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Music Business Terminology
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A&R
Artists and Repertoire - A division of a record label responsible for talent scouting and overseeing artistic development. Example: An A&R manager may discover a new band at a live gig and help them develop their first album.
Mechanical Royalties
Royalties paid to songwriters and publishers for the reproduction of songs. Example: Every time a CD with a songwriter's music is sold, they earn mechanical royalties.
Sync License
A license that allows music to be synchronized with visual media such as films or advertisements. Example: A film production company obtaining rights to use a popular song as part of its movie soundtrack.
Advance
An upfront payment made to an artist by a record label, against future royalties. Example: A new artist might receive an advance of
360 Deal
A business relationship between an artist and a music company, where the company is involved in multiple facets of the artist's career, including recording, touring, and merchandise. Example: An artist signs a 360 deal that entitles the record label to a percentage of all their revenue streams.
Master Rights
The exclusive rights to a master recording, which includes the right to reproduce and distribute the recording. Example: The owner of the master rights to a hit song can license it for use in a commercial.
Performance Rights Organization (PRO)
Organizations that collect royalties on behalf of songwriters and publishers for the public performance of their music. Example: ASCAP and BMI are PROs that collect and distribute performance royalties when music is played on the radio.
Publishing Deal
An agreement between a songwriter and a music publisher where the publisher helps promote, license, and collect royalties for the songwriter's music. Example: A songwriter signs a publishing deal and the publisher helps place their songs on TV shows.
Record Label
A company responsible for producing, marketing, and distributing an artist's music. Example: Universal Music, Sony Music, and Warner Music Group are among the largest record labels in the industry.
Royalty
A payment made to rights holders (like songwriters, publishers, and recording artists) for the use of their music. Example: Radio stations pay royalties when they broadcast a musician's song.
Breakage
A deduction from the artist's royalty account for the potential loss of revenue due to physical media damage. Example: Historically, record labels would account for vinyl or CD breakage when calculating royalties.
Tour Support
Financial assistance provided by a record label to an artist for expenses associated with touring. Example: A label may provide tour support to cover the cost of transportation, accommodation, and stage production for a new artist's first tour.
Publishing Royalties
Earnings collected by songwriters and publishers for the use of a composition. Example: A songwriter receives publishing royalties when their song is covered by another artist.
Recoupment
The process by which a record label recovers the advance paid to an artist by deducting royalty payments. Example: If an artist received a
Option
In a record contract, the label's right to extend the agreement for additional recordings after the initial period. Example: A label might exercise an option to release a second album if the artist's first album performs well.
Demo
A sample recording made to demonstrate a musical composition's potential. Example: An artist sends a demo of their latest song to various record labels in hopes of securing a deal.
Independent Label
A record label that operates without the funding or influence of the major record labels. Example: Sub Pop is an independent label known for signing bands like Nirvana and Soundgarden before they became famous.
Distribution Deal
An agreement in which a distributor agrees to sell and distribute an artist's or label's music. Example: An independent artist might sign a distribution deal with a company that gets their music onto major streaming platforms.
Digital Rights Management (DRM)
Technology used to control the use of digital content and devices after sale. Example: DRM might restrict the number of devices that can play a purchased MP3 file.
Neighboring Rights
Rights related to the public performance or broadcast of a recorded piece of music. Example: When a song is played on the radio, neighboring rights ensure performers and record labels are also compensated, not just songwriters.
Catalog
The collection of music recordings and compositions owned or controlled by a music publisher or record label. Example: A record label's catalog may include all the albums and singles released by its signed artists over the years.
Payola
An illegal practice where record companies make covert payments to radio stations for broadcasting their records. Example: A label secretly paying a radio station to put their artist's new single into heavy rotation.
Producer
An individual who oversees the recording process, working closely with artists to shape the sound of the recorded music. Example: A famous music producer like Rick Rubin helping a band create their signature sound on an album.
SoundScan
A service that tracks the sales of music and music video products throughout the United States and Canada. Example: Billboard uses SoundScan data to compile its music charts.
Sync Fee
A fee that a music user pays to a rights holder to license a song for synchronization with visual media. Example: A TV show pays a sync fee to use a classic rock song during an episode.
Work for Hire
A legal term referring to a situation in which an artist or composer creates music specifically for a project owned by another entity. Example: A composer might create a film score on a work-for-hire basis, with the film company owning the rights.
Gold Record
An award given to an album or single that has sold a certain number of copies (500,000 units in the U.S.). Example: An artist's debut single goes gold after selling over half a million copies within a year.
Platinum Record
An award given to an album or single that has sold a certain number of copies (1 million units in the U.S.). Example: A hit album is certified platinum after it exceeds one million sales.
Cross-Collateralization
A clause in a contract that allows a company to use an artist's earnings from one project to cover the losses or advances of another project. Example: A record label uses profits from an artist's successful album to recoup expenses from a previous, less successful album.
Music Supervisor
A professional responsible for selecting and licensing music for film, television, and advertising. Example: A music supervisor works on a movie soundtrack, ensuring the chosen songs are stylistically fitting and cleared for use.
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