Let's talk about “the controlled composition clause”
commonly found in recording contracts. This clause deals with “actual”
musicians: composers, and singer/songwriters. There are artists who are just
singers and not necessarily involved in the writing process, thus, this clause
may be irrelevant, but would most likely still be present in their agreement.
Here is what “the controlled composition clause” looks like:
“…Record Company is hereby granted a mechanical license for all
Controlled Compositions, as defined below, embodied in the Masters at fifty
(50%) percent of the minimum statutory mechanical copyright royalty rate in
effect on the date of the first release of Records containing such Controlled
Compositions (the “Controlled Rate”). The term “Controlled Composition” means a
Composition embodied in any Master delivered hereunder which is written or
composed by Owner, alone or in part, directly or indirectly, by Owner, or by
any person, corporation, partnership, firm, or other entity in which Owner has
a direct or indirect interest…” (Schornstein, 2006).
The purpose of this clause is to divide the Mechanical
royalties, in which a musician would make from their music under US copyright
law, between them and the record company. Clearly, this clause benefits the
record company, and not the artist whatsoever. The artist instead of receiving
100% of the US statutory rate, is given a discounted rate, in this case, 50%.
It is common, however, for record companies to give 75%, rather than 50.
It’s easy to see why record companies would include this clause
as there is such a drop in music sales. This along with many other clauses
opens up another revenue stream. As a singer/songwriter, you are cutting out
the “middleman”, so naturally the record company feels entitled to a portion of
that “extra income” you will be bringing in.
Getting a discounted Mechanical royalty rate is not the only
downside to this clause, though. The other negative is that this rate will not
increase even though the actual US Statutory rate has increased by the time of
sale. The rate the artist receives is pinned at the rate established on the
date of the first release of the record. It would be very wise to have your
lawyer negotiate this to the date of manufacture of the record, rather than the
release (Schornstein, 2006).
Although it does not include this in the example I provided,
some agreements also have a cap on the amount of songs Mechanical royalties
will be paid. They may limit it to 10 songs even though the artist wrote all 15
songs on the album (FreeAdviseLegal.com).
Concluding my thoughts here, I find this clause to be completely
unreasonable and should be revised. My biggest reason for this: What resources
of the record company’s are a musician using when they create THEIR music? The
company is not providing the artist with composers or lyric writers at any
point in time. So… I’m really confused as to why a record company would think
money is to be split from the actual creative aspect that went into the creation
of these songs. Now the producer I believe does deserve a portion of Mechanical
royalties, as he/she helped record and mix the actual sound recording of the
song(s). If and ONLY if the record company sets an artist up with one of their
producers, then this clause makes sense. However, the percentage taken by the
record company should be no more than 15%, and even that is being more than
generous. The bottom line is the artists are already being paid very little, as
the record companies have so many expenses to take out. All of which is
understandable, but needs to be within reason. It’s completely unreasonable to
charge an expense in which the record company’s resources of any kind were not
used.
References
FreeAdviceLegal.com. (n.d.). Recording agreement points.
Retrieved May 18, 2016, fromhttp://law.freeadvice.com/intellectual_property/music_law/recording_agreement.htm
Schornstein, J. M. (2006). Recording contract clauses. Retrieved
May 18, 2016, fromhttp://www.musiciansintellectuallaw.com/rec_clauses.html
