Thread: Knowledge Is Power

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  1. #1
    Join Date Nov 2006
    Location Songwriter Gulch
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    Thumbs Up! Knowledge Is Power

    This is a highly opinionated and totally slanted personal list of my definitions for common music industry jargon. Hopefully my many prejudices will be obvious! What could I, a recording engineer, possibly know about the music business? The only answer is the people who I have been privileged to both work and hang out with and the many aspects of their business lives they have chosen to share with me as their friend.

    My mentor has been Mr. Leroy Lovett. I met him 41 years ago while we were both working in Detroit at Motown Records. I was a beginning mastering engineer and he was a top executive with Jobete Music Co., Inc., Berry Gordy Jr.'s wildly successful music publishing company. Mr. Lovett has been kind enough to review this list and, more important, to tell me what to get rid of where I didn't really have a clue!

    I feel that you are at a serious disadvantage if you do not understand the meaning and implications of each of these terms because it can be very difficult to recognize a truly favorable offer without such an understanding.

    This is dedicated to Leroy C.. Lovett, Jr. and to the memory of the late John Hammond Sr. Both of these men very quietly dedicated their lives to supporting and empowering musical artists with knowledge about the ins and outs of our industry. In my experience, people confuse good deals for bad at least as often as the other way around!

    I'm not a lawyer If I can inspire the right questions to ask YOUR lawyer, this list will have done exactly what it was intended to do.

    Bob Olhsson, November, 2006

    A & R:
    Artists & Repertoire. Traditionally this is the record company employee charged with finding new talent, selecting the music to be recorded, producing the recordings, and maintaining the label's relationship with artists and songwriters. Today, it's commonly limited to only the first role.

    Advance Against Royalties:
    Money paid to you in advance before you actually earn it. Generally, the higher the advances, the lower the total amount paid out. Beware that managers and lawyers can profit from a large advance with the artist paying for it later in the form of lower royalty rates and excessive cross-collateralization.

    All-in Deal:
    A flat-rate recording contract where the artist is required to deliver a complete, finished master recording in exchange for a fixed advance amount that includes all the recording costs the label is willing to pay.

    A person skilled in writing musical ideas on paper in such a way that professional musicians can easily perform the parts.

    A business entity and performance "name" used to identify musical activities to the public. Many people from Duke Ellington to George Clinton have functioned as multiple artists simultaneously!

    Artist Management:
    The person who supervises the numerous tasks that comprise the business that is an Artist. Good managers often delegate jobs to experts who will get them done both properly and advantageously. These jobs must get done or an artist goes nowhere fast!

    Artist Relations:
    The person at a record company directly responsible for all communication between the company and the Artist. Their enthusiasm is both priceless and critical to getting the entire label behind an Artist.

    Artist Royalties:
    The share of the sales of each recording paid to the
    Artist-entity by a record company.

    Assignment of Copyright, Ownership or Royalties:
    This turns ownership or entitlement to royalty income over to somebody else. Not a good idea unless something VERY substantial is given to you in exchange. Many artists and writers retain full ownership of their masters and copyrights.

    A lawyer. Hopefully an expert at the meaning of the language in a contract and its implications. Often music attorneys negotiate recording contracts with record company attorneys. Expertise in the music industry is necessary, however a second-opinion from a non-music business attorney, one who gets paid hourly, is a real good idea since what might be a great deal for both a record company and for an attorney negotiating for a percentage of that deal might not be the best arrangement for you!

    That little "whatzit" on everything from toothpaste to CDs that is scanned to help keep track of inventory. Company numbers are assigned after filling out an application form and then you, (the company) supply the rest of the code for each product. This "catalog code" can be imprinted in the data of each CD as well as on the package. There is also the ISRC code which is given to each selection and encoded in the CD. Both of these help you get paid in the new world of computer madness.

    Booking Agency:
    An agency that books performances with promoters. Beware that their relationship with a promoter will be far more important to them than the relationship with any particular artist. You should never assume an agent is strictly on your side.

    A general term for obtaining copyright clearance or permission to use somebody else 's copyrighted material. This can involve simply getting somebody-'s permission or it can be a license allowing a specific use for a specific royalty rate. There are specialists who negotiate copyright clearances that are well worth what they cost to film producers and record labels.

    An arrangement where a large publisher shares the publisher share of royalties with a small publisher in exchange for handling both the administration and the exploitation of musical material. Such arrangements can be either for limited territories or worldwide.

    Compulsory Licensing:
    A law that requires a copyright owner to issue a license to anybody agreeing to pay them a statutory royalty rate.

    The piano roll manufacturers and record labels managed to lock songwriters' royalties to the same two cents per copy rate for 75 years. Today Silicon Valley investment bankers are seeking similar legislation that would lock recording artists into a royalty rate determined by lobbyists while preventing them from making exclusive distribution deals.

    See Statutory Mechanical Rate

    Hopefully an expert in one or more areas of the business who makes themselves available for giving advice by the hour. Some are saints!

    An agreement that advances paid under one contract can be repaid from royalties earned under other contracts. Many artists have wound up receiving no royalty income at all due to excessive cross-collateralization practices by record companies and managers.

    Distribution Deal:
    An arrangement where a large record company/distributor manages the relationships between the retailers and the record company. The distributor handles all shipping, billing, collections, etc. The record company is expected to supply finished goods and to provide all advertising, publicity and promotion. (If they're smart, they will also call directly on retailers as no distributor will stick their neck out for just one small label.)

    Exclusive Artist Contract:
    An agreement with a record company to NOT record for anybody else! While artists often look to getting one of these "record deals" as the start of their "real" career, Exclusive Artist Contracts have also put an end to many a musical career.

    Actively pursuing any and all forms of income available to a recording or to the rights to a song. There is a big difference between having the rights of Exploitation and an agreement by somebody to do so!

    Finders Fees:
    A fee paid to somebody who facilitates the creation of a business relationship.

    Foreign Publishing Administration:
    This is a relationship where a publisher active in a given country collects royalties on behalf of another publisher in exchange for a small percentage. This will generally not include doing any record promotion or other exploitation the way a foreign co-publisher would.

    Foreign Publishing:
    Income from record manufacturing, sheet music, performances and airplay in another country. Large music publishers expect as much as 70% of their income to originate from outside the United States. Much of this money is collected from broadcasters playing U.S.-originated recordings. Royalties are often payable to the recording artist and label besides the musicians' unions and songwriters. Because publishers benefit the most from airplay, it is common in many countries for the publisher to do all the record promotion rather than the record company. For this reason it is hard to expect a foreign record company to pick up a CD where there is no active publisher involved in their country. While one could get around this by turning the publishing over to the foreign label, striking a co-publishing deal with a major publisher in the country is often a better bet. Motown assigned co-publishing to a large European publisher resulting in massive airplay when comparably successful U.S. labels never got to square one in Europe. There's an awful LOT of money to be made here, income that even industry veterans are often ignorant of. The remarkable success of Bill Gates and Microsoft was based on the equivalent of retaining and exploiting the foreign publishing on the IBM DOS computer operating system.

    Hit Record:
    A recording that earns a profit for everybody involved. Hits are the whole point, the very bread and butter of the record business!

    Independent Label:
    A small record company that does not own its own distribution and manufacturing. Because an independent label releases far fewer recordings during a given period, an artist generally gets a lot more attention, publicity and personal sales into retail from an Indie than they ever will from a major. The disadvantage is that Indies generally can't afford to pay large royalty advances or to support superstars.

    ISRC Code:
    A number that is embedded in a CD that identifies who owns the rights to each track. These are used in some countries to automatically determine royalties from airplay to be paid to writers as well as to artists, musicians and record companies. Many labels are lazy about making this happen and I haven't a clue why. US ISRC registration is here

    A record company that records artists and then sells the recordings.

    Major label:
    A large record company, usually part of a much larger corporation. Major labels generally have the staff and facilities to deal directly with all of the record retailers in the country. Many also do most of their own manufacturing. While major labels can afford large advances and even afford to lose money on superstars, they can also easily afford to eat the expense of an advance and simply never release your record. While a high-profile artist can profit from a relationship with a major over one with an Indie, it's also very easy to get lost in the shuffle of fifty or more releases a month compared to perhaps the one or less release a month from an Indie. One needs a strong management team to successfully manage a relationship with a major label.

    A master recording intended for replication along with the right to replicate it and the copyrighted material embodied in it. A record company can pay for creating a master or the artist or producer can own it and lease or sell it to a record company.

    Master Exploitation:
    The right and responsibility to seek the release of a recording. Most commonly used regarding licensing other record companies, especially but not necessarily outside the U.S.

    Master Lease:
    Lease of the exploitation rights to a master to an entity or label for a certain time without a transfer of actual ownership of the master to that label or other entity. This can involve cash, royalties and/or advances.

    Master Purchase:
    Outright sale of a master and all exploitation rights to an entity or label for a combination of cash, royalties and advances.

    The last step in production and the first of manufacturing. It is often used as an expert second-opinion and a final opportunity to tweak the presentation of mixes within the context of each other and of the other recordings they will be competing with. It differs from mixing in that a mix alters the presentation of the music. Making a great first impression on every listener is very important to the success of a recording and an artist. Mastering engineers try to minimize unintended distractions from mixes.. In most cases, mastering is paid for by the record company unless an artist insists that their own choice of a mastering facility be used.

    Mechanical Royalties:
    Royalties paid to songwriters by record labels

    See Statutory Mechanical Rate

    Music Publisher:
    A Music Publisher takes care of the business of promoting the recording and public performance of songs. (Some even sell sheet music in some cases!) A publisher collects royalties that are then split with the writers. Songwriters can have contracts for specific songs or make deals for their exclusive services over a certain period of time. It is conventional for a writer to receive a reasonable advance as part of any publishing contract. Many artists and writers set up their own publishing company. It's just as foolish to hang on to all of your publishing and do nothing with it as it is to sign it all away to somebody without the knowledge to do anything with it.

    New Artist:
    A recording artist who is not an established figure in the radio and retail record industries.

    A record distributor that offers small quantities of recordings from all labels to small retail shops and larger stores to fulfill "special orders" of recordings they don't want to stock a quantity of. Some one-stops have now gone into the mail-order retail business.

    Packaging Fee:
    A common reduction in artist's royalties to cover "album packaging and breakage." This leftover from the 78 era makes comparing royalty rates very confusing. A contract paying on less than 90% is questionable. Labels that don't take this reduction may pay a lower royalty rate that is equal to more money!

    Performance Rights Organizations:
    Also known as PROs, these are agencies that collect Performance Royalties.

    The three largest in the United States are BMI, ASCAP and SESAC. Each pays separate writer and publisher shares directly to the writers and publishers involved. Making the right choice for exactly what you are doing can make a significant difference in income. Outside the United States, there is generally a single PRO in each country.

    A new category is a PRO that pays performers for having their recordings played. In the United States this is handled by Sound Exchange which collects and pays royalties for Internet and satellite broadcasts.

    Performance Royalties:
    Royalties paid to songwriters and publishers by broadcasters, restaurants, club-owners, venues and sometimes promoters in exchange for the right to perform copyrighted music as part of the entertainment they provide. This is generally handled by a Performance Rights Agency.

    The retail and/or distributor relations executive at a record company. (Sometimes, but not always, the head of the sales department.) These are the people who get records into the stores and, quiet as it's kept, are frequently the highest paid people at a label. Find out who the phone-man is and be REAL nice to him or her!

    The international legal term for a copyrighted sound recording.

    Points On Retail:
    A royalty rate that is a percentage of the retail price of the recording. Note that most recordings are discounted somewhat at retail however such royalties are still paid on the full retail price.

    Points On Wholesale:
    A royalty rate that is a percentage of the wholesale price of the recording. This will be a larger number, usually double its equivalent rate on retail but not necessarily any more, if as much actual money per unit sold. Beware of people talking about "points" without saying points based on what.

    Power of Attorney:
    An agreement that another individual can make binding agreements as if it were you. These are generally limited to specific activities or transactions. For example, if you signed a Power of Attorney regarding a master, the person holding that agreement can then act as the sole owner of that master including signing it over to themselves. There are times when a Power of Attorney is expedient but it is never something ordinary to sign, especially with somebody you don't trust totally.

    Press & Distribute Deal:
    Sometimes called a "P&D" deal. An arrangement where an Indie label turns the manufacturing and distribution completely over to a major. The Indie remains responsible for financing and promoting their recordings. This is advantageous because it eliminates credit problems with pressing plants when the need arises for a sudden massive order to support a big hit. Majors have also been known to make P&D deals with their most successful artists. While it offers the artist more control, it's hard to say they would be better off with a P&D deal than with a superstar deal.

    A general term that can mean almost anything. In the record business, this person is often called a recording director.

    Usually a person engaged in the business of organizing live shows and selling tickets.

    Public Domain Arrangement:
    A copyright on the arrangement of a public-domain composition. These are paid at the same rates as song writing through the same channels. It is not uncommon for the artist and record producer to share in this kind of copyright income.

    Also known as a Press Agent, a person who provides the press with stories about artists and access to artists for interviews. Access to big stars is frequently exchanged for running stories and reviews of unknowns handled by the same publicist. Not having a well-connected publicist can be a major hindrance!

    The "art" of getting somebody mentioned or covered in the press as news.

    The publishers half of publishing royalties as differentiated from the writer's share.

    A confusing term that means different things to different people. It generally means part or all the income from exploitation of song writing. Always ask exactly what the word means to the person using it!

    Publishing Administration:
    The job of collecting publishing royalties and distributing them. Generally this is done for a small percentage of the income. It rarely involves any advances, promotion or exploitation, just the invoicing, bookkeeping and check-writing.

    Publishing Royalties:
    Money paid by record companies, promoters, broadcasters and venues in exchange for permission to use musical compositions owned by others.

    Rack Jobber:
    A distributor who sells recordings in "racks" placed in non-record stores in exchange for the store getting a percentage They are generally lumped together with one-stops. Both charge retailers more than a regular distributor but pay less than a store but more than a distributor does for recordings.

    Radio Consultant:
    A person hired by broadcasters to determine what is most advantageous for them to program. These folks can make or break a record or even a DJ.

    Radio Promotion:
    The job of presenting radio stations and consultants with information about why they should play the record being promoted rather than others. There is plenty of favoritism involved and exchanges of "exclusives" or of access to stars for interviews in exchange for early airplay of lesser artists is not uncommon.

    Record Distributor:
    A firm that sells recordings directly to retail stores. Because stores often pay the distributors who have hit product ahead of the distributors and labels who don't, you need one!

    Record Producer:
    The recording director supervises the engineering, coaches the performers and musicians and finally decides when everybody can go home! Sadly, there are a lot fewer recording directors around today than there were thirty years ago. Instead we now have "engineer-producers," "artist-producers," and other such combinations which often really means there is no producer. That doesn't mean there's anything wrong with producing yourself, just that I think the opportunity to work with a real experienced recording director is well worth the time and expense. I'd also love to see more people become record producers for others. In my experience it gets the job done both faster and better, provided the producer really knows what they are doing

    Record Promotion:
    See Radio Promotion.

    Record Sales:
    The job of getting distributors and retailers to stock a record. See phone-man.

    Recording Contract:
    This can mean MANY different things!

    Recording Engineer:
    The person charged with setting up and operating the recording equipment and making sure the technical end is both covered and doesn't interfere with the musical tasks. We engineers can bring a lot of valuable production experience to the recording process.

    A reduction in royalties actually paid to cover advances and other specified expenses.

    See Artist Management.

    Payment for repeated use of television performances. These are handled through the unions. Somebody is almost always getting them, hopefully, but not always, the original performer!

    Stores that sell recordings directly to the public.

    Retail Relations:
    Is the same as sales at small labels. At large labels, these are the people who dole out posters and other goodies to stores.

    Sampling License:
    A license that allows you to use samples from another recording. This is generally paid to the record company. Your negotiating position is enhanced greatly if you have not begun to record. It is not very good if the record has been released and can be a disaster if it is a hit. There are artists who have had number one singles and wound up paying more than their entire royalty per copy sold because they didn't get the licenses up-front. Engineers and studios have also lost suits over their participation in recordings of unlicensed samples.

    Self-Contained Artist:
    A recording artist who writes and performs their own material.

    Song Plugging:
    The art of getting performances and recordings of songs.

    Split Publishing:
    More than one publisher of a song. Writers sometimes offer to split the publishing or publisher's-share with artists in exchange for them recording it.

    Split Writers'-Share:
    More than one writer of a song. Writers sometimes even offer to split the writer's-share with artists in exchange for a recording.

    Statutory Mechanical Rate:
    A government proscribed royalty rate payable to songwriters and publishers. If they pay the statutory rate anybody can legally record any song that has been released once. It's a good idea to try negotiating a better rate and terms with a publisher.
    Here's a link with U.S. rates:

    The opposite of a hit. A recording that loses money.

    Street Promotion:
    People who get posters and fliers out in store windows and anywhere else they can.

    An artist who has attained a level of consistent sales that allows a label to use the threat of withholding that artist's recordings from an account as both a collection device and a marketing tool. Major labels often pay more to such artists than they can possibly earn from selling the artist's recordings because of the power created in the marketplace by having them on the label.

    The use of a song as part of a motion picture or other audio-visual medium.

    Synchronization License/Licensing Agency:
    A contract for payment of royalties for Synchronization use. There are agencies who handle this for publishers although often a better rate is available directly from the music publisher.

    The writers' half of publishing royalties as differentiated from the publishers' share.
    Last edited by Bob Olhsson; September 2nd, 2009 at 04:32 PM.
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