Music transactions: the basics
𝗪𝗵𝗮𝘁 𝗶𝘀 𝗮 𝗖𝗼𝗽𝘆𝗿𝗶𝗴𝗵𝘁?
To put it briefly, a copyright in music is a form of protection granted by law for original works of authorship, including musical compositions and recordings. It's what ensures creators can control and profit from their creations.
𝗥𝗲𝗰𝗼𝗿𝗱𝗲𝗱 𝗥𝗶𝗴𝗵𝘁𝘀 𝘃𝘀. 𝗣𝘂𝗯𝗹𝗶𝘀𝗵𝗶𝗻𝗴 𝗥𝗶𝗴𝗵𝘁𝘀: 𝗧𝗵𝗲 𝗗𝘆𝗻𝗮𝗺𝗶𝗰 𝗗𝘂𝗼
Recorded Rights refer to the rights for the actual sound recording: a singer's performance or a band's session in the studio. Publishing Rights focus on the musical composition itself: the notes, melodies, chords, and lyrics.
If you write a song, the Publishing Rights cover your creative work, while the Recorded Rights pertain to specific recordings of your song by yourself or other artists or bands.
𝗪𝗵𝘆 𝗧𝗿𝗮𝗱𝗲 𝗖𝗼𝗽𝘆𝗿𝗶𝗴𝗵𝘁𝘀?
People buy and sell copyrights for various reasons:
🎸 Artists and creators sell their rights, usually to secure immediate financial gain, in the context of a wealth planning exercise, or to fund new projects.
💰 Investors and companies buy rights like they would any other financial asset class - like they would buy stocks, funds, real estate - anticipating that the music rights' value will increase and which returns can be achieved through licensing, streaming, and other revenue streams.
𝗛𝗶𝗴𝗵-𝗟𝗲𝘃𝗲𝗹 𝗣𝗿𝗼𝗰𝗲𝘀𝘀 𝗼𝗳 𝗮 𝗠𝘂𝘀𝗶𝗰 𝗖𝗮𝘁𝗮𝗹𝗼𝗴 𝗧𝗿𝗮𝗻𝘀𝗮𝗰𝘁𝗶𝗼𝗻
1️⃣ An artist or rightsholder starts by hiring an independent expert to give them an opinion on the value of their catalog. After consulting with their management, legal advisors and other professionals, they decide whether to sell or not.
2️⃣ Word is spread out and the artist's advisors gather offers from prospective buyers. This is a time to describe and quantify the financial potential of the catalog, current and not yet realized
3️⃣ Due Diligence: Buyers go through a meticulous examination to verify ownership, existing agreements, and any encumbrances on the copyrights.
4️⃣ Negotiation: The art of striking the final deal, where terms, price, and rights are hashed out.
5️⃣ Closing: The grand finale, where contracts are signed, and rights are officially transferred.
Understanding these basics empowers artists, investors, and anyone interested in the music industry to navigate transactions with confidence and clarity. Music isn't just an art form; it's a sophisticated ecosystem where creativity meets commerce.
At Clarty, we help and represent sellers and buyers through this process - either for part of the journey or from start to finish. Reach out if you have any question or want to know more!