and soundtrack albums

Ron Hay is a media and entertainment lawyer and a member of the KNOWlaw Group of the Toronto law firm McMillan Binch.

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Anyone who has viewed a rough cut or director’s cut of a movie can soon appreciate the value the music soundtrack adds to a production. While a great composer can’t make a great movie out of a bad one, he or she can certainly help determine the film’s success.

There are several key issues to consider when negotiating your music deal. Ownership of the copyright of the score, allocation of public performance royalty revenues, use of non-original source music, and responsibility for the recording costs and ongoing residual payments all need to be addressed in the composer agreement.

Ownership of the score

A key issue in composer negotiations is determining who will own the copyright in the score. The production company will usually insist that the composer give up his or her copyright, while the composer will want to retain copyright ownership and instead give the production company a licence to use the score for the production.

Even if the producer wins the argument, the composer will retain the right to obtain certain income derived from the use of the score, such as public performance rights royalties.

If the producer is to own the copyright, a grant of rights must be obtained in writing from the composer. In the u.s., terms such as ’employee for hire’ and ‘work for hire’ are sufficient for the copyright to rest in the hands of the production company. There is no work for hire concept in Canadian law, and it is important to obtain an express grant of copyright from the composer.

Public performance royalties

At a minimum, the composer will retain the right to receive the ‘writer’s share’ of public performance royalties, and may be able to negotiate further payments based on additional uses of the score, such as sheet music, soundtrack recordings and other ancillary uses.

Royalties for the public performance of musical compositions are collected and distributed by socan (or its American cousins ascap, bmi and sesac) from television stations, movie theaters and other venues and users of music. These royalties are divided into two equal parts – the ‘writer’s share’ and the ‘publisher’s share.’

Determining who will be entitled to the publisher’s share – the composer or the producer – is entirely negotiable. Composers with bargaining power may be able to retain all of the publisher’s share in addition to his or her writer’s share, but often the most a producer will agree to is to split the publisher’s share with the composer. Sometimes the producer will insist on getting the entire publisher’s share, as it may be required to do so as part of its overall deal with its investors or distributors.

Using source music

Some pre-existing source music is often included in the production’s soundtrack. Source music can blow a music budget out of the water – care must be taken in relying too early on particular songs or recordings before quotes are obtained for their use.

Use of source music requires two (and sometimes three) kinds of licences. The first, a ‘synchronization’ licence, is required before rerecording an existing composition. This licence allows the composition to be recorded ‘in timed synchronization’ with the film.

A second type of licence, a ‘master use’ licence, is required in order to use an existing recording of a song in addition to a ‘sync’ licence. In addition, using existing recordings may give rise to payment obligations to musicians whose performances are captured by those recordings.

If the project is a feature film which might play in u.s. theatres, a third licence – a u.s. theatrical ‘public performance’ licence – will also be required.

Fees for synchronization and master use licences vary dramatically, depending on the popularity of the work, whether the work is integral to the story line, the production’s budget, the territory and term – and must be negotiated with the appropriate rights’ owners.

High-priced soundtracks

The soaring soundtracks of films such as Star Wars and Superman come with a hefty price tag – not only must you pay the price such superstar composers demand, you must be prepared to pay the musicians who perform the finished score.

It is not uncommon for 50- to 80-person orchestras to be engaged for soundtracks of major studio releases. Musician fees, studio and mixing costs, arranging and copying costs can easily amount to hundreds of thousands of dollars, even before factoring in the cost of the composer’s fee.

Recently a number of American and Canadian producers have traveled to Eastern Europe to record their soundtracks. The fees charged by the European musicians are a fraction of the North American union rates, and even with the additional costs of travel, thousands of dollars can be shaved off a music budget.

Electronic scores

A cheaper and common alternative to the multi-thousand dollar recording budget is to engage a composer to prepare an electronic soundtrack.

The composer is typically paid an all-in fee, whereby he or she composes, records, and mixes the synthesizer soundtrack and delivers the completed product to the producer on dat. However, if any musicians are to be engaged, the issue of residual obligations must be addressed.

Musician residual fees

Engaging musicians under an American Federation of Musicians agreement will give rise to ongoing residual obligations based on the producer’s receipts. A composer should resist assuming such obligations if any union musicians are used in the soundtrack of an ‘all-in’ deal. Where a contract specifies that the composer is responsible for ongoing payments to musicians, the underlying message is – ‘don’t even think of using union musicians.’

Non-union soundtracks may run counter to the producer’s agreement with its broadcaster – many broadcasters require music to be recorded under an American Federation of Musicians contract. These issues need to be addressed and responsibility for residual payments allocated.

Soundtrack albums

Soundtrack albums have become increasingly popular in Hollywood. No longer are they simply promotional tools – they can actually help pay for the music budget and generate additional income for producers.

In Canada, the opportunities are greater for fame rather than fortune from a soundtrack album. However, the promotional value of an album should not be discounted, and producers who want this opportunity should attempt to negotiate up-front the right to produce such a recording with their composer.

Two approaches

There are two basic approaches to producing a soundtrack album.

A producer may be able to interest a record company in producing the album; the record company (together with the producer) chooses artists from its roster, takes responsibility for the recording, and may pay the production company an advance. The record company may also agree to pay the costs of the film’s composer as well as the costs for any source music used in the film.

If the soundtrack is released prior to (or in conjunction with) the film’s release and is a success, everyone wins. This approach is increasingly popular in Hollywood, where cross-ownership between film studios and record companies helps assist in making such arrangements.

A more typical approach has the producer assembling the artists and then approaching a record company. If interested, the record company may agree to pay the costs of converting the film’s tracks into a commercial soundtrack album, and may also pay the producer an advance against future revenues. The production company will then share in any success the album might enjoy by way of royalties based on sales.

Several issues must be addressed before embarking on a soundtrack album venture. Using artists of any stature will require consent from the artists’ record label, as the label will want to ensure that your album does not compete with or harm the image of the label’s own product or artist. Royalty rates will also need to be negotiated with each artist.

Consent will be required from owners of pre-existing compositions, and you will be obligated to make ongoing payments based on sales. Using pre-existing recordings in your album also requires consent and will give rise to payment obligations.

Choosing your composer and negotiating the deal is an important piece in the production puzzle. The resolution of many of the issues raised above will depend on the relative bargaining strength of the producer, the composer and the record company. The issues are numerous and complicated – if in doubt, get professional advice.

(this article contains general comments only. It is not intended to be exhaustive and should not be considered as advice on any particular situation.)