Chapter 24
Ownership and Control

            By the late 1930s, certain business aspects of the popular music industry were taking shape.  With vast sums of money being generated, it was natural that all parties would maneuver for power and control.

            From its first flash across a composer's mind to its finally being enjoyed by an audience, a popular tune goes through various stages of ownership and performance-related profit sharing.  Movie scores, television background music, excerpts from classical works, and many other forms of a musical "product" are frightfully complex, of course, but certain basic patterns are at work in the industry.

            For the purposes of this general overview, many important ownership and copyright concerns will not be treated – foreign record deals, recording artist contracts, album covers and liner notes, union labor agreements contracts with agents and promoters, foreign publishing rights, Muzak versions, etc.

            Then, too, big stars, established companies, and strong agents demand more freedom and a greater percentage of the financial gain than the newcomers in the industry.  Indeed, many of the considerations listed are, like baseball players' contracts, highly individual and constantly negotiable matters which seem to be dependent on raw potential, past performance, and a promising future.

            In sweeping generalizations, then, the following principles pertain in the world of popular music.

COPYRIGHT

            After Gutenberg invented movable type in 1453, there were many maps, booklets, pamphlets, articles, and such printed and sold without regard to who wrote the work or who first published it.

            In 1556, Queen Mary I of England (also known as Mary Tudor, the Catholic daughter of the Protestant Henry VIII) decided things had gotten out of hand.  Actually what bothered her was not that printers were ripping off authors, but that some of the printers were publishing articles and pamphlets critical of her, and that Protestant pamphlets and other materials were still being published, making it difficult for her to return England to its Catholic roots.  So Parliament passed the Licensing Act that licensed publishers and created the Stationers' Company, with a Royal Charter from the Queen.  The Act limited who could print books and other materials and gave the Stationers' Company the legal right to seize materials that violated Church and State content standards, effectively creating a means of censorship for the Crown.  It worked.  The number of critical pamphlets dropped dramatically (Althouse 1984, 12-13).

            When the Licensing Act expired in 1694, the unauthorized printing and pirating of all types of publications began anew.  Parliament responded again, this time for more democratic reasons, with the 1710 Statute of Anne granting authors protection of their works for fourteen years (Althouse 1984, 13).

            In the early days of America, each colony had its own copyright statute, so when the new nation came into being, one of its first tasks was to set up adequate protection for creative people.  Thus, the first United States Copyright Act of 1790 appeared "to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors, the exclusive Right to their respective Writings and Discoveries."  Subsequent revisions increased the coverage to include musical works (1831), photographs (1865), and dramatic works (1870) (Althouse 1984, 13).

            In an effort to keep up with the times and technology, Congress passed another Copyright Act in 1909, with a renewable twenty-eight year period established as the duration.  Then, fearing that the wealthy piano roll industry and the rapidly growing phonograph companies would buy up all the popular tunes, Congress created, in that same 1909 bill, a "compulsory mechanical license", giving anyone the right to prepare separate, different copies of the basic tune as first recorded for a fee of two cents for each additional recording made, payable to the copyright owner.

            Today, under the Copyright Act of 1976 and the Copyright Term Extension Act of 1998, creative works are protected for the life of the author plus seventy years, and each of the modern possibilities for a "copy" is separate and distinct – publishing rights, of course, but also movies rights, stage rights, television rights, commercial ("jingle") rights, mood (Muzak) rights, and so on.

            There is also a common law copyright.  "Common law copyright springs into being without formality, registration, or notice, immediately upon the creation of a musical or literary work" (Shemel and Krasilovsky 1971, 110).

            Shemel and Krasilovsky make no mention of the urban myth about getting a common law copyright by mailing the song to yourself, registered mail, preferably across state lines.  In these days of corporate control and manipulation of the supply and demand of tunes, talents, and markets, holding a common law copyright on a given song has become fairly meaningless.

            Statutory copyright comes when the composer sends a complete copy of the tune, with the appropriate application form and the registration fee, to the U.S.  Copyright Office.  The tune is registered with its own copyright number, and fully protected as the composer's exclusive personal property.  What happens more often is that the composer permits a publisher to own the copyright as part of their basic agreement.  And then, a strange condition arises, as it did with the Beatles, that the publishing house merges with a bigger firm or gets sold.  Because John Lennon and Paul McCartney did not have the majority ownership in their publishing company, Northern Songs, they lost their copyrights to almost every song they wrote for the Beatles when Northern Songs was sold to ATV Music Publishing.  ATV held the copyrights until 1984, when they were sold to Michael Jackson (who, ironically, had been told by Paul McCartney that the way to really make money in the music business was to own publishing rights) for $47,500,000.

PERFORMANCE RIGHTS ORGANIZATIONS

            The idea of "permission to perform" was first applied to plays and operettas in Europe.  Prior to that time, a play was written, copyrighted, printed, and sold, and it then became public property.  Playwrights might have to compete with other companies doing their (the playwrights') shows which the other companies had legally purchased.

            In the United States, "performance rights" were not protected until 1897.  Before that, when a Gilbert and Sullivan show would tour the United States, for example, "American producers purchased quantities of opening night seats for stenographers who transcribed the dialogue."  [Then] with a legally purchased copy of the musical score and a transcribed dialogue, a producer could put on, a few weeks later, his own production of that operetta – all without any payment whatsoever to Gilbert and Sullivan.  All of this was completely lawful and quite common until 1897 (Althouse 1984, 41).

ASCAP

            Finally, in 1897, Congress recognized public performance rights as part of the principle of ownership, and in 1909 it authorized the creation of ASCAP (the American Society of Composers, Authors, and Publishers), a not-for-profit agency that would collect fees from venues where music was performed.  The story is long, complex, and filled with human drama.  Litigation went all the way to the Supreme Court, but ASCAP finally emerged in 1914 as a duly sanctioned collection agency.

            ASCAP promptly hired a group of men to go out to collect fees from restaurants, dance halls, night clubs, and theaters, and to listen, log, and report back about whose music was played how often in which location.  When radio, recordings, and the movies came along, there was a quantum leap in the amount of money involved and in the complexity of the judgments to be made on the "facts" gathered.

            Consulting with insurance actuaries and other experts in the field of statistical extrapolation, ASCAP came up with workable procedures, imperfect of course, but reasonable and practical ways to decide which of their members should get how much.

            By the late 1930s, ASCAP concluded that their member composers, authors, and publishers were not getting a fair share of the profits "out there in the industry", and they (ASCAP) increased their "pay to play" fees substantially, meaning record companies, radio stations, theaters and such had to pay more to press a record, broadcast a song over the air waves, or feature a song in a live show.

BMI

            In protest, the National Association of Broadcasters bolted out of ASCAP to form their own performance rights organization which they quite logically called BMI (Broadcast Music, Inc.)

            In the long run, this was a very good thing for increasing the diversity of music available in America.  ASCAP had been largely populated by industry insiders – musical comedy composers, classical composers, Tin Pan Alley tunesmiths, and composers of movie music.  They had neglected the development of black and country music through the 1920s and 1930s.  Jelly Roll Morton and Gene Autry, for example, had great difficulty getting admitted into ASCAP, even though their own publishers were members of ASCAP (Ryan 1985, 62-64).

            Therefore, BMI attracted hundreds of song writers who were hungry for attention and financial recognition.  In no time at all, BMI became a formidable competitor to ASCAP for performance rights coverage in the industry.

            For quite a while, all the big stars in early rock and in country music were affiliated with BMI.  Bob Dylan, Johnny Cash, and many others eventually moved to ASCAP, however.  In recent times, BMI and ASCAP seem to be equally strong in coverage of pop music.

SoundExchange

            Created in 2000 as part of the Recording Industry Association of America (RIAA), a trade organization that represents record labels and distributors, SoundExchange became a stand-alone non-profit organization in 2003.  It collects royalties on behalf of copyright owners (record labels and artists), mainly from satellite and Internet radio transmissions, such as SiriusXM and Pandora.

SESAC

            SESAC, originally called the Society of European Stage Authors and Composers, was founded in New York in 1930 by Paul Heinecke as a way for European stage authors and composers to collect the copyright fees owed them by American performers and publishers.

            Over time, SESAC's headquarters moved to Nashville, Tennessee, and it began focusing more on building relationships with composers, writers, and publishing companies (regardless of where they were located), and dealing with all aspects of the music business, including creation of the works, licensing for all manner of circumstances, and general administration.

            SESAC is smaller than ASCAP and BMI, and there's one other major difference between it and the other three performance-rights organizations – SESAC is a for-profit corporation.  SESAC is also more exclusive.  While anyone who is a songwriter or publisher can join either ASCAP or BMI, only a select few are invited to join SESAC.  One of those select few was Mariah Carey, who signed with them in July 2014.

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            The above four performance rights organizations track royalties for most of the music in the land.  They have fixed fees which they collect from night clubs, restaurants, theaters, sports arenas, colleges, radio stations, Internet channels, and anywhere else copyrighted music may be played.  The amount of royalties these establishments pay to the performance rights organizations depends on many things, including how big of an audience is reached, what a broadcaster's revenues from advertising are, and how many times a specific song is played.  Broadcasters are constantly fighting to keep the fees down so they can increase their profits, and performance rights organizations are constantly fighting to increasing the fees, so the copyright holders are equitably paid for their work.  It's all terribly complex, and in a continuous state of legal maneuvering and lawsuits.

MECHANICAL RIGHTS

            Deriving from the piano roll industry, when copies of the music were in fact mechanical, "mechanical rights" are those concerning records, tapes, compact discs (CDs), and movie and television soundtracks.

            Since it would be extremely difficult for individual composers and publishing houses to know when the songs they own are being recorded or distributed, organizations grew up in the recording industry to handle all such details.

Harry Fox Agency

            Since the late 1920s, most of the leading publishers have used the Harry Fox Agency in New York as their agent-trustee to collect mechanical fees from the recording industry.  For its services, the agency charges a certain percentage of the fees it collects on behalf of the publishers.  The agency may handle each recorded song in a separate contract, or it may work with a record company in a blanket agreement covering all the singles and albums released by that company.  With changes in the industry, HFA developed Songfile® (an online mechanical licensing tool to allow the public to purchase a license for a song they didn't write that they want to record or distribute) and Slingshot (which helps digital music providers manage their licenses).  HFA is also the designated YouTube administrator for many music publishers.

American Mechanical Rights Agency

            Formed in New York in 1961, the AMRA works much like HRA, and seems to specialize in attending to the interests of American composers and publishers in foreign countries.

SYNCHRONIZATION RIGHTS

            Named when music was synchronized with the action of a movie are "synchronization rights."  The mechanical rights organizations named above also handle synchronization rights for their clients, although some major publishers have separate departments to look after their music when it is used in the film industry.

            The many functions and occurrences of music in films make the legalities of synchronization rights complex indeed.  Music may be composed specifically for a film, or old standards may be used in the background, or an ancient classical work may be heard throughout the film.  Then, too, a song from the film may have pop super hit potential, or the movie cast album might be promising, or the soundtrack by itself could turn into a best-selling record.

            Synchronization rights are so interlaced with movie profits that all the major motion picture companies simply purchased outright, or gained controlling interest in, the important record companies.  Those very same record companies had earlier, for the same reasons of self-interest, purchased or gained control of the important publishing houses.  So, even if it is complex, much of it is in house or, at least, in the family circle.

VIDEO RIGHTS

            In their infancy, videos looked like a truly new art form, but by the late 1980s and early 1990s, they seemed to degenerate into a kind of meaningless early-adolescent visual Muzak on one hand, and aggressive promotion for movies, tours, and recordings on the other hand.  Still, there are some marvelously imaginative videos that appear now and then, such as those by Peter Gabriel.

            For a while, video rights and their prolonged legal battles got a lot of newspaper coverage.  But now things have settled down quite a bit – perhaps because the giant international firms own all the companies along the way, and thus control all the copyrights, performance rights, mechanical rights, movie rights, television rights, video rights, even foreign rights to all the above.

HOLOGRAPHIC RIGHTS

            There is no doubt that holographic images and their attendant sounds will be a part of living room entertainment in the future.  When it happens, holographic rights will be negotiated for profit by those who control the product.  Popular music is big business, and it is perfectly reasonable and predictable that powerful law firms and special focus corporations would emerge to distribute the billions of dollars involved.