This Article Originally Published September 1999


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.

  1. 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!

  2. Freddy makes a promotional video of his single. Who gets paid when the video is played on television?
Answers To Quiz
  1. 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.*

  2. 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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