Licenses and other contracts - an overview
Licensing agreements of all kinds are a key element in the music business. A license is simply the authorization - often for a fee - to use a right.
Licenses can relate to all kinds of rights - for example, personality rights for the use of an artist's image, trademark rights for the use of a band's logo in the manufacture of derivative products, copyright for the exploitation of a song, or neighboring rights for the exploitation of a recording. A license agreement determines who is authorized to use which right, in what context (in terms of content, duration and space) and under what conditions.
In their professional lives, almost all musical artists are primarily confronted with contracts concerning the rights to their compositions (copyright) or their rights as performers (neighboring rights). For example, Dolly Parton composed the melody and lyrics of the song "I Will Always Love You", and is therefore its author. This song became a worldwide hit thanks to Whitney Houston's interpretation. As performers, Whitney and her co-musicians have obtained neighboring rights.
A musician (or label) wishing to publish recordings regularly hires "session musicians" to take part in studio recordings. In order for the musician (or label) to be able to exploit the recording afterwards, they need a licence for the session musicians' rights. To this end, participants regularly sign a recording session sheet, an extremely simplified license agreement. With this recording session sheet, studio musicians assign all rights to the recording for a one-off lump sum. They retain only those rights that cannot be transferred by law (e.g. remuneration rights for broadcasting or performing recordings, which are administered in Switzerland by SWISSPERFORM). As a general rule, the sale of rights is valid indefinitely, worldwide and for all types of use.
To market their recordings to the public, artists generally enter into "artist contracts", "copyright assignment contracts" or "distribution contracts" with a label, distributor or aggregator. The type of contract best suited to the circumstances depends primarily on who assumes the economic risk of producing and marketing the recording. In the case of an artist's contract, the label assumes most of the costs of production, marketing and distribution. In return, the artist is personally bound to the label for several years, assigning the rights to the recordings for decades. What's more, the label receives most of the revenue from commercial exploitation. Under a copyright assignment contract, the artist pays for the production and delivers mixed recordings, sometimes already accompanied by the artwork, etc. In the case of a distribution contract, the distributor or aggregator assumes only the logistics (digital/physical), since all other organizational and financial tasks are handled by the artist.
A copyright assignment contract is often confused with a publishing contract. Whereas a publisher is responsible for exploiting the copyright in a composition (independently of a particular recording), a copyright assignment contract regulates the rights in a single, concrete recording. In the case of the song "I Will Always Love You", a publishing house is thus responsible for Dolly Parton's rights as singer-songwriter, while a record company is responsible for Whitney Houston's rights to the recording.
For all these different contracts, musicians would be wise to consider the money and effort invested in publishing the recording by the various parties involved. This sharing of risk should then be reflected in the distribution of revenues established by the contract: the higher a party's financial risk, the greater its share of revenues should be. Particular attention should also be paid to the duration of the contract and the transfer of rights. Here too, the higher the personal economic risk, the shorter the duration. Formulations such as "for the duration of the protection period" translate into "for 70 years". Last but not least, it's worth taking a close look at sales participation. On the basis of the contract, it should be easy to determine the amount due after exploitation of the recording. However, the amount of the percentage is not the only determining factor: its basis must also be considered. In the absence of a definition of costs in the contract, phrases such as "after deduction of costs" frequently give rise to very unpleasant discussions.
Hence my final recommendation: take enough time to negotiate, and get advice from a specialist.
