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by Donald S. Passman
By now, you should already know enough to answer the final
homework assignment I gave after my nine-week music business
class at USC Law School. Very impressive! So try your hand
at it:
Scenario
It may
surprise you (but then again, it may not) to hear that many
clubs now charge for the privilege of playing in them. Thus,
rather than give you the money to entertain the throngs, these
clubs become fancy places to "showcase" your talents and invite
industry executives and relatives, etc., to see you perform.
- Each time the album is sold, who is entitled to a payment
from the record company? (Ignore any recoupment). Clue:
There are five parties, but you won't know the last one
if you're not an expert!
- Freddy makes a promotional video of his single. Who gets
paid when the video is played on television?
Answers
To Quiz
- Each time the album is sold, the following are entitled
to a payment from the record company: Artist, Producer,
Publisher (Warner/Chappell), which includes Freddy's songwriter
royalties, Publisher (Marvelous music), which included Marvin's
songwriter royalties and Unions.*
- The publisher and writer get public performance monies.
(The record company may get a fee from MTV for the right
to use all the company's videos, but this fee isn't broken
down by video.)
*It's
important that you not be charged with any union payments
based on the sale of records, as these are customarily borne
solely by the record company. This is different from union
scale that is paid to you for recording sessions. Session
scale payments are always recoupable as recording costs.
The most significant per-record union charges are payments
made to the AFM (American Federation of Musicians), MPTF (Music
Performance Trust Fund), and the AFM Special Payments Fund.
Through various computations, these usually total about
4.6 cents per cassette, and 5.6 cents per CD, for worldwide
sales during (a) the first five years after release for the
MPTF portion of these monies (28%), and (b) ten years after
release for the balance. These royalties aren't paid on the
first 25,000 albums or on any singles.
There is also an AFTRA contingent scale compensation based
on record sales, which is much less money. This is only payable
if you have nonroyalty background singers, and it has a ceiling
(meaning that it stops after the union gets a certain amount).
The ceiling is currently 4 1/2 times scale for a one-hour
session. So, because one-hour scale is currently about $60
to $130, the maximum AFTRA contingent scale is $270 to $585
per singer.
Donald Passman is a Los Angeles-based
music attorney with the firm of Gang, Tyre, Ramer & Brown.
Specializing in music business law for over 20 years, his
clients include major publishers, record companies, film companies,
managers, producers, songwriters, and artists such as REM,
Janet Jackson, Quincy Jones, Tina Turner and Green Day. On
a regular basis, we will be excerpting from Mr. Passman's
best-selling book, "All You Need To Know About The Music
Business."
From "All You Need To Know About The
Music Business" by Donald S. Passman. ©1991, 1994, 1997
by Donald S. Passman. Reprinted by permission of Simon & Schuster,
Inc.
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