by Jeffrey and Todd Brabec
Unless the contract contains other provisions, the artist agreement will usually state that the record label is the copyright owner of the performances recorded during the term of the recording agreement. In many cases, the ownership will be termed a "work made for hire" under the U.S. Copyright Act, and, if upheld, there may be no reversion of rights to the recording artist or record producer.
The general grant-of-rights clause of the recording agreement gives the record company the right, among other things, to manufacture and distribute audio and audiovisual recordings of the performances of the artist under the record company's trade name, to perform such recordings, and to package and exploit such recordings, all such rights being subject to the other terms of the agreement, including those provisions that guarantee royalty payments for most types of commercial exploitation.
Depending on one's bargaining power, a number of restrictions can be negotiated by the artist (e.g., initial release of any recording to be on the record company's "top line" label, no inclusion of a master on "compilation" or "television-only" albums until a certain amount of time has elapsed after the initial release of the recording, approval over certain motion picture or advertising commercial uses), but in most cases, the record company will have fairly unrestricted rights to exploit the master recordings in the manner that it sees fit to promote the artist.
In cases where the artist is able to cause a reversion of ownership of his or her recorded performances contractually via negotiation (an occurrence that usually happens only with the biggest superstars or in the case of a licensing of preexisting masters agreement), that right is often subject to the record company's having recouped all advances paid to or on behalf of the artist.
Such reversion provisions normally refer to a grant of rights that will last for a certain number of years after the expiration of the term of the recording artist agreement, with an automatic extension of time if the record company is still in an unrecouped position at the time of the agreed-upon reversion date. For example, a sample clause might read:
All rights in and to the recordings shall revert to the recording artist 15 years after the expiration of the term of the recording agreement, said agreement to expire upon the commercial release in the United States of the fifth album recorded during the term of the record contract.
Notwithstanding the above, however, in the event that the record company has not recouped all of the advances previously paid to the artist (e.g., signing advance, commencement of option advances, album delivery and acceptance advances, commercial release advances, etc.) or paid to others on behalf of the artist (e.g., audio and audio visual recording costs, per diems to performers, musician union fees, etc.), the rights to the master recordings shall remain with the record company until either all such advances and direct costs are recouped or until the artist repays the record company the total outstanding unrecouped advance balance related not only to the most recent album but all albums recorded under the artist agreement.
In the event that such a "repayment of any outstanding advance balance" provision is included in a recording agreement, the effective reversion date will usually be the last day of either the calendar quarter or semiannual calendar period during which the repayment by the artist is made.
For example, if the artist repays the unrecouped advance balance on July 14 of a particular year and there is an "end of the semiannual calendar period" reversion date, the transfer of ownership of the recordings to the artist would not occur until December 31 of that year. If an "end of the calendar quarter" reversion date had been used in the above scenario, the reversion date would be the end of September.