D.I.Y. v. GETTING SIGNED TO A MAJOR RECORD LABEL IN THE CURRENT SOCIAL MEDIA ERA

The question these days for musical performing artists seems to be whether it is better to do it yourself ("DIY") or sign with a major record company. The answer is: it depends.

It used to be, back in the 1970s, '80s, '90s and even into the start of the new millennium, that the major record companies had talent scouts scouring the country and searching the clubs for talent. There were layers of A&R staff at major labels (A&R stands for “artist and repertoire”) who were often producers that would take artists into studios and make recordings. That way a record label could find out what an artist might sound like on record before proceeding further. The A&R staff would also review songs from publishers and songwriters to choose “hits” for the artists already signed to the label to record. Sometimes artist managers and lawyers would pitch talent to the A&R personnel, a process which was commonly referred to as “shopping” an artist to a label. For the most part, those days are done.

These days the A&R staff could more accurately be referred to as R&D (research and development). They no longer need to scour the clubs or take demos shopped to them by managers and lawyers. Artists can make state of the art recordings in their homes and distribute it digitally with the push of a button. The labels can search the internet and websites like TikTok and YouTube to see what artists are garnering interest from the public. These days, a new artist's mission is more about creating a “buzz” with an online presence and doing live shows to build a fan following. The record companies are interested in analyzing data before they take an interest in investing time and money in a project.

The major labels are now less about finding and developing raw talent and more about marketing and promoting the artists that have developed themselves and built the widest public appeal. Rather than bring new artists into the studio to work with them, the labels tend to find artists that are already performing live and drawing crowds, and already have at least some recordings commercially released and available online. Since an artist can create good quality recordings in a home studio, and easily upload music for commercial release through any number of online distributors, any artist can make music and get it out to the public without the need for a major record label’s assistance. The labels actually want the DIY artist to develop its sound and test market itself. When there is interest from the public, voluminous hits on an artist’s website or YouTube video, substantial sales of the artist’s music, and long lines at the live shows, then the major labels start sniffing around. The contractual downside of signing with a major record company is that in most cases their contracts assign ownership of your copyrights to the company in exchange for funding (an advance and a promise of royalties); the DIY artist can retain ownership of its copyrights and then use and exploit them to generate income.

On the up side, as an independent artist these days you can make and distribute your own recordings online through the digital streaming services and promote the music through social media and with live performances - and keep 100% of the copyrights and 100% of the profits. In the "good old days" an artist needed a record company to fund the recordings in state-of-the-art recording studios and then print, warehouse and ship the physical records to brick and mortar stores. Before Spotify, AppleMusic and other digital streaming services, radio was the only gateway to the public, and you needed a record company to market and promote the music to radio. You no longer need to go that route. You can do it yourself if you prefer.

If the DIY route is not for you, then you still need to do some legwork to get the attention of a major record company. What you, as an artist, need to do, first and foremost, is work on your art. That can be a combination of writing great songs, making great recordings, making interesting videos and creating a great live show – any and all of those things. You need to build your websites and develop your social media in order to link your fans to your work so that the public can hear your music and see your performances. An artist needs to create a “buzz”, create excitement and interest for what the artist is doing creatively. Some artists do it with a killer song and others do it with an interesting video. You need to create something unique and interesting that the public just cannot resist. It is not easy. It takes hard work and perseverance – and requires a little luck to get attention. However, if the alternative is to give up and go work in a grocery store or some other day job, then you might as well hone your craft and give it all you have to try to create something that demands that people pay attention. Then, if you want, you will get signed to a major record company that will, hopefully, help fund your expanding efforts and spread your artistry to a broader audience around the world.

Wallace Collins is an entertainment lawyer handling contract negotiation and general copyright and trademark law matters in the music, film, television, book, fine arts and technology areas. He was a songwriter and recording artist for Epic Records before graduating from Fordham Law School. T: (212) 661-3656; www.wallacecollins.com 

BEWARE: ARTIFICIAL INTELLIGENCE POSES A THREAT TO ARTISTIC CREATIVITY AND A POTENTIAL COPYRIGHT INFRINGEMENT NIGHTMARE!

The headlines these days are full of stories about artificial intelligence (“AI”). It seems AI has gone from science fiction to reality in a very short period of time. From Open AI’s ChatGPT app to Google’s MusicLM music creation tool, the future is now. A few decades back the struggle over digital rights and copyrights was a sideshow, of concern only to a relatively small slice of the population. Now, however, everyone is online, which means that even if you don’t consider yourself a creator as such, material you write, post or share could become part of an AI engine and used in ways you never imagined. To wit, several of my clients have recently raised concerns about the threat of AI, and the threat AI may pose to authors, artists (both fine and graphic artists) as well as songwriters and musicians… so let me try to break it down.

The tech behind AI is a complicated, but at its most basic AI engines ingest massive data sets, which they then use to train software that can make recommendations or even generate code, art, or text. Sometimes the engines are scouring the web for these data sets so they can learn what is on a webpage and catalog it for search queries; other times, AI engines have access to huge proprietary data sets built in part by the text, photos, and videos users have posted on their respective platforms. Unlike the music piracy lawsuits of decades ago, the AI engines are not making copies of the data they use and distributing them under the same name. The legal issues, for now, tend to be about how the data got into the engines in the first place and who has the right to use that data.

AI proponents argue that AI engines can learn from existing data sets without permission because there is no law against learning, and that turning one set of data into something entirely different is protected by the law, as affirmed by a lengthy court fight that Google won against authors and publishers who sued the company over its book index, which cataloged and excerpted a huge swath of books. Those against AI argue that if AI is going to use original material created by others then the AI engines should get a license from the original author or creator, or from whoever owns the copyright. Otherwise, the AI engines are violating the rights of the authors and creators of the underlying materials and, even if the result is not an exact copy of the underlying work (think “sampling” in music), the resulting AI product would not exist “but for” the underlying work and the use of the AI work competes with the artists or creators’ ability to make a living.

As of now, the US Copyright Office has stated that it will not accept a copyright registration on any work of authorship created using AI. However, there is still the issue of whether the resulting AI creation infringes the copyrights of other authors when it incorporates the work of the original authors into a new AI work or some sort (regardless of how remote or miniscule the resulting use in the new AI-generated work). Using the MusicLM system as an example, the Google researchers noted that MusicLM did have a tendency to incorporate copyrighted material from training data into the generated songs. During an experiment, they found that about 1% of the music the MusicLM system generated was directly replicated from the songs on which it trained (a threshold apparently high enough to discourage them from releasing MusicLM to the public in its current state).

Assuming MusicLM or an AI system like it is one day made available, it seems inevitable that it will give rise to major legal issues, even if the systems are marketed as tools to assist artists rather than replace them. AI music generators violate music copyright by creating a mosaic of coherent audio from prior works they ingest in training, thereby infringing the US Copyright Act’s reproduction right. Similar concerns have been raised around the training data used in image, code and text-generating AI systems, which is often scoured from the web without creators’ knowledge. New works generated by an AI system would arguably be considered derivative works, in which case only the original elements of the AI-generated work would be protected by copyright (although it is unclear what might be considered “original” in such a context).

It might not be long before there is more clarity on the matter. Several lawsuits are making their way through the courts which will likely have a bearing on music-generating AI, including one pertaining to the rights of artists whose work is used to train artificial intelligence systems without their knowledge or consent.

Current AI platforms are crude and imperfect, but by design AI improves and gets “smarter” the more it is used. AI may still be in the early horse & buggy stage - but AI could quickly advance to the Tesla level. Authors, creators and artists beware!

 

Wallace Collins is an entertainment lawyer and intellectual property attorney based in New York. He was a songwriter and recording artist for Epic Records before receiving his law degree from Fordham Law School. www.wallacecollins.com 

 

 

LEGAL BASICS FOR THE DIY WORLD: ARTISTS, AUTHORS, CREATORS AND MUSICIANS

Four Essentials:

1) Copyright Protection 
Under US copyright law, copyright (literally, the right to make and sell copies) automatically vests in the creator the moment the expression of an idea is "fixed in a tangible medium" (in other words, the moment you write it down, type it or record it on tape). With respect to music specifically, there are really two copyrights: a copyright in the musical composition owned by the songwriter and a sound recording copyright in the sound of the recording owned by the recording artist (but usually transferred to the record company when a record deal is signed). It is important to remember that you own the copyright in your work the moment you write it down or record it, and you can only transfer those rights by signing a written agreement to transfer them. Therefore, you must be wary of any agreement you are asked to sign. 

Although it is not necessary, it is advisable to place a notice of your copyright on all copies of the work. This consists of the symbol "c" or the word "copyright", the author's name, and the year in which the work was created (for example: "(c) John Doe 2017). The filing of a copyright registration form in Washington D.C. gives you additional protection in so far is it establishes a record of the existence of such copyright and gives you the presumption of validity in the event of a lawsuit. Registration also allows for lawsuits to be commenced in Federal court and, under Federal law, allows an award of costs and attorney's fees to the prevailing party (and you can register on-line or by mailing in forms with submissions). Currently, the filing fees are low enough to make registration well worth while. www.copyright.gov

2) Trademark Protection for Your Name 
Trademark rights are rights in a name or logo which indicate source or quality. Such rights are based on "use" of the mark and vest in the owner when the mark is first used in connection with goods or services. Although the title of a work is not protected by trademark, these rights are applicable to names used by actors, musical performers, DJs and companies. The more unique the name of your company, product or band is, the more easily protection is available for it as a trademark. 

The best way to protect yourself is to file a Federal trademark registration application, since registration will give you a presumption of ownership of the name nationwide. Before investing too much in your prospective trademark, however, it is a good idea to order a trademark search to make sure no one else has been using the same or a confusingly similar name before you. You can do this through a combination of on-line researches, through your lawyer, or by contacting a searching service. With respect to the name of a performer or band, keep in mind that a mere search of current Federal trademark registrations may be insufficient. It is best to conduct a full statewide search as well as a search of the copyright office records in order to find any songs which may be copyrighted in a band's name. This is important because trademark rights are based on "use." Therefore, even if another user does not file for Federal trademark registration, certain rights vest in that user under state law when they start using the name. This has led to problems in the past. For example, when you go to release your record or film worldwide you may find that someone else has been using the name of your band or film company in, say, Illinois. If they were using the name prior to when you first started using your name then, under state law, that user could prevent you from releasing your record in that state. The usual solution to such a problem is to buy out that users rights, but this can be costly, or enter into an agreement to alter and distinguish the names (e.g., Squeeze/Squeeze UK; Dreamworks, Dreamworks SKG. 

Once you have determined that no one else is using your name, the next step is to file an application for Federal trademark registration in the US Patent and Trademark Office. Registration provides nationwide protection as well as the presumption of validity for lawsuit purposes, as well as legal fees and additional damages for infringement. www.uspto.gov
  
3) To Incorporate or Not to Incorporate 
As a practical matter, sooner or later you may want to incorporate in order to limit your personal liability. When you incorporate your business you actually create an entity separate from yourself which will have its own bank account and tax identification number. If you operate properly as a corporation (i.e., signing documents as an officer of the corporation rather than as an individual, using a separate bank account, etc.), then, as a general rule, only the corporation is liable for the obligations of the agreements the corporation makes. The easiest example of how this protects you is if you imagine a situation where your corporation pays you a salary of several hundred thousand a year for several years. Over the years you use that salary to buy a house, a car, and a boat. Then one day catastrophe strikes and the corporation is sued for millions or goes bankrupt. Although the creditors could take the assets of the corporation, they could not pierce the corporate veil and force you to sell off your house, your car and your boat (Imagine: even when Chrysler went bankrupt Lee Iacocca did not give up any of the assets which he had purchased with his salary. In fact, he kept right on getting a salary from the corporation). If properly employed, a corporate entity can be used as a shield to protect you. In most cases, however, it is not really necessary to incorporate at the start of your artistic career. The law does require that, if you use a name professionally other than your personal name, then you should file a Business Certificate (or "DBA") in the County in which you reside or do business under that name. A DBA is necessary if you want to open a bank account in your professional pseudonym or group or company name. The DBA form is available in stationary stores or at the county clerk's office.

There are also tax advantages to operating as a corporation. As an individual making in excess of  a certain amount, as set by the IRS, even if your write-offs and deductions reduce your income substantially you will still be subject to the "alternative minimum tax' under current law. However, as a corporation, you are entitled to take the deductions and, as an individual, you are only subject to standard tax on the amount which passes through to you individually. Also, as a business matter, the individual members of a group or company may want to enter into a partnership agreement between and among themselves in order to spell out the particulars with respect to certain rights such as songwriting and ownership of the trademark rights in the name. Otherwise, any group of two or more persons operating a business for profit is considered a partnership for the purposes of applying the laws of partnership under the laws of most states. These laws generally employ a rule of sharing evenly in profits and losses, including all assets of the business
  
4) Signing Contracts 
Never sign any contract given to you without having your lawyer review it first. Do not rely on anyone else (or even their lawyer) to tell you what your contract says. And never let anyone rush you or pressure you into signing any agreement. There is really no such thing as a standard "form" contract. Any such contract was drafted by that party's attorney to protect that party's interests. Your lawyer can "translate" the deal and explain its terms to you, and then help negotiate more favorable terms for you. 

Keep in mind that it may, in fact, be in your best interest to "get it in writing" if you have an arrangement with someone. This is especially true in collaborative situations. Otherwise, you run the risk of a disagreement later over the actual terms of the oral agreement, and it becomes your word against that of the other party. That is not to say that an oral agreement is not a binding contract (as Kim Basinger recently found out). It is just that a contract is easier to prove if the terms of the arrangement are in writing. A simple contract may not necessarily require extensive involvement by lawyers. A contract can be as basic as a letter describing the details of your arrangement which is signed by both parties to the agreement.

As a general rule, you should consult with a lawyer if you are asked to sign anything other than an autograph. Too many aspiring artists want to get a record deal so badly they will sign almost anything that promises them a chance to do it. Even successful careers have a relatively short life span. Therefore, it is important for you to get maximum returns in the good years and not sign away rights to valuable income like publishing. Everyone needs someone to look out for his or her interests. That is why, at the end of the day, you may want to consult with an entertainment lawyer. Meet with several lawyers to find one whose vibe is right for you. If you believe in yourself and your talents, give yourself the benefit of the doubt, and invest in good legal representation.

Wallace Collins is an entertainment and intellectual property lawyer with more than 30 years of experience based in New York. He was a recording artist for Epic Records before receiving his law degree from Fordham Law School. Tel: (212) 661-3656; www.wallacecollins.com