Monday, April 2, 2018

Production Companies Benefit When Composers Keep their Royalties

A recent Facebook post by a young colleague asking for assistance in dealing with a documentary producer has led me to repost this letter that I used to share with all my UCLA students.  I invited my students to use this letter freely, whenever they confronted the same challenge.

Here's the situation:

Music rights are complicated and unless you live in that world, the details might get lost. People misunderstand terms and are frightened by the unknown.

Because of this, a producer makes an unreasonable demand: that the composer needs to give up his writer's/publisher's share of performance royalty income.  In this instance, the producer believes that this is needed in order to free the film or game from any legal encumbrances that might stop the film from being sold.  Nothing could be further from the truth and the letter explains this.

For the sake of this letter, we'll also assume the fee is substantial enough for the production company to ask for some or all of the publishing - I'll post another blog about what to do when the fees are not really reflective of the work.

Here's the letter:

Dear Producer who wants a “Buyout”

I want to thank you for being open on this subject and for the offer to pass the following information on to your legal advisors for review.  The copyright law as it relates to music is indeed complicated, but with a little understanding, we can all benefit from the systems that have been in place since the late 1800s to protect composer's rights as well as those who want to employ composers.

The basics:

Yes, you can employ me as a “Work for Hire” and include that language in our contract. And yes, in this case, the copyright, publishing, and control of the music is granted to your production company. This is often the standard under which composers work.

But “Performance Royalties” are a different matter as is the income stream associated with them.  

They are separate from the ownership and copyright, and it is actually in the best interest of your production company to make certain that I, as the composer, be granted all my rights and royalties in this regard.  

This is why Disney, Universal, Columbia Tri-Star, Miramax, and the myriad of other companies I have worked for have always granted these rights to me.  They know it's in their best interest and here’s why:
1. ”Performance Royalties” are paid by broadcasters, not your production company.  There is no negative impact on your production company.
Broadcasters and other entities that “perform music in public” already have deals in place that pay “performance royalties” to the world's "Performance Rights Organizations" (PROs). This fee is called a “Blanket License.”   
When the Broadcasters and others pay this fee, they have the right to broadcast/perform any music that is assigned to these respective PROs.

Then, after the performance or broadcast, the worldwide PROs divide the blanket license fees they have collected according to what music was performed, as cataloged in a document called a "cue sheet."  I'll be supplying this "cue sheet" at the end of the project, and you will learn that upon distribution of your film, an accurate cue sheet will be a required deliverable along with your master video.
This is where the production company might benefit.   
For every dollar the PROs distribute, 50% goes to me as the composer of the music and 50% will go to the publisher of the music.  Since your production company has paid me a premium fee for my work, your production company will be entitled to some, if not all of this publisher's share of royalty income.  
That said, no matter what the fee, in no case is the production company entitled to "the writer's share" and in fact, it is detrimental to the production company to limit my ability to collect this royalty.  Let me explain further.

2.  The “writers share” of the performance royalty will only be paid to the writer.  This is separate from the “Authorship” owned or controlled by the production company under the “work for hire” agreement.
As a matter of fact, both ASCAP and BMI state clearly on their websites and in their literature that under no circumstance will the writer's share of performance royalties be paid to the employer or any other entity other than the composer.  

If we follow your request that I forfeit my composer's share, the money that I should have collected is simply re-distributed to other composers.  The production company and publisher see no benefit to this, and as I will show, it actually adversely effects the production company and their ability to collect their share of any royalties.

3.  If a cue sheet is filed where no recognized writer is listed as the composer, or if a production company’s name is listed under “composer,” it will adversely effect the production company’s ability to collect their publisher’s share of the royalties – especially in foreign territories.
Yes, it is true that if a cue sheet is filed without an affiliated composer listed, the publisher will still get their 50% share of the domestic performance royalty income, but that is only in the USA.

Most foreign publishing rights societies will not pay the publisher unless a recognized composer is listed on the cue sheet!
And foreign performance royalties, over the life of a film, can be 10-100 times the domestic royalty!
So, in summary, by allowing me to file cue sheets that accurately list me as the composer of the music, we all benefit from the royalty streams and ensure that income from around the world.

I know this is a lot of information for a brief e-mail.  Please feel free to contact me if you have any questions about the details.  I am certain we can work out an arrangement to our mutual benefit.



I hope this letter is of help to my colleagues and it is my pleasure to share it here.

Craig Stuart Garfinkle

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