Basics: Music Publishing and the Record Company

(sponsored by the AMM Music Group and it's labels.

Music is software - like a computer program, a text (e.g. a novel), information, films etc.

At the point where there is a marketable product, music is actually an advanced software product - which consists of two components - the composition and the performance/recording , without which no-one could consume it.

This is similar to another field of entertainment - the cartoon. With a cartoon there are usually two components .. the story idea/text and the picture/drawing.

Movies are even more complicated - they need a story , dialogs, acting & filming & production, music (itself consisting of two components, without which it couldn't be heard)

Before the possibility to duplicate a performance (meaning until this century) , the rights and income was quite easy:

• The composer wrote a tune, the publisher had it duplicated - and publisher and composer made money from the sale of the notation.
• The performers (musicians) were being paid for doing their work of making it audible at an event.
  • This also meant that to hear music, you either had to have a lot of money (to pay for your own performers) or learn to play very well yourself (which takes a lot of otherwise productive time plus you need to buy instruments) or hope that someone else is performing music and you can bum a free ride.

Then came the possibility to record music and in the course of this century the possibility to make "soundcarriers" cheaply, so they can be sold cheaply.This resulted in the basic concept of rights and incomes that still prevails today:

A composer writes a song, the publisher helps him to find a performer for the recording and someone else (a record company, to take the risk of manufacturing and selling copies of the recording.) The publisher and the composer get the money for the use of their composition from the record company. Under any international copyright law, the composer and his helper, the publisher, are seen as the main team of music creators and the owners of the music itself. They jointly own the copyright of a song and therefore the right to get paid when a composition is duplicated somehow (mechanical reproduction rights) or played for others somehow (in concerts or via radio - called the "performance" copyright, which can easily be confused with the performers rights).

The performing musicians's role is more limited and it took a while to really be respected in most countries. He is mainly considered a kind of manual worker - since his work is based on the creation by someone else. But of course it is obvious that a performing musician still has to be paid - and while he got paid by performing live in the past, he still has to get money when people are listening to him, even though today he usually is not there in the same room with them. With record sales this is quite easy and respected almost worldwide - the musician is being paid by the record company or producer which in turn is being paid by the people listening to the music after buying a record/CD (called "soundcarrier"). The rights to the recording - which as digital data (a bitstream that is sold on a CD, which is a kind of CD-ROM) is compound software embodying the composition (with it's rights) and the performance (and it's rights) are handled and marketed by the record company (or label) to the audience. The record company usually finances the recording and pays musicians (either with a fixed fee or with a percentage of sales). This is different then a record distributor - a company which does not own the rights to a recording, but only has a simple final right (given to it by a contract and usually only for a limited time) to resell the record in a part of the world. The rights to the recording are protected in most countries of the world for 40 to 50 years from the date of the recording - and both the musicians and the record company have to be make money from the use of the recording. Typically the record company collects the money and pays the musicians share to him.

It is a bit more complicated in the case of people enjoying the music by listening to a radio or TV-station. While everyone agrees that it is still the performance of the musician that enables people to listen to the composition (and that different performances make a difference to the enjoyment of listening) there are still quite a few countries where musicians do not get any money from radio broadcasts.
The biggest country is the USA, where radio and TV broadcasters insist on the idea that they help make the record known when they broadcast it - and with this help musicians and record companies to sell more records. The claim that therefore there is a strong symbiotic relationship and everyone profit the same by their broadcasting music, even if they do not pay the musicians and record companies.
The laws in most industrial countries do see this differently - mainly because it is not really clear wether a lot of radio broadcasts will help proportionally to sell records. There is a very strong case for these countries and against the current USA-laws:

• Radio stations usually do not mention which tune they play - let alone what "soundcarrier" it is from and where to get it.
• To get the name of the artist and the record mentioned, record companies usually have to advertise for records on big commercial radiostations - paying for this publicity that they supposedly get in exchange for the free use of their products
• Many commercial radio stations play music between 70 and 95 percent of the daily broadcasting time and therefore the main interest in listening to them (going on the assumption that people are not listening to a radio station to listen to advertising) is in the music they play
• Some radio stations even proudly advertise that the broadcast "the music you like" with no interruptions (again - not telling anyone what music it is) .. basically telling people that if they tune in to the station and accept the presence of some advertising, they are getting music for free.

With the latest copyright convention at the end of 1996 in Geneva it was more or less established, that even the USA now accepts this - but there is still no legislation and no collecting system in place to collect money for record companies and musicians.

The reason for both record companies and musicians being entitled to income from radio airplay lies in the fact that it is not only the musicians whos income is reduced from radio airplay, but also the record company, which makes it's profit from the sales of music on "soundcarriers".

• social interpretation of economic data
• Overview of the size of some countries CD markets
• Overview of publicly traded music companies
• MEBIS Homepage

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Last Updated: 12.December 1998