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Panelists Erin Jacobson, Bob Mair, Pedro Costa and Michael Eames (seen on laptop screen) getting a little bit silly while discussing the serious topic of understanding music library contracts at TAXI's Road Rally 2019!
Panelists Erin Jacobson, Bob Mair, Pedro Costa and Michael Eames (seen on laptop screen) getting a little bit silly while discussing the serious topic of understanding music library contracts at TAXI's Road Rally 2019!

Panelists: Erin Jacobson, Bob Mair, Pedro Costa, Michael Eames
Moderator: Michael Laskow

Editor’s note: The following two paragraphs and panelist bios that follow are repeated from Part One of this panel to give you some context.

It should be noted that music library agreements are not like the publishing deals one might sign with a publisher on the record side of the industry. Those are a different beast, and frankly, those deals are what people who aren’t up to speed as to what typical music library contracts look like are comparing them to. They are all publishing deals, but it’s like apples and oranges. They’re both fruit, but they are different types of fruit!

And to help you better understand what some typical music library contracts might have in them, and what those things mean, are some world-class experts who bring different perspectives to the discussion.

Erin Jacobson is a music attorney— and a great one at that. She handles all kinds of negotiations and deals across the entire industry, and is one of the few music attorneys I personally know who really understands the music library industry and your needs as the people who create music for them.

Bob Mair is a music library CEO with countless placements for TAXI members on his scorecard, a composer, and a great businessperson, known for his ethical dealings with his composers.

Pedro Costa is also a music library CEO with a ton of placements for TAXI members on his scorecard. Like Bob, Pedro is also a composer, and a great businessperson, and is very well regarded for his ethical dealings with his composers. He also credits TAXI with helping him launch his career placing his own music in tons of TV shows, which ultimately led him to starting his own music library.

And on the big screen up there, live from his hotel room in New York City is Michael Eames. Michael is also a publisher and one of the smartest people I know in the music industry. His understanding of the intricacies and nuances from both business and legal sides is so deep it makes my head hurt!

I want to go back to the root of this whole thing. Let me ask the question in a different way. Has anybody—including Michael who’s coming to us telephonically here—has anybody ever seen a really big meltdown happen because of non-exclusive contracts, where it’s been like a lawsuit, or a big money settlement? I understand, you could have 12 seconds of instrumental music in The Kardashians retitled in two or three different libraries. Nobody’s going to court over that; there’s not enough money for it going to court. Filing the papers would cost more than the placement would probably generate. But has anybody ever heard of any cases where a non-exclusive became a big problem?
Bob: Well again, it comes back to copyright. Again, this is my opinion. I’m guessing Michael [Eames] might agree with me. But, you know, a “bottle of water,” now I call it a “bottle of beer,” now I call it a “can of soda.” It’s still the same item.

That’s why we don’t have the labels on them. [audience laughter]

Bob: That’s right. It’s a retitle! So again, I’ve heard of some pretty ugly situations that have had to be cleaned up, and I think a minimum infringement is like 50 grand, somewhere in that…

Erin: The minimum infringement? Well, I mean, the maximum is a $150,000 per infringement, but that’s for damages, etc.

Bob: So my understanding is somewhere in the neighborhood of 50 grand. So you start adding that up when you are getting 10, 20, 30 copyright infringements, and that’s starts getting pretty pricey.

Michael [Eames] is waving his hands, so he’s got something to add.
Michael: What I was going to say is that I have never experienced nor ever heard of any contractual meltdown as far, you know, like you were saying with the lawsuits, etc. But I have had a situation where I would call it a relationship meltdown; it wasn’t necessarily quite a meltdown. But, you know, we, years ago, and it was the last thing I did non-exclusively, so I am with Bob on the exclusive versus non-exclusive. But I had taken something on a non-exclusive, and even the artist did not inform me that he had given the music to another place to pitch, also non-exclusively, and of course, technically it was his right to do so, because both arrangements were non-exclusive. But I ended up licensing something to this one TV show, and the other guy who was pitching it saw the show, heard the piece of music and called up the supervisor and started giving him hell, like, “Hey, man, why did you license my piece of music from me?” And he’s like, “Well, actually I got it from Michael Eames,” and he didn’t know about me… So it was just a very awkward situation, and that’s why we don’t do non-exclusive anymore, because it is easier for the supervisors and they prefer it. They know they go to one source for an artist, as opposed to if they find the same song and the same artist with multiple places, they are not going to be 100% sure that that is a legitimate place to license it from. And frankly, I think it ultimately hurts the artist, because they might then have a negative association with a particular band. And when they hear about the band maybe in the future, they’ll be like, “You know, there was an issue years ago; maybe I’m just gonna use a song from one of the other bands.”

Pedro does a hybrid model, and I’m actually a fan of the way he does it. When he told me he was going to do this, I immediately understood before he even finished the sentence.
Pedro: Could I add a comment to that last question?

Pedro: I haven’t run into a legal situation, but when you mentioned The Kardashians, it actually brought up a conversation that I had this week with the music supervisor of the show. I think they’re in Glendale, maybe? I’m not sure. He was talking about a similar situation to what Michael was just referring to, where they placed music. It was obviously a non-exclusive situation, and then they had the library owner of a different company who had the same track and had the detection on Tunesat and reached out and said, “What the heck is going on here? I would like to get paid for my track.”

So it becomes a situation where the music supervisor is saying, “You guys know that it’s non-exclusive; why are you coming to me over a Tunesat situation when Tunesat is actually doing audio detection?” So the library owner should know that he can’t claim that if it’s a non-exclusive situation, it could have been through a different library, and then goes and harasses the music supervisor. So that’s where breakdowns of relationships can usually happen, because they don’t have time to be dealing with those kinds of things.

Great point. They don’t have time to deal with much of anything other than their core jobs.

OK, so Pedro’s solution is that he offers non-exclusive on songs. And I’m guessing… I think the logic is that people invest a lot more time in creating a song and they don’t want to tie it up with one library, because it may languish there for years and never get used, and they want to hedge their bets by spreading it around. However, you do exclusive on instrumental cues. And I’m guessing the logic there is you can always go make another one that is remarkably similar and doesn’t infringe your own copyright. You alluded to it earlier on there and said instrumentals are just easier to crank out.
Erin: But going and creating a similar one we need to think about who’s owning that. Are you just exclusively representing it as an administrator, or are you actually taking copyrights? Because that is going to matter as to who is then going and commissioning a similar version.

Bob: I’m hoping that we can get feedback, because some of the words we’re using, I want to make sure that everybody understands that term. You know, copyright, publishing.

Generally speaking, our members are pretty well educated by the time they get to the Road Rally. Are you guys following along OK? There giving us thumbs up, so yay! We have very smart member body.
Bob: The scenario I’m thinking of that became very ugly was a company that shall remain nameless decided to take these titles they signed. I’ll say titles not compositions. Then they started doing side deals with these titles. Very interesting—great way to make an extra buck. So you take the title, you go to production company A, “Oh, you can have half the publishing; we’ll retitle that title.” Production company B, “Yeah, you can have half the publishing; we’ll just retitle that title,” to the tune of 10, 20 of those per track!

Wow. And that company is still in business? Tell us which companies. Just kidding, I know you can’t.
Pedro: Just to be clear, I was a little bit confused by your statement. There is no relationship between the music in our exclusive labels to the music that was signed non-exclusively. They are not related at all.

Erin: Oh, that wasn’t what I meant. I was just talking about it because Michael [Laskow] made a comment about creating something that’s similar to something else. And so, that would depend then as a library, like if you want another song or another composition that is similar to one you already have, do you actually own the rights to the first composition via your contracts or not? Because some libraries will take copyright ownership, and some don’t.

I should have been more clear in the way I phrased the question. When I say similar to, I mean that I pitched the surf-rock track and Pedro signed it exclusively. And that’s fine; tie it up, because I can go and make five more surf-rock tracks this week that will all be similar tempo, similar instrumentations, but they are not going to infringe their own copyright.
Pedro: We are talking more about being able to produce quantities for an exclusive situation when you are dealing with cues, versus vocal songs where maybe you don’t want to tie up the song.

Right. A vocal song is a bigger time investment. Whereas with a cue, you can go make five more surf-rock tracks pretty quickly. They may not have the same melody, but they probably will have similar or the same instrumentation and a similar vibe. It might even be over the same chord change but with different melodies. I mean, all that is Kosher.
Pedro: For us, it has been more of a progression of our business model. When we first started the company… Really, how I started it was, “OK, TAXI friends, I have this opportunity; let’s pool our music together and get it to this show on ABC. TAXI, can you help us out?” And Michael says, “Heck yeah. Let’s get some TAXI members on major networks.” And that’s how we got started. So it made sense at the time to pool it all non-exclusively what we have…

Actually, I remember the phone call. And I feel bad; I feel like we’re ignoring Michael over there. But I think he’s working while we’re talking.
Michael: I have a question for Pedro, but go ahead.

So Pedro called me up—and he was starting to become successful as a composer--and he called me up and said, “I’d like to start a library. There are more requests for music than I can fill with my own material. Is it Kosher for a TAXI member to start a catalog?” And I said, “Only if I really know the member well and trust that member to be ethical and good and thorough in their business practices will I even take a chance on this, and I know you to be all of those things. But I would like you to start it out non-exclusively, so if it melts down, nobody gets burned.” And you said, “OK.” And it worked out for the best!

Michael [Eames] has a question for you, Pedro.
Michael: Yes, I do. Just point of clarification for me, and I figure if I have the question, maybe others in the audience do. With Pedro doing exclusive on the instrumentals and non-exclusive on the vocals, is there ever a situation where Pedro would have an exclusive on the instrumental version of a vocal song, so that the vocal version only is non-exclusive, but the instrumental is exclusive? Because, that to me in effect becomes exclusive, because no other outlet can use the instrumental of that vocal version.

Pedro: No, the instrumental of the song would reside only with the song. So it’s always kept separately in the artist’s vocal catalog; it’s a separate label completely. I would never add the instrumental to our pool of production [instrumental] music. So, if somebody wants to license the instrumental, they’re going to pay a sync fee for the license of that instrumental version of the vocal song.

Michael: Thank you.

Bob: There's one more tier to this thing. I do know of non-exclusive agreements that say if that non-exclusive library gets your song placed, then it becomes exclusive to them.

Erin: A lot of times, there's an income threshold for that. So, a lot of times it's like if we get you a placement for X dollars or we make you X amount of money, then it becomes exclusive.

Bob: On the exclusive side, there are some libraries that have a five-year reversion clause for example, and if they met a certain threshold, then it would become perpetual [and the reversion clause goes away].

My feeling is that most of the time with the libraries that we work with (there are some out there that I would not include in this conversation) are reputable. They're different, their contracts are different, but they're reputable and we know this from having long histories with them, and from our members having long histories with them. So we know that people are getting paid in a timely fashion. We know that people don’t feel like they’re getting screwed out of anything or the library is acting in any untoward way. People call me and ask, “Can you tell me if I should sign with this library?” and I say, “No, technically you should go to an attorney. But if you're talking about one little instrumental piece that’s going to land in a reality show that's going to generate nine dollars and 37 cents, I don't believe it would be a good investment to call Erin up and work with her on that. However…

Erin: It's always a good investment to call and work with me! [audience laughter]

However, I think that everybody should have an attorney explain what to look for, and if they want to call you on an hourly basis and say, “Can we talk about this clause?” you can do that for them obviously on bigger more important things than a nine dollars and 37 cent cue in a reality show. But my answer to them [in that case] is talk to your fellow members who have worked with that library, because history is a great teacher and if twenty other members have worked with the company over a 10-year period and everybody says their great, you probably don't need a lawyer for that particular scenario. Just find out if you're making a business decision and not a legal decision, and don’t go into it being completely ignorant.

Don’t miss Part 3 of this in-depth discussion in next month’s TAXI Transmitter!