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Music Business Terminology

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A&R

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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.

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Mechanical Royalties

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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.

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Sync License

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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.

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Advance

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An upfront payment made to an artist by a record label, against future royalties. Example: A new artist might receive an advance of 50,000whensigningtoalabel,whichisthenrecoupedfromtheirearnings.50,000 when signing to a label, which is then recouped from their earnings.

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360 Deal

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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.

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Master Rights

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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.

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Performance Rights Organization (PRO)

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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.

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Publishing Deal

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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.

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Record Label

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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.

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Royalty

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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.

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Breakage

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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.

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Tour Support

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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.

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Publishing Royalties

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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.

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Recoupment

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The process by which a record label recovers the advance paid to an artist by deducting royalty payments. Example: If an artist received a 100,000advance,theirroyaltiesarewithhelduntilthisamountisrecoupedbythelabel.100,000 advance, their royalties are withheld until this amount is recouped by the label.

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Option

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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.

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Demo

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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.

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Independent Label

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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.

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Distribution Deal

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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.

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Digital Rights Management (DRM)

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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.

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Neighboring Rights

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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.

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Catalog

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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.

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Payola

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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.

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Producer

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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.

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SoundScan

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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.

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Sync Fee

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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.

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Work for Hire

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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.

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Gold Record

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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.

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Platinum Record

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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.

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Cross-Collateralization

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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.

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Music Supervisor

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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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