To put it another way, a record that sells 10,000 copies or less probably won't be considered by a major record company.
Consider these three items:
(1) YOUR RECORD COMPANY SHOULD BE INCORPORATED
(2) THE RECORD COMPANY NAME SHOULD BE TRADEMARKED
(3) HAVING A UNIQUE LOGO IS IMPORTANT FOR NAME RECOGNITION
The Record Company is the entity which should handle all legal matters relating to the sound recording. This provides a distinct business entity through which business transactions take place, such as pressing and distribution negotiations, mechanical license requests, and legal disputes, which can help protect your assets as an individual. For instance, if a legal proceeding is initiated because of your recording, it will be directed at the record company rather than you.
You should then draft an agreement between yourself, as the artist, and the recording company granting all recording rights to the recording company in return for royalties on the product. The recording company distributes assets in the following 3 ways:
1) ARTIST ROYALTIES
2) MECHANICAL FEES AND EXPENSES
3) DIVIDEND DISBURSEMENTS
Be thoughtful about the names you choose, because it will represent you and your music. As you'll see, you may even be able to use your second and third choices, too.
Start with the phone book, then call your local AFM (musician's union). Then move on to the publications entitled "The Recording Industry Sourcebook" and "Musical America" and search under record companies. Although these only come out once or twice a year, they are probably in your library. If you have access to an internet account, use as many internet search engines as you are able, such as a "Yahoo" search under "Entertainment:Music:Labels".
Once you're sure your choice isn't taken by a record label, you want to make sure it's not used by corporation of any kind in your state. Call your state corporation commission to confirm the availability of your 3 name choices in terms of corporations that exist in your state.
Once you've checked that your name isn't already in use by another record company, or by another corporation in your state, you'll need to search that the name is also not in use for an existing trademark. Filing a trademark on your chosen name ensures your exclusive use of that name internationally.
If you have access to Compuserve, a search service through Thomson and Thomson is available for a nominal fee (approximately $1 per search, and $10 if the name that you are searching is found). You may be also be able to search through trademarks at your library, or services similar to Thomson and Thomson.
A trademark clearance specialist can help guarantee that the job is done correctly. Their job is to check trademarks for possible conflicts, which can sometimes arise even if marks aren't identical. For example, if you are doing the search yourself, and you submit the name "Sony Musik" you must submit the search term in a way that would reveal any possible conflict with "Sony Music". This doesn't even consider possible conflicts arising from similar graphic designs! That's why a specialist is desirable if you have the money.
To minimize your costs, use a service like Thomson & Thomson's, and, when you submit your application to the Commissioner of Patents and Trademarks, limit your trademark to a "text only" representation, which is just the name without a graphic. Be aware that a conflicts could arise down the road.
Also, be aware that a search of a trademark database alone is not sufficient because it does not take into account common law trademarks, which are established by usage alone. Do your homework on all possible fronts.
The link above should answer many basic questions about what a trademark is, what a patent is, and how these differ from copyrights, potential disputes under the patent and trademarks law, common law trademarks, how to get forms for submission. Get the forms as early as possible, and read them carefully. The trademark fee is $245.00, plus $100.00 extra if you file an intent to use application (read on for further details about that).
If you've got others besides yourself involved, you might want to draft by-laws, and incorporate as a partnership instead of an individual. You might also need to elect Subchapter S status for your corporation, but ask an accountant. You will probably have to pay a filing fee and a tax on shares of stock. If you're not planning on a public issuance of shares of stock, you can get a minimal amount for non par value, with a lower tax rate. Check with your accountant.
Here you have a choice in procedure. If you're not the nervous type, you might want to wait until your product is ready to file an "actual use" application, because eventually, you will have to send an actual sample of your product to the Commissioner of Trademarks. You will save $100 in the end by waiting. A slightly safer method is to file an "intent to use" application with the Commissioner. This application then goes through their scrutiny, meaning they have time to find any conflicts (not that you'd get your money back - remember your homework!) Also they publish the name in a gazette for six months to give others a chance to post a dispute. While you may use the name during this time, it's best to get to this step as soon as possible. While you're pretty safe when you get your filing receipt, the object here is to minimize the possibility of winding up with a name that you can't use printed on your CDs.
Research the performing rights organizations to find out which is right for you to join. While they all provide the same basic service, each does it in its own way. In fact, large publishers often register different names with each performing rights organization, to provide their artists with the choice of affiliation. By the way, you'll also have to decide whether you will become an associate member, writer publisher member, or commercial publisher depending on what your plans are.
Here's where it differs from your record label setup a little. Unless you're a bigger publisher, you can probably get away with setting up with a standard DBA business license from the county you are in - as opposed to incorporating. Also, you will not need a trademark (again, seek advice...). This is because once you've cleared your name with a performing rights organization, that name is reserved in a database common to all three performing rights organizations. That provides a level of protection for the name, since no publisher who wants to affiliate can use your name, and a level of proof that your common law trademark does, in fact, exist. Also you'll notice publishing names are often somewhat creative - "Barking Pumpkin" springs to mind. This is an attempt to create a name that is unique. Once you've got a choice in mind for your affiliation, and three choices for a name, get in touch with that group and request the application materials. They will reserve your choice of name (1st choice if they can accommodate) for six months.
All these steps should be going on concurrently with the setup of the record company. Your performing rights organization will also need a copy of commercially available product to finalize your acceptance in it. (Do you get the feeling you're going to be giving away some CDs?...)
Maybe. First there's photos. You need to look at three issues.
1) What's in it. It is best to have signed releases from people in your photos, and concerning locations that are private property. In urban settings, some settings may need permits. If you take shots in an urban setting where a trade name is noticeable and you don't have a permit, proceed with caution. For instance, if the front of your album is a McDonalds sign, you should make sure that's alright before you proceed.
2) Who Took it. Have a signed release from the photographer, even in the instance of snapshots
Second there's graphic art.
If your graphic elements are work for hire (i.e. you pay someone to do them) then no permission is required since you, by law, are the copyright holder. If the work (painting, drawing, etc.) is not a work for hire and you do not own the original, make sure you have a release for its use as well.
Third - Lyric reprint permission- If you are using quoted passages you'll want permission from the publisher to use them unless they're in the public domain (More on public domain below). Music publishers called this permission "Lyric reprint permission". This differs from a mechanical license and must be applied for in a separate operation. The publisher will instruct you as to what to add to your graphic (Ex. "lyric reprinted by permission (c) 1995 Tactus Music Publishing"). In dealing with a large publisher, for instance, you might find yourself talking with a separate department (or even another company) then the one that issues mechanical licenses, so don't overlook this part or expect them to bring it up if you forget it. A confusing point is that some publishers include Lyric reprint permission in their mechanical licenses, others don't. Just remember to ascertain that you have it before you reprint the lyrics. Since publishers are much more eager to give permission before the fact than after, this is best taken care of now.
Once a song has been recorded by an artist, by law, any other artist is free to do a cover version of that song. There is a statutory rate established for the use of another artist's song which has been previously recorded. It is adjusted from time to time. At the present, the rate is somewhere around 6 cents for every CD sold, for each song under 5 minutes. There are other variables. Songs longer than a certain length are charged at a different rate. Also it is possible to negotiate a lower rate than the statutory rate with a publisher that is motivated to have you cover their song. By the way, to license a song at the full statutory rate is referred to as "100% rate" because you are paying 100% of the statutory rate.
You must obtain a license for each song. This accomplished in one of two ways. I will discuss the most desirable one first.
The most desirable way to obtain licensing for a song is through its publisher (or publishers), because you are dealing with the people who own the material. You might be able to obtain licensing for less than 100% rate, particularly if you will cover multiple titles. Also they will usually work to make some details easier for you, such as only requiring quarterly royalty statements. Don't be suprised if they want to hear your treatment of the material - even though you know they cannot stop you from doing the song (unless you are changing the lyrics). After all, it is their property. Be cooperative. Emphasize your excitement for their material. Some publishers are more protective than others, but they are all in the business of disseminating their songs. Once you have gone through this process, they will issue a mechanical license to your record company for each song covered.
Here is how you proceed with your pursuit of a mechanical license.
Find a commercial recording of the song you want to cover, and look on the album cover for the following details:
2) Performing rights organization
3) Record company
Often the performing rights organization is listed on the back cover. The organizations are ASCAP, BMI, and SESAC. When you find the name, call the index department of the organization and ask for the following information for each song title:
1) what is the writer split
2) who are the writers
3) writer's share (the percentages the writers have agreed upon)
4) Name, Address, Phone of publisher (or publishers - along with their percentage interests.)
Some of the performing rights organizations require this be done by mail, others will only give you 3 titles over the phone. (One hint: if you have no idea who the publisher is, try ASCAP first.) Once you have the above information, you are ready to approach the publisher
Contact the office of copyrights in Washington D.C. and let them know you need to file a notice of intention with the copyright office for a compulsory license. Keep in mind you will pay full statutory rate for your usage of the material, you'll have to submit certified statements, give monthly accounting, and you'll be required to post a bond.
On the CD you will place 2 symbols to show your copyrights
P in a circle - this means "protected", and refers to the sound recording itself
C in a circle- this stands for copyright, and refers to the visual information, such as the album art. example:
(c) & (p) 1995 Changing Tones Records
Basically, the code is an 11 digit system. The UPC assigns a manufacturer with the first 5 digits of the number. The manufacturer (record company) assigns the remaining numbers. Each product MUST have its own discreet number - even the same release on different formats (The same title on CD and on Cassette will have different numbers, since the store needs to track these as separate items). The 5 digits assigned by the UPC will be the same for every release. Write to the UPC for a manufacturer's application. This will cost you about $300 for the membership fee. Once you have your Manufacturer's number, The Barcode Server is a great resource on the web for creating a bar code for packaging..
Also remember you must assign a release number. Typically the release number becomes the last digits of the UPC code as well, for purposes of standardization. You also determine the suggested retail price as well. This price helps determine all the other pricing stuctures (price to distributors, price to record stores, etc.) Don't go too low in price is the conventional wisdom. You need to do your homework here.
Finally, there are several other issues which need to be addressed. These are the regulations about what must appear on the CD issued by the Recording Industry Institute of America (RIAA). The Record Company name and the Company's street address must appear on the album art. The (c) and (p) signs should be on the CD. A warning against unauthorized reproduction should be placed both on the disk and the back cover or wherever appropriate. Also, the Compact Disk Digital Audio logo should appear on the Disk and Back cover. My advice is to take out 5 to 10 CDs from the majors and have a look at them. Note what is similar between different companies, and what is different. Also look for things that are present on every product.
(C)1995 Changing Tones. All rights reserved.
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