| Subject: recording contract notes |
Author:
Anonymous
|
[
Next Thread |
Previous Thread |
Next Message |
Previous Message
]
Date Posted: 03:59:45 06/03/03 Tue
1 This Form is intended for use in circumstances where an artist has been contracted to render both audio and audio-visual recording services to a company for a term of years. The Form is drafted from the point of view of the Company and contains a number of provisions which are unfavourable to the artist. In agreements of this nature special attention must be paid to the matters referred to in Paragraphs 133 [215] et seq ante. Besides ensuring that the final form of the agreement is fair and reasonable, the Company should also ensure that the artist has received independent legal advice from a solicitor who is familiar with this type of agreement. The form of agreement is suitable for use as a first draft. The Company will normally seek to lose a number of the provisions which are very unfavourable to the artist to ensure that the agreement is enforceable.
2 Joint and several liability may be unacceptable to the members of an artist, and is potentially dangerous to the individual members of the artist in the event of any dispute between them.
3 The artist may wish the definition of ‘Company’ to include successors and assignees also since, depending on subsequent amendments, this may have the effect of including in the accounting provisions gross receipts of and records sold by the successors and assignees.
4 The artist may wish to have approval rights over locations and may wish to approve the recording schedule. The artist will also wish for provision to be made for reimbursement of travel expenses and provision of hotel accommodation (see eg Form 61 Clause 4 [1407] post).
5 There should be no obligation to complete the product requirement in the event of force majeure or non-performance by the Company of any of its obligations.
6 The right to increase the product requirement may not be acceptable to the artist.
7 Depending on the status of the artist, the artist may wish to have total control over the selection of material to be recorded on the master tapes as well as the identity of any producer of the master tapes and the identity of any production company of any audio-visual promotional material.
8 The artist may seek a commitment from the company to make promotional videos and to expend up to a certain budget on advertising and to provide tour support to the artist. The artist may resist the entitlement of the Company to deduct payments made pursuant to this clause as part of advances.
9 This clause may on occasion be acceptable to the artist’s manager and the record company since it may operate in both of their favours. The record company will be happy if the artist’s manager is a person who is easy to deal with, and the manager will feel the benefit of some measure of security as far as the manager’s position with the artist is concerned. The provision may not, however, be in the best interests of the artist and may be resisted.
10 The artist may seek to exclude merchandising or promotional use, and will not wish the production costs of these materials to form part of the recording costs since these will be recouped solely out of the artist’s royalty.
11 As drafted, this clause effectively provides for an open-ended extension which will not normally be acceptable to an artist. Extensions of periods or suspension as a result of events of force majeure should be considered. Failure to complete completion of recording owing to an event of default, or a condition affecting one member of the artist and the resulting joint and several liabilities, should also be considered.
12 This clause creates an open-ended extension of the option period and might be unacceptable to the artist.
13 Whereas the rest of the provisions of Clause 3 deal with copyright in the product of the services of the artist, the provisions of this Clause 3.1 deal with the copyright in the sound recordings and films made by the Company the ownership of which the artist recognises as being vested in the Company, together with the rights to exploit the same without any restriction on the part of the artist.
14 As to requirements relating to assignment of copyright see the Copyright, Designs and Patents Act 1988 s 90 (11 Halsbury’s Statutes (4th Edn) COPYRIGHT), and Paragraph 66 [103] ante. As to the assignment of rights under a contract see generally 6 Halsbury’s Laws (4th Edn Reissue) paras 9 et seq.
15 As the services of the artist may well involve the contribution of various literary and musical material, it is important for the Company to obtain an assignment of the copyright in any such contributions. As to performers’ property rights and rental rights see generally Paragraphs 96 [148] et seq, 119 [180], 120 [181] ante.
16 Ie the Copyright, Designs and Patents Act 1988 ss 180-212 (11 Halsbury’s Statutes (4th Edn) COPYRIGHT).
17 As to performer’s rights and consents see generally Paragraphs 93 [145] et seq ante.
18 As to moral rights see generally Paragraphs 80 [122] et seq ante. Whilst there are no moral rights in sound recordings, there may be rights in the literary and musical material incorporated in them.
19 An acknowledgement of this nature is important to the Company, since it will undoubtedly need to have the right to use photographs and circulate biographies of the artist in order to publicise the records, and in some territories (principally certain states in the United States of America) the consent of the artist may be required in order to authorise such endeavours.
20 The artist may wish that advances are payable irrespective of any suspension or event of force majeure.
21 The breakdown and dates of payments of the instalments are capable of wide variation and subject to commercial negotiation. In cases where the artist is represented by an agent, a payment direction in favour of the agent in a form similar to that contained in the star artist direct agreement (see Form 61 Clause 5.1 [1409] post) may be required. The artist will also generally require VAT to be payable on all advances and royalties. It would be usual to expect the amount of the advances payable in respect of each successive option to increase steadily.
As to equitable remuneration see Paragraphs 119 [180], 120 [181] ante. Whether the Company considers it necessary to apportion part of the royalty payable under this Clause to equitable remuneration is a commercial decision which may need to be reviewed in the light of case law on equitable remuneration.
22 As to agreements with minors see generally vol 16(2) (2001 Reissue) FAMILY Paragraph 217 [891] et seq, and see Form 77 [1755] post.
23 This provision is necessary to determine the subsistence of copyright in the product of the services.
24 This provision may often be dispensed with, since the Company will be in a position to cut or discard any offending material.
25 An artist will normally seek to limit the circumstances in which such right may be exercised. As to moral rights of the artist see Paragraphs 80 [122] et seq ante.
26 As to the Performing Right Society see Paragraphs 129 [211] et seq ante. This provision is likely only to be relevant where the artist is to perform or record works in which the copyright is controlled by the Company or an associated company. If the artist carries out any arrangements of such works, then the artist may be entitled to receive a share of the performing right income which would result in a diminution of the share payable to the company in its capacity as publisher.
27 This provision is essential to the Company, since closed shop arrangements exist in respect of certain unions which might prevent the Company from engaging the artist if the artist were not otherwise a member.
28 This provision is generally subject to negotiation and may not always be required.
29 This provision is subject to negotiation and may not always be required.
30 This provision is subject to negotiation and may not always be required.
[630]
31 Although the record company may seek to exercise some control over the artist’s live performances, this may not be accepted by the artist, although in practice the Company may be able to exercise negative control since some engagements may not be commercially viable in the absence of tour support from the company.
32 This provision seeks to preserve the goodwill present in the name of the artist.
33 Independent legal advice must be obtained from a solicitor with relevant experience: see generally note 1 above.
34 These provisions will only apply in the event that the artist is a group of more than one member and should be examined most carefully by the artist. See also notes 1 and 2 above.
35 See note 2 above.
36 See note 2 above.
37 An artist will usually resist a requirement to obtain the prior written consent of the company for any change in the group. The leaving notice procedure in Clauses 6.4 to 6.7 may not always be applicable or acceptable, and is usually the subject of commercial negotiations in which the overall context and terms of the agreement will be relevant. See also notes 1 and 34 above.
38 Whilst the Company may wish to be relieved of its obligations towards all of the members of the artist, if one member leaves this will frequently be unacceptable to the other members of the artist.
39 Note 1 above and Paragraphs 133 [215] et seq ante should be borne in mind in the context of any re-engagement option, and great circumspection will need to be exercised by the company if it wishes to have the benefit of such a provision.
40 See notes 38, 39 above. In practice, any provision relating to new members may be extremely difficult to enforce.
41 See notes 38, 39 above. In practice any provision relating to new members may be extremely difficult to enforce.
42 A division of payment provision will not generally be needed where all of the members of the artist jointly direct the Company to remit royalties and advances direct to the agent.
43 As to the rights of persons having recording rights see Paragraph 104 [158] ante. If the Company is requiring audio rights only, it may in some circumstances be inappropriate for any restriction to be placed on the activities of the artist in cinema films or television films. In certain circumstances the Company may need to restrict the right of the artist to re-record certain works. Where the Company’s associated publishing company controls publishing rights in the works some degree of control may be exercisable.
44 See note 43 above.
45 Whilst it is of obvious commercial importance for the Company to establish whether or not there are any unreleased recordings of the artist, any warranty from the artist as to the previous release pattern will in appropriate circumstances need to be qualified and inquiry will also need to be made of all record companies.
46 The artist may be expected to resist any provision which makes royalties payable in respect of records made during the early years of the term cease to be payable on the happening of any breach (material or not) by the artist. The artist can similarly be expected to reject any provision which limits the obligation of the Company to pay royalties to the artist only throughout the duration of the term. The amounts of the royalties are generally a matter of commercial negotiation, but see generally note 1 above and Paragraphs 133 [215] et seq ante. In practice, most record companies have detailed royalty provisions. The provisions in this Form will not always be appropriate and will need careful thought and adjustment. The structure of the clause allows for an increase in royalty to be payable during the period, the royalty on master tapes recorded during the first option period capable of being higher than those recorded during the initial period etc. The clause also permits the establishment of 2 separate royalty rates for albums and singles, which is common, and also for 2 separate royalty rates applying to sales in the United Kingdom (or any other designated territory) and sales outside the designated territory.
47 The percentage of net profits may not be payable depending on the extent of the rights granted to the Company and the precise commercial terms.
48 The artist may not accept that the production costs of pre-recorded tape or compact discs are greater than vinyl discs and may require the rate for tapes and discs to be the full royalty rate.
49 The artist may seek to impose a restriction on the time period in which a sale may be effected to a club operation, and may wish to exclude altogether any ability for any record to be made available as an introductory offer or a free or bonus record or on terms pursuant to which the Company receives no payment.
50 The intended effect of the words ‘otherwise applicable’ is to make all royalty reductions cumulative.
51 The artist may wish to prohibit ‘premium’ promotional and advertising use altogether or for a specified period.
52 The artist may wish to exclude altogether the concessionary rate for libraries, educational institutions and the armed forces. The intended effect of the words ‘otherwise applicable’ is to make all royalty reductions cumulative.
53 The reduction for television advertised records may not be acceptable to the artist unless the television sales campaign costs a predetermined amount, or the artist may wish to exclude the provision altogether. The intended effect of the words ‘otherwise applicable’ is to make all royalty reductions cumulative.
54 The provision relating to extended play records may be irrelevant and the rates for 7” and 12” records are a matter of commercial negotiation. The intended effect of the words ‘otherwise applicable’ is to make all royalty reductions cumulative.
55 The artist will wish any discount in the retail price to be borne by the Company, since the Company alone controls such matters and will wish to prohibit the right of the Company to license records and master tapes on a flat fee basis.
56 If a club operation sale is to be permitted, the artist will wish to specify a minimum royalty base price.
57 The artist may wish to exclude any right for the record company to incorporate non-artist material on records. Any compilation right may be by negotiation, but the artist may not be prepared to accept both a pro rata reduction of the royalty base price and a pro rata reduction of the royalty itself on compilation albums. The intended effect of the words ‘otherwise applicable’ is to make all royalty reductions cumulative.
58 See note 57 above.
59 The artist will wish to restrict the point at which such rights may be exercised by the Company, and will wish to limit the numbers of records distributed free or for publicity purposes.
60 This provision allows for the Company to apply further reductions and deductions in royalty rates, but may be rejected by the artist on the grounds that it is for the Company to ensure that it can sub-license the records at the same royalty base price on which it is obliged to pay the artist.
61 As to the exchange rate, account should be taken of companies who may have received payment at a rate more favourable than the rate of exchange in which the artist was paid.
62 The artist may not accept that the Company has the right to deduct credits and exchanges from the sales of records, since sales figures already exclude returns, credits and exchanges. As to the right to deduct reserves against returns of records which are sold on a sale or return basis, the artist will seek to limit the amount which the Company may deduct by way of reserve. In some circumstances the artist may request that the reserve is placed in a joint named interest-bearing trust account, and the artist may require reserves to be liquidated and paid to the artist within 2 to 4 accounting periods.
63 Any recoupment of advances from the royalties is normally acceptable. The recoupment of sums deemed to be advances and recording costs is a matter of commercial negotiation, but see note 1 above, and Paragraphs 133 [215] et seq ante.
64 This provision is likely to be resisted by an artist, since it will mean that if the advance in respect of any option period has been recouped, all further income in excess of the advance from other records will be deemed to be prepayment of advances payable by the Company on the exercise of further options which may in some cases be free of charge to the Company.
65 The question of whether the artist’s royalties should bear any royalty payable to an independent producer is a matter for commercial negotiation. Normally an artist will seek to limit the amount of the royalty.
[631]
66 The artist may wish the accounting dates to be quarterly and may require the Company to render accounts within 45 days from each accounting period.
67 The artist may wish to lengthen the period after which any statement is binding on the parties, and may not accept certification by the auditors of the Company as being binding on the artist.
68 The artist may resist this provision, since it may require notice from the artist as a precondition to payment of royalties on each accounting date.
69 The artist will normally require certificates of any tax withheld and an undertaking on the part of the Company to co-operate with the artist to minimise the withholding of taxes.
70 This provision may not be required, depending on the circumstances. See note 42 above.
71 The controlled composition clause will in many circumstances be unacceptable to the artist, since it reduces mechanical income by 25%.
72 Where the artist does control rights in compositions, this provision amounts to a free synchronisation licence and may therefore be unacceptable to the artist.
73 The artist may require the Company to use its best endeavours to remedy any breach as a precondition to being able to rely on the exclusion.
74 The morals clause may be unacceptable to the artist, and in some circumstances may not be required by the record company.
75 The suspension and termination procedures may be resisted by the artist in their entirety, since the artist will argue that it is paid in stages depending on performance and suspension could be used to prolong the term indefinitely. See also note 91 below and Paragraphs 133 [215] et seq ante.
76 The artist will not wish to accept that the Company is able to suspend the agreement, because an event of force majeure prevents it from distributing records and would want to limit the period of such suspension.
77 The number of tracks and number of minutes playing time in respect of any album is subject to negotiation.
78 The definition of ‘associate’ is included for the purpose of extending the definition of compositions which are the subject of what is frequently referred to as a ‘controlled compositions clause’ in Clause 10.
79 See 23 Halsbury’s Laws (4th Edn Reissue) para 1293 note 20 and para 1298.
80 The definition of ‘completion of recording’ is inserted for the purpose of determining the date of payment of relevant portions of the advances payable under the agreement.
81 The definitions of ‘distribution expenses’ and ‘distribution fees’ are necessary only where the Company is agreeing to pay to the artist a percentage of net profits relating to the audio-visual exploitation of the records.
82 See note 81 above.
83 As to gross receipts generally see vol 15(2) (1998 Reissue) ENTERTAINMENT AND MEDIA Form 152 [2751].
84 References to the types of television should be examined carefully and amended where necessary to include any additional or specific types of television exploitation within the contemplation of the parties.
85 The artist will seek to resist the exclusion of advances and minimum guarantees unless and until earned, and will wish these to be brought into account as soon as they are non-returnable. The artist may also wish gross receipts to be calculated on a so-called ‘source’ basis by reference to receipts of the Company’s successors and assignees and will not wish to accept that sums held outside the United Kingdom are not included as receipts (see also note 104 below).
86 The definition of ‘initial period’ is included for the purpose of delineating the term which comprises the initial period plus one or more option periods. The length of the initial period is negotiable. The Company will wish to enjoy the longest possible legally enforceable period since it postpones the point at which a further advance has to be paid. The artist will wish this period to be short.
87 It should be noted that the definition of ‘live recordings’ is not referred to in the definitions of ‘album’ or ‘single’ which are derived solely from the master tapes. The master tapes are studio recorded and accordingly the product requirement will not extend to any records derived from live recordings. The artist will normally seek to have these included in order to receive royalties on them.
88 The artist will normally seek to limit the extent of discretion exercisable by the Company in determining what is and what is not technically and artistically satisfactory. See note 88 above, and Form 4 note 35 [685] post.
89 The record industry has traditionally accounted on 90% or (in the case of the USA 85%) of records sold. The original intention was to provide an allowance for damaged or broken records, but since the sales figure is nowadays usually the net sales figure of all gross sales less any returns or credits the artist will seek to be accounted to on 100% of sales. Additionally, the artist will seek to impose some restriction on the nature and amount of credits to be given by the Company, possibly by excluding credits given to any associate or by restricting credits and allowing them only where they are bona fide reasonable and on arm’s length terms.
90 As to net profits generally see Paragraphs 264 [363] et seq ante and see vol 15(2) (1998 Reissue) ENTERTAINMENT AND MEDIA Form 154 [2762].
91 The number of option periods and the length of the term and initial term are negotiable. An option period of 12 months is generally acceptable. See also A Schroeder Music Publishing Co Ltd v Macaulay [1974] 3 All ER 616, [1974] 1 WLR 1308, HL.
92 The packaging charges are used in calculating the royalty base price and are negotiable.
93 The definition of ‘product requirement’ is included for the purposes of Clause 1.4.
94 The record company will normally require certain warranties relating to the artist’s professional name, although the group provisions contained in Clause 6 may in some cases, if they are accepted, clarify the position of any leaving member of the artist. So far as the professional name is concerned, it may be relevant for other provisions to be inserted relating to the name. If the name has been registered as a trade mark, the Company will need to enter into a separate user agreement with the artist or other the trade mark proprietor.
95 It should be noted that the definition extends both to audio product and audio-visual product. The artist may wish to limit the scope to audio product.
96 The artist will seek to limit the scope of the definition of ‘recording costs’ to the actual direct costs incurred by the Company, exclusive of any overhead or profit charge relating solely to the production of the master tapes or live recordings after the deduction or taking into account of any sums contributed by third parties towards the making of such recordings (such as television companies). The artist will not wish any royalty payments or percentages of profits to be included, as this will mean the costs are continually escalating. Similarly, the artist will seek to exclude the costs of promotional videos art work and other promotional material altogether, as well as any element of costs payable to an associate of the Company. The artist will also seek to impose a maximum amount which can be recovered by the Company in respect of any master tape or live recording and will seek to limit the ability of the Company to recover recording costs from one album from the revenue of another album (ie cross-collateralising income and expenses). Whilst this is favourable to the Company, it is not favourable to the artist, whose royalty income from a successful album may be stopped altogether and used to pay for the recording costs of an unsuccessful album. The method of recovery of the recording costs should also be examined carefully by the artist. If recording costs are deductable for the purpose of calculating net profits they should not be deducted again for the purpose of calculating royalties payable to the artist as in Clause 8.16. Finally, the artist will seek to prevent the Company from deducting the recording costs from the artist’s royalty since, whilst such sums are being deducted, the Company itself will be in receipt of profits from the records and the artist will maintain that the recording costs are part of the Company’s cost of doing business and should therefore be borne by the Company alone in any event.
97 The artist will normally require some form of consultation rights over the recording schedule, may wish the periods to be limited in each calendar year and may wish to have approval over all studios and locations.
98 The definition of ‘relevant rate’ is inserted for the purpose of the so-called ‘controlled compositions clause’ in Clause 10 (see also note 78 above).
99 As to rental rights generally see Paragraphs 119 [180], 120 [181] ante. The rental right in the copyright works included on the Master Tapes is different from the rental right in the performances contained on them. If the performances are of compositions controlled by the Artist, the Artist’s publisher will probably be unwilling to grant the Company the exclusive rental right in the compositions. If the Artist performs material written by third parties, the Company may need to acquire the rental right in relation to such works.
100 Since the amount of the retail price determines the level of royalty, the artist may seek to impose some restriction on the ability of the Company to settle this level or provide a notional minimum retail price to be used solely for the purpose of establishing a minimum royalty.
101 The artist will seek to resist the deduction of Value Added Tax and similar taxes from the retail price for the purpose of calculating the royalty base price, since such taxes may never have formed part of the retail price and their deduction will create a profit centre in favour of the Company.
102 The precise definition of ‘services’ will vary in every case and the description should be considered carefully.
103 The precise length of the term is generally the subject of commercial negotiation (see note 86 above). The term is subject to extension if the product requirement in each year is not met and also by the period of any suspension to which the Company is entitled pursuant to the provisions of Clause 13. The artist will seek to limit the length of any suspension or extension of any period in the term, and should not accept any provision extending the term because the product requirement has not been met through no fault of the artist.
104 This definition is included for the purposes of calculating net profit, and may not be required if the agreement does not provide for the artist to receive such a participation or if the rights granted to the Company are limited to audio records. The artist will be concerned as to some of the points raised in connection with the recording costs (see note 94 above) and will wish to prevent a double deduction of sums both by way of recording costs and third party liabilities. The artist should require documentary evidence of any deduction being required to be made as a result of any foreign union arrangement, and if the ability to deduct sums payable to owners of copyright elements contained in the master tapes or the records is accepted at all by the artist it should be limited purely to audio exploitation. The deduction of all other sums payable in respect of the manufacture or sale of the records should be resisted by the artist, as it will presumably eliminate any prospect of net profits.
105 If the artist grants the Company audio-visual rights in respect of the live recordings the artist should seek to include these within the definition of videograms and bring the revenue derived from videograms within the definition of ‘gross receipts’, since sums received from their audio-visual exploitation will otherwise be excluded.
106 This provision is inserted to avoid the operation of the Interpretation Act 1978 s 23 (41 Halsbury’s Statutes (4th Edn) STATUTES).
107 As to copyright in the UK see Paragraphs 36 [48] et seq ante. Rights of copyright created pursuant to the Copyright, Designs and Patents Act 1988 (11 Halsbury’s Statutes (4th Edn) COPYRIGHT) extend only to the United Kingdom. For copyright to subsist in other parts of the world depends on the laws of the country in question. Since the assignment of copyright clause is intended to assign rights of copyright throughout the world, it is important that the expression ‘copyright’ should not be limited to copyright existing under the law of England and Wales, as might be the case where a standard interpretation clause is used without this provision.
108 EC Council Directive 92/100 has been implemented in a different manner in every state in the European Economic Area and it is possible that differences may arise in interpretation of implementing legislation. Although the provisions of the Directive will generally override any implementing legislation, this provision endeavours to settle matters relating to equitable remuneration pursuant to the Agreement under English law.
109 This provision is intended to cover the possibility that an individual engaged to render services in one particular capacity may render incidental services in another capacity such that a literary, dramatic, musical or artistic work is created. It is important that the producer obtain an assignment of copyright in the product of all services of persons engaged for the film and not just of the particular services for which they were engaged.
110 The artist will wish to see a reversion of rights if the Company fails to distribute records within the given period or for a given period. As to damages for loss of opportunity to enhance reputation see Herbert Clayton and Jack Waller Ltd v Oliver [1930] AC 209, HL, and see generally 12 Halsbury’s Laws (4th Edn) para 1188.
111 This provision will frequently be resisted by artists.
112 This provision relating to equitable relief may only be relevant in foreign jurisdictions.
113 As to severability of illegal and void contractual provisions see generally 9 Halsbury’s Laws (4th Edn) paras 430 et seq.
114 See Form 25 [906] post.
[632
[
Next Thread |
Previous Thread |
Next Message |
Previous Message
]
| |
Feedback: 