A year or so ago, I sent a letter to my clients with minor children advising them of the need to do some simple estate planning. It was something I felt strongly about.
Like every Nashvillian, I was shocked to learn of Steve McNair’s awful murder on the 4th of July. I was surprised but not exactly shocked to learn that he had died without a will, and that in addition to the children he had with his wife, Mechelle, he had children from previous relationships in Mississippi (Steven L. McNair, Jr. and Steven O’Brian Koran McNair).
McNair reportedly earned over $90 million during his tenure in the NFL and owned property and held investments in both Tennessee and Mississippi. That means that at least these two states will be involved in the probate of his estate. To leave his wife without any clear picture of how to handle this is inconceivable. Worse, an action between the heirs could literally pit brother against brother and put the widow in a terrible position. None of this contemplates the horrible estate tax consequences of leaving so much money and property unsheltered.
All these possible hellish family scenarios could have been avoided by some simple planning, as could have most of the estate tax consequences.
It will be interesting and instructive to see how this plays out, but it won’t be pretty. This is why if you have children or if you own any assets at all, you need to do some estate planning.
Monday, August 24, 2009
Sunday, August 16, 2009
It's The End of The World as We Know it and I am Not Sure What to Think About It
"Next month Pearl Jam plans to release its new album simultaneously on CD and in Rock Band."
- from an article in today's New York Times magazine by Daniel Rudolph on the Beatles' new Rock Band game due out 9/9/9.
- from an article in today's New York Times magazine by Daniel Rudolph on the Beatles' new Rock Band game due out 9/9/9.
Sunday, August 2, 2009
Single Song Agreements
For some time now, I have been wanting to write a basic analysis of a single song agreement because this simple document is the backbone of the music publishing industry. It is also can be tremendously misunderstood.
First and foremost, a single song agreement is an assignment of copyright. Section 204 of the Copyright Act of 1976 says that any assignment of copyright must be in writing. Therefore, unlike certain verbal assignments that that occurred under the 1909 Copyright Act, you cannot assign your copyright in a musical composition unless you do so in writing. Also, except in very limited circumstances, you should never agree to assign your composition as a “work made for hire.”
Also, if there is more than one writer on a composition, and they are both/all assigning their copyright interest to the same publisher, the single song agreement is the document which details the writers’ percentages of the composition. It is important to note that the law presumes the splits to be equal unless specifically outlined. This split should be decided upon as near the date of creation as possible. I was once embroiled in a lengthy court battle over this very issue.
The next important part of the agreement is the warranty and indemnity provision. The writer must warrant that the work is original and will not infringe upon anyone else’s work. Remember that this does not apply to titles or ideas, although some writers apparently think otherwise.
The scope of the indemnity provision is extremely important to the writer. Unless he negotiates with the publisher to limit his liability against third party claims, he could end up on the line for all of the publisher’s legal fees, even if the underlying claim is frivolous. This is a very real possibility and should not be overlooked.
The next important section (and songwriter’s favorite portion, most likely) is the compensation section. Typically, the writer can expect to receive a portion of mechanical royalties, synchronization fees and royalties, public performance royalties (i.e., from airplay) and print royalties. The print royalty section is the most archaic section of the agreement and goes back to the days when music publishers were essentially print publishers who sold sheet music. Today, a songwriter would be lucky to have their work sold as a piece of sheet music. Mechanical royalties are the royalties that are generated from the sale of records (you remember records, don’t you?), compact discs and legal digital downloads. Synchronization royalties are the royalties generated from a “synchronization” of a song with a motion picture (movie, TV show, commercial, etc.).
Typically, a publisher splits all of this income with the writer under the terms of the single song agreement. Public performance income (radio, live performance, etc.) is paid directly to the writer by his or her PRO, or performance rights organization. The three PRO’s in the US are BMI, ASCAP and SESAC. Under a typical single song agreement, the writer has no claim to the publisher’s share of public performance income, or vice-versa.
The grant of rights provision can be critical to the writer. Usually, the writer will want to make sure that the publisher does not have permission to change the title, lyrics or music to a song without the writer’s consent. Also, the writer might want to limit the use of the work in certain kinds of films, commercials and/or political campaign. Without limiting language here, the writer has no control over these types of exploitations.
The next salient section is the accounting section. The writer wants to be sure that the publisher accounts to him (i.e., rendering a statement and a payment if applicable) at least twice a year. Additionally, most agreements allow the writer to object to the statement for up to one (1) year after receiving the statement. The writer should endeavor to increase that amount of time to at least two (2) to three (3) years. This period of time can fly by and you do not want to lose your contractual right to question a statement.
Another major issue in a standard single song agreement is demo costs. Some of these costs are almost always recoupable (that is, taken for reimbursement by the publisher from the writer’s share of royalties). The writer will want to be sure that he or she has a handle on what the costs will be. Understandably, keeping a handle on demo costs is also very important to the publisher.
Also, though this is rarely an issue, the writer will want to make sure the publisher cannot exploit the demo without approval from the writer.
Finally, this leaves the issue of a reversion clause. Most drafts of single song agreements omit the reversion clause, although, in my experience, the publisher will usually add this clause if requested. Essentially a reversion clause provides that if the publisher does not commercially exploit the composition within a certain amount of time, it reverts to the writer. This is fair, because in most single song agreements (as opposed to exclusive songwriting agreements) the publisher does not “buy” the song from the writer; his or her part of the deal is to get the song cut. Further, if the publisher cannot exploit the song, it is not really valuable to his or her catalog, yet it has intrinsic value to the writer.
It used to be easy to figure out the terms of a reversion. Exploitation used to mean that a song was recorded and released by an artist on a record label with national distribution or included in a film with some sort of synch fee. In the current environment, where anyone with an internet account can distribute nearly anything, this distinction becomes much more vague. The writer must pay special attention to this provision to ensure that he can live with its terms.
I hope this overview provides some insight into the workings of this document and proves there is no such thing a “just a standard single song agreement.” Although these agreements may seem similar in scope, each section of each agreement needs to be carefully reviewed.
First and foremost, a single song agreement is an assignment of copyright. Section 204 of the Copyright Act of 1976 says that any assignment of copyright must be in writing. Therefore, unlike certain verbal assignments that that occurred under the 1909 Copyright Act, you cannot assign your copyright in a musical composition unless you do so in writing. Also, except in very limited circumstances, you should never agree to assign your composition as a “work made for hire.”
Also, if there is more than one writer on a composition, and they are both/all assigning their copyright interest to the same publisher, the single song agreement is the document which details the writers’ percentages of the composition. It is important to note that the law presumes the splits to be equal unless specifically outlined. This split should be decided upon as near the date of creation as possible. I was once embroiled in a lengthy court battle over this very issue.
The next important part of the agreement is the warranty and indemnity provision. The writer must warrant that the work is original and will not infringe upon anyone else’s work. Remember that this does not apply to titles or ideas, although some writers apparently think otherwise.
The scope of the indemnity provision is extremely important to the writer. Unless he negotiates with the publisher to limit his liability against third party claims, he could end up on the line for all of the publisher’s legal fees, even if the underlying claim is frivolous. This is a very real possibility and should not be overlooked.
The next important section (and songwriter’s favorite portion, most likely) is the compensation section. Typically, the writer can expect to receive a portion of mechanical royalties, synchronization fees and royalties, public performance royalties (i.e., from airplay) and print royalties. The print royalty section is the most archaic section of the agreement and goes back to the days when music publishers were essentially print publishers who sold sheet music. Today, a songwriter would be lucky to have their work sold as a piece of sheet music. Mechanical royalties are the royalties that are generated from the sale of records (you remember records, don’t you?), compact discs and legal digital downloads. Synchronization royalties are the royalties generated from a “synchronization” of a song with a motion picture (movie, TV show, commercial, etc.).
Typically, a publisher splits all of this income with the writer under the terms of the single song agreement. Public performance income (radio, live performance, etc.) is paid directly to the writer by his or her PRO, or performance rights organization. The three PRO’s in the US are BMI, ASCAP and SESAC. Under a typical single song agreement, the writer has no claim to the publisher’s share of public performance income, or vice-versa.
The grant of rights provision can be critical to the writer. Usually, the writer will want to make sure that the publisher does not have permission to change the title, lyrics or music to a song without the writer’s consent. Also, the writer might want to limit the use of the work in certain kinds of films, commercials and/or political campaign. Without limiting language here, the writer has no control over these types of exploitations.
The next salient section is the accounting section. The writer wants to be sure that the publisher accounts to him (i.e., rendering a statement and a payment if applicable) at least twice a year. Additionally, most agreements allow the writer to object to the statement for up to one (1) year after receiving the statement. The writer should endeavor to increase that amount of time to at least two (2) to three (3) years. This period of time can fly by and you do not want to lose your contractual right to question a statement.
Another major issue in a standard single song agreement is demo costs. Some of these costs are almost always recoupable (that is, taken for reimbursement by the publisher from the writer’s share of royalties). The writer will want to be sure that he or she has a handle on what the costs will be. Understandably, keeping a handle on demo costs is also very important to the publisher.
Also, though this is rarely an issue, the writer will want to make sure the publisher cannot exploit the demo without approval from the writer.
Finally, this leaves the issue of a reversion clause. Most drafts of single song agreements omit the reversion clause, although, in my experience, the publisher will usually add this clause if requested. Essentially a reversion clause provides that if the publisher does not commercially exploit the composition within a certain amount of time, it reverts to the writer. This is fair, because in most single song agreements (as opposed to exclusive songwriting agreements) the publisher does not “buy” the song from the writer; his or her part of the deal is to get the song cut. Further, if the publisher cannot exploit the song, it is not really valuable to his or her catalog, yet it has intrinsic value to the writer.
It used to be easy to figure out the terms of a reversion. Exploitation used to mean that a song was recorded and released by an artist on a record label with national distribution or included in a film with some sort of synch fee. In the current environment, where anyone with an internet account can distribute nearly anything, this distinction becomes much more vague. The writer must pay special attention to this provision to ensure that he can live with its terms.
I hope this overview provides some insight into the workings of this document and proves there is no such thing a “just a standard single song agreement.” Although these agreements may seem similar in scope, each section of each agreement needs to be carefully reviewed.
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