By Jeffrey and Todd Brabec
A number of limitations are placed on recording artists with respect to how mechanical royalties will be calculated when they record public domain compositions. (A composition in the public domain is one that is unprotected by copyright, because its copyright has expired.)

Granted, not much public domain material is recorded in comparison with original material, but if such a song becomes a hit, the royalties can be substantial provided the arranger/recording artist has copyrighted his or her version.

For example, Eumir Deodato arranged and recorded a contemporary version of the theme from the film 2001: A Space Odyssey (originally composed by Richard Strauss in 1896 as Also sprach Zarathustra) a number of years ago. The single became one of the biggest songs of the year and won a Grammy Award for the best instrumental recording.

In such a case, if the recording artist/arranger has not negotiated a guarantee of mechanical royalties from the sale of public domain arrangements, thousands of dollars in writer and publisher royalties would be lost.

Some record companies refuse to pay any writer or publisher mechanical royalties for public domain compositions. Others pay a flat reduced penny rate.

The most common approach, accepted by most record companies, provides that the record company will pay the recording artist/arranger on the basis of the percentage that ASCAP or BMI pays the writer/artist for performances of the copyrighted arrangement. ASCAP and BMI will treat an arranger as a writer and pay royalties according to the amount of new material that has been added to the original public domain composition.

The most effective way of illustrating the importance of this area is to present an example of how a writer/artist is paid for an arrangement when an ASCAP or BMI comparative-crediting clause has been negotiated into in his or her recording artist or producer's contract.

Let's assume that a well-known instrumentalist who is an ASCAP writer records a contemporary arrangement of a classical work that is in the public domain. In the artist's record contract is a provision that the artist will be paid the 8.5 statutory royalty for the sale of every composition that the artist writes and records. In addition, it is agreed that mechanical royalties on any arrangement of a public domain work will be calculated in proportion to the percentage given the artist/arranger's copyrighted arrangement by ASCAP.

The single is released, becomes an overnight success, and sells 250,000 copies. The album goes to #1 and sells 2,000,000 units.

The recording artist/writer submits the recording and a copy of the new arrangement to ASCAP, where the composition is analyzed and, after comparing it note for note with the original public domain work, decide that a great deal of original material has been added to the original source work. ASCAP and its Special Classification committee gives the composition a 50% royalty rating-in effect, making the new composition worth one-half of an original song.

The record company is sent a copy of the ASCAP determination and gives the song a 50% mechanical royalty payout rate. In other words, the song will receive 50% of the 8.5 statutory per composition mechanical royalty (i.e., 4.25 in 2004 and 2005).

The mechanical royalty calculations would be:

Single 4.25¢ x 250,000 = $10,625
Album: 4.25¢ x 2,000,000 = $85,000
$95,625 Total

Obviously, it is extremely advisable when negotiating a record contract to include some provision for writer royalties from the sale of CDs, tapes and other recordings including downloads containing public domain compositions.

Such a clause may not seem important to most recording artists who write their own material, but a good recording contract should anticipate and provide for all contingencies. It may not seem likely, when a recording contract is signed, that the artist will be recording any public domain compositions. But if it happens, the artist should be guaranteed some type of fair formula for payment.

© 2004 Jeff Brabec, Todd Brabec

This article is based on information contained in the new, revised paperback edition of the book "Music, Money, And Success: The Insider's Guide To Making Money In The Music Industry" written by Jeffrey Brabec and Todd Brabec (Published by Schirmer Trade Books/Music Sales).

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