M a k e a L i v i n g f r o m M u s i c 7 P R E F A C E The World Intellectual Property Organization (WIPO) is pleased to present this second edition of the Creative Industries book How to Make a Living from Music. The book is designed for musicians and music professionals who wish to hone their knowledge of the music business. It offers practical information to help authors and performers appreciate the importance of proper management of their intellectual property rights, in addition to providing instructive advice on how to build a successful career in music by generating income from musical talent. The book provides useful definitions of grassroots concepts and identifies the basic income streams for authors and performers. Special attention is given to copyright and related rights, and their particular application in the music context. The book underscores the importance of artist development and management, and provides guidelines on establishing fair arrangements for benefit sharing resulting from songwriting and performances. How to Make a Living from Music is written, first and foremost, as a practical tool for creators in the world of music who are still in the process of establishing themselves in the market. Hence it offers a style that is designed to reach out to a broad audience. Secondly, the publication explores the interface between the creative process and all the necessary management arrangements which need to be in place from the moment of creating the music material until the moment it reaches the audience, thus providing valuable insights on synergies between creative and entrepreneurial approaches. Thirdly, it looks into the importance of using the enabling infrastructure such as collective management organizations, registration systems and available compensation schemes. The value of the presented material is reinforced by the detailed annexes which can guide music professionals through the practical complexities of the music business. H o w t o M a k e a L i v i n g f r o m M u s i c 8 This book is intended as a tool for musical authors and performers both in developed and developing countries. Many international examples have been included, making it a useful instrument for creators worldwide. The content is not meant to be used as a substitute for professional advice on specific legal issues. How to Make a Living from Music was commissioned by WIPO and written by David Stopps,1 a seasoned music manager with vast international experience. The author is not an academic or a lawyer. Rather, he is a working music business artist manager, event promoter and entrepreneur with over 40 years’ experience in dealing with copyright and music monetization issues at the music industry’s coalface. This book is therefore written from the point of view of a practitioner and tends to take a pragmatic, practical approach, rather than a theoretical or academic one. The views expressed in the book are those of the author and do not necessarily reflect those of the Organization. H o w t o M a k e a L i v i n g f r o m M u s i c 9 I N T R O D U C T I O N This is a very exciting time for music artists. A music artist is always a performer (someone who sings and/or plays a musical instrument) and is often also a music author (a composer, songwriter, lyricist or arranger). Never before in the history of the world music business have there been so many opportunities for authors and performers to get their music heard and sold on a global level. So much has happened since the first edition of this book. We have seen the emergence of Twitter as a major marketing tool for music, and continued expansion and innovation from Google, Apple, Facebook and Amazon (often collectively referred to as GAFA). We have also seen Myspace falling into decline after it was purchased by News Corp and then seemingly revived in 2013 under the stewardship of Justin Timberlake. Cloud computing and storage are emerging as the next major phase in the development of digital music services, as we move from a copy economy (CDs and downloads) to an access economy (streaming). Artists are discovering that ‘data is the new oil’ as they constantly find ways to grow a database of fans which will be key to their success in the new digital ecosystem, an ecosystem increasingly being driven by artists and artist managers. More and more music is becoming social, with sharing and recommendations being at the heart of music discovery and digital music marketing. Whereas in previous times fans were regarded as consumers, they are now a vital and active part of every business model. Google’s YouTube has become the world’s biggest music discovery website, which has increasingly resulted in music moving from audio-only to an audio-visual format. Korean artist PSY’s ‘Gangnam Style’ video received over one billion views on YouTube in 2012, making it the most viewed video in YouTube history. The audio version of the track was successful, but not as successful as the video, which shows that fans want the full multimedia experience. Meanwhile Lady Gaga has H o w t o M a k e a L i v i n g f r o m M u s i c 10 created her own social network, ‘Little Monsters’, created by Backplane, which uses Facebook as a feeder. More and more artists and managers are taking the DIY (Do It Yourself) route, but that cannot function in a vacuum. Fans expect artists to nurture their digital presence by constantly updating their website and their social media artist pages, and by providing regular and interesting tweets and Facebook posts. Real-time analytics are proving invaluable, as they can reveal exactly what type of fans an artist has and, more importantly, where they live, which greatly assists successful tour planning. In the digital services landscape we are increasingly seeing ‘freemium’ offerings such as SoundCloud, Dropbox and Reverbnation, which provide the basic version free to download and use, whereas more advanced features or increased capacity have to be paid for. We are seeing traditional financial advances from third-party phonogram producers (record companies) becoming more scarce, and financial crowd-sourcing directly from fans providing an alternative source of finance for artist projects. Where recording agreements are on offer, phonogram producers are increasingly demanding a 360 degree contract wherein they will receive income from live work, merchandising, branding and sometimes publishing in addition to recording income. When it comes to recording, recording hardware is becoming ever more sophisticated and less and less expensive. Telecoms are also getting involved with music content and are developing their own music stores and services in some countries. New innovative digital services are constantly being launched, but innovation in the coming years will be driven by the competition between Apple’s iOS system and Google’s Android in the mobile ecosystem. Anyone doubting the true value of music should consider that Apple became the world’s largest corporation in 2011, with music being one of the main drivers of that achievement. When Steve Jobs launched iTunes and the iTunes music store, he was not focused on selling music but rather on using music to sell iPods and computers. iTunes enabled Apple to take a massive market share in the portable digital music player market and by association the personal computer market. Apple later expanded the same music storage ability from the iPod to the iPhone and the iPad. As the Internet is geographically neutral, where an artist is based has become far less important. In previous times, it was often advisable for an author or performer to move to one of the world’s major music business centers, such as Los Angeles, Paris, Hamburg, London, New York or Nashville. With the advent of the Internet, that