Welcome to Music Matters Podcast with Darryl Craig Harris. Talking about all things music. This is a leveraged artist, music business insiders, and more. Kim Kapo, how are you doing today? I'm doing well, Darryl, thanks. So you're an attorney, but you're also a professor at Loyola University in New Orleans. There you're teaching basically law related to music and media. And you just participated as a lead attorney in a very important case. Let's talk about that because it has ramifications for musicians publishing rights and all that kind of stuff. So let's get into that. Yeah, absolutely. Well, first things for you to have to me and I appreciate being on. This case involved something of what may seem like an esoteric provision of the Copyright Act that has to do with what's called termination rights. Termination rights are a congressionally provided mechanism by which authors or their affairs can recapture copyrights in a previously been transferred away. And in one iteration or another, these rights have been around since the nation's first copyright act in 1790. Congress has been providing authors in their air as the ability to reclaim copyright. And the reason is pretty simple and it's, it's, it's recognized that typically an author is transferring away. Is there her rights at a time when the value of that copyright is not known or simply not noble? And so that on top of the bargaining power disparities that I think we most, you know, we recognize as bargaining power disparities between major, you know, labels and publishers and, and individual creators have prompted Congress to be fairly protective of authors and, and have provided that mechanism by which they can get their rights back. The issue in this case was an industry practice that had gone on for a long time where after an author or their airs exercise their recapture rights or their termination rights, the prior owner would, in this case, a mus of publisher would take the position that those rights were limited to the United States. In other words, they would maintain the right to exploit the work everywhere in the world except the United States and the author of the airs only received back the right to exploit the work in the United States. And so it would have the effect of splitting up the copyright ownership based on territory. Right based on region. Yeah, based on region. So you know, I transferred, when I transferred to my copyright, I gave you the right to put it throughout the world. And now when I get it back, it's been splintered up until these different territory, territory, you know, pieces. And ultimately what it did is provided a disincentive or that, that industry practice provided a disincentive to terminate it all because what the labels or the publishers could do is essentially say, well, you could terminate, but you're going to be stuck under the old deal for, you know, international revenues and rights. So why don't we just give you a little bit better of a deal all around, right? And then you don't agree not to terminate these rights. And ultimately, from a financial perspective, oftentimes, I've made a lot of sense. And also, I mean, let's be honest, litigation is expensive. And so if they can make it so it's not worth your while to pursue a claim, then you won't pursue it. And that's essentially an R view what's happened over the past 50 years is they've been smart. And the industry's been smart about making it not worth your time to, or money to pursue a claim, but zero, you know, my client, zero vetter was unwilling to accept that premise just on principle alone. Yeah. And it's the inequity is obviously been the issue because, you know, attorneys, while actually labels have several attorneys typically, they have, you would think the major labels have a lot of money. They know how to shut you down if you want to go after them. So like you mentioned, oftentimes, I'll just make a deal or sometimes it just won't make a deal. I'll just make you go after them. Has that been more typically the case or what's been your experience with that? Yeah. I mean, I think that we have to separate it between, you know, publishers and record labels in this instance because they they've approached historically, they've approached termination rights a little bit differently. In fact, you know, the company line with most record labels is that these recordings are not eligible for termination in the first place because there's what's called a work for higher exception to termination rules. And so if a work was one that was created for higher, then you don't have any termination rights. And so that that copyright is perpetually owned by whomever you created it for. And that the record labels have historically taken a position that the sound recording is created by their recording artists are works for higher. But the publishers have never really taken that approach. And so whereas the labels might push you to fight a little bit harder, the publishers will most frequently just make you a deal. And I'll say that some of this is naturally becoming less important in our industry because ownership deals are becoming less frequent. What since I started practicing, you know, 15, well, more than 15 years ago now and in that time, I've seen the industry shift tremendously from, you know, almost purely ownership based deals at the at the major label level to a lot of license based deals now. And when you have a license deal, you don't run into these same sort of termination issues because the the expiration of the license will naturally return for the author or whomever the errors are the right to exploit that work. Same goes in the publishing world, you know, you had publishers like Cobalt and downtown and other administrative publishers come in in the past two decades and say, we aren't going to take ownership over your songs, copyright. We just want to administer it for a certain period of time. And so in some ways, these deals are becoming more of a relic, but they're very important for, you know, people in the 70s, 80s, 90s. Legacy artists is where that's where that really really had some with them, right? Absolutely. And there's nothing to say that that ownership deals won't come back and vote at some point. And in some of the deals we do are still straight ownership deals and not everybody's going to get a license basis. And so these termination provisions are still very important, not just a legacy aspect, but also to folks who are doing copyright transfers, you know, even today. Yeah. And it's, I mean, explain the difference if there is a difference between publishing and copyright because that's an area that a lot of people have confusion about. They don't understand it. There was a difference. Talk about that a little bit for artists that are out there. Yeah, I mean, sometimes the problem is we use the publishing as shorthand for the control, ownership and control of the musical work copyright. And every most artists out there know that there are two separate copyrights and, you know, are recording. There's a recording itself and then there's the underlying composition or musical work that's embodied on that recording. And they receive separate copyright protection to the law. We have started to refer or you know, we've commonly referred to the musical work copyright as the publishing, but really what we're saying is ownership and control of the musical work. So I often encounter songwriters and creators who have this misconception that there's like a quote songwriter share or writer share of the copyright and a quote publisher share. That's just not correct. The reason that people think that is pretty natural, it's because they're familiar with the split of revenue that occurs at the PROL. So ask out in the amount and see, say, can the store really split revenue into writer shares and publisher shares? But that doesn't mean that a copyright is split up in that way. There's only one copyright. And so if you are taking 50% of your 50% writer of that song and you've got 50% of the entire copyright, whether it's publishing or writers, it's just not helpful to think of it in those terms. Because too often people think, oh, well, I'm keeping my writers share, but I'm transferring my publishing. That just doesn't make any sense. It really stems from the way that PROs distribute revenues. So I always encourage creators to think of the songs copyright as a unitary thing. How are you going to split it up? Don't think about this share for this role or that share for that role. How are you going to split up this pie? And that's what I'm encouraged to do. But yeah, that's the sort of the difference there. Yeah. And I ask that question because there's a lot of, as we know, a lot of amateur musician attorneys out there. And it creates a lot of confusion. People have, they think they know, they think they know how to protect their songs, how to protect their music properly. And they actually don't. What? Speaking from an attorney, a music attorney's perspective, what is the best way to protect your work from, well, I guess protect a copyright, but obviously from other people also stealing your work. The best way to do that. Yeah, well, one of the great things about our copyright law is that it protects the work from the moment it's fixed and attangible media. If you do not need to file anything with the government in order to have copyright protection, you do have copyright protection from the moment you create that. Now when it comes to enforcing that copyright in our, in the United States, we are somewhat unique in that we require the work to be registered with the copyright office in order to enforce it in federal court. So a lot of times we can take pre litigation enforcement action without a registration. But if it gets to the point where you need to enforce it in federal court, then you need to have a registration or to do so. And less do you think that, oh, you can just register it, you know, shortly before you go into court and file a claim, the law provides you with sort of carrots and sticks, right? So the stick is you can't get into or to enforce it unless you have a registration with a carrot side of that is if you have registered the work prior to the infringement commencing, then you can avail yourself of special damages and including attorney's fees and what's called statutory damages. The way is you don't have to prove how much you are actually harmed, the law just provides you. So think of it as like a liquidated damage school. So where you know, you're just going to get a certain amount and that the amount that you would get in range anywhere from $750 to $30,000 per infringement. And if it was willful, then it can go up to $150,000 per infringement. So you know, that's a really large negotiating stick when you are pursuing somebody for infringement claim. The thought that the potential defendant could be liable for statutory damages in the attorney's fees usually brings people to the settlement table fairly quickly. On the other hand, if you don't have a registration at the time that the infringement commenced, you're more likely to get pushed back and sort of like a game of chicken, you know, kind of test the waters, see if somebody's actually going to pursue a claim. So enforcement and protection are two different things. But in general, I think it's a good idea to register your copyrights. It's not, you know, it's not that expensive to do. And it's something that most people can do on their own. And so if you have the time and the resources to do it, I would certainly say to register and register it early so that if your work is misappropriated, you have a real, a cause of action with some real teeth. And you find, well, actually a big part of the legacy artists, I've actually worked, I'm a musician, I've worked with a lot of legacy artists. And a big issue for them is streaming, streaming rights and licensing because with licensing, that oftentimes a really popular song will show up in films. And that, let's talk about that for legacy artists because that thing, that's kind of part of the case that you just did. And talk about the plaintiffs, I think Cyril Vetter was the plaintiff and it was a song called Double Shot that you took on. Talk about that in terms of really just the licensing and then be able to recover funds once they get the publishing or copyright back. Yeah, absolutely. And that's kind of how the dispute started is, as you point out, there was a sync license opportunity that was presented for this song. And the scope of that sync license was worldwide. In other words, the licensing in that case wanted, I'm sorry, the license store in that case, wanted to have the right to exploit the work throughout the entire world as a territory. The work was double shot was going to be used or it was used in a television show called Moonlighting, which was actually from the 80s, but they wanted to put it on streaming services. They did not have any geographical limitation. Right. Right. And so they needed a worldwide license in order to do that. And my client attempted to license the work throughout the world because this was post termination. This was after he had recaptured his rights. And the prior publisher stepped in to say, no, we have the right to license it. You have to do ABC for every territory other than the United States. You only have the right to license it to ABC for the United States. And that's what kind of got them, the lawsuit going. But to your question, in general, I always like to say that sync licensing is the most democratic form of revenue that a creator has an opportunity to earn. Because a lot of these royalty streams, whether it be on the music publishing side or on the recording side, don't amount to much unless you got a significant level of popularity. So whether it was songwriter royalties in the form of mechanical royalties or performance royalties, unless you're getting streamed or unless you're getting played on commercial like radio, that the performance royalties aren't going to amount to much. Unless you're streaming heavily, then your mechanical royalties aren't going to amount too much. And the same goes for record royalties when you're unless you are either selling a ton of physical product or getting a massing significant numbers of monthly listeners or streams, it's just not enough to maintain a living. So sync synchronization opportunities where you use the song and the recording in an audio visual work, most frequently it would be television or film or commercial of some sort. Of course, there are also nowadays there's sort of smaller sync synchronization opportunities on TikTok, Instagram, Facebook, etc. But the large money, the big money, the big paychecks tend to come from film and television and advertisements. Well, you don't have to be a non-quantitive, you don't have to be the most popular artist in the world to get a big check. In fact, there are plenty of independent artists who make six figures just on sync synchronization opportunities. And so that is something that's unique. So a lot of people focus on boosting their monthly streams and I understand why. I mean, that is indicative of a broad fan base and you want to have a broad fan base because you want your art, your music to reach the most years possible. But in terms of revenue, in terms of looking for ways to diversify that revenue stream, sync synchronization is a bit... Yeah, and it's something that, again, especially with legacy artists where they're not having hits, but they had big hits way back when they're not selling records currently. But that licensing thing is... And I work with the turtles. I worked with the champs, the group of the tequila. I worked with a bunch of those artists and there was always a bad story, almost always, with them, with their publishing and how it came down with the record deals. So it's so important for people to educate themselves in this area and you release music. And of course, we all hope that it's a hit. You never know where that song is going to end up. So you need to prepare for the possibility that, yeah, maybe it's a hit. And then down the road, you want to protect yourself from bad ramifications if you don't take care of the front end of it. One question I wanted to ask because I know you also work with a lot of artists. And we see a lot of information lately about people selling their catalogs. And we've seen some huge deals, huge financial deals. Can you talk about that and why artists do that? Well, what's the reason? Typically, I know there's a bunch of different reasons, but why they would sell their catalog? Yeah, I mean, the catalog sale market has matured. It is, I think a lot of the big catalogs have been sold. But the reason why those artists or those songwriters would do it is because the valuation that they're receiving, right? The way that those deals work is they typically look at the average of, let's say, the past three to five years of income. And then they apply a multiple to that number. And that multiple varies pretty significantly, depending on a number of factors, which kind of gets into the weeds. But let's just say for the sake of argument that it, that multiple can be anywhere from seven to 20, right? And so you take the average of the last three to five years earnings and you'd multiply it by, let's say, 15. And to an artist or a songwriter, having that large sum of money and deploying that capital elsewhere, perhaps into other investments or what have you, may be more worthwhile to them. Then receiving, just check after check after check. And especially if you're still creating and you're confident in your new material, and selling off your catalog and then continuing to create, that would, ideally give you consistent revenue moving forward as well. We are seeing more partial catalog sales, where, or partial royalty sales, so where you're not selling 100% of your copyright or 100% of your royalty stream. So you kind of get the best of both worlds. Hopefully you can get a high valuation, but also maintain some revenue that's coming in the door from that royalty stream. So if something, these companies, they're pretty good at extracting value out of, particularly older catalogs. You look at the Neil Diamond movie. I mean, they're really good at coming up with new ways to figure out how to revitalize a catalog or to turn over money where there wasn't any. And so if you've maintained a portion of your royalty stream or your copyright, then you can be the beneficiary of that work too. And so I would say that those are becoming more common, but that's of course going to probably bring the valuation number, you know, or the multiple down, the less that you're transferring over. But that's the essential reads all financial. You know, that's why. It's because they feel like there's more value in the upfront money now than there is in waiting around for that. Money there. And do you find also to that maybe sometimes their concern is for their family not having to deal with all that when they're gone? And it's just a set, it's just settled. Yeah, absolutely. Maybe I mean, I, we worked with a composer recently. It was worried about just that. Had a long career and continues to have a career as a composer. But wanted to be able to provide for his family in a way that was pretty simple and uncomplicated. And there's nothing like a big check in the bank to provide in a way that's not, you know, complicated. And then they manage that money well, then you know, you can live off the interest. Right? Like that's kind of the idea. If that money is deployed in ways that can generate more revenue. But I think you're right about that. It can be about providing for, you know, your family in a way that doesn't involve having to track royalty statements. And I've got those clients too, where they're, you know, where their, their parent was a, you know, maybe a record producer and they come to us and they're, they've got just, I mean, hundreds of contracts that they're trying to sort through to make sure that they're still being, you know, they're being accounted to correctly. Right. I mean, that's a real pain. Yeah. So it's just, it's like overwhelming. And maybe they don't really understand the music business. They don't have the money to go out and hire a bunch of attorneys and fight labels. And it's, it's, yeah, I think I think that's, and that's been my case, where I, when I've read into these guys and talked about them and it just gets overwhelming. And they're kind of thinking, well, how are our family going to deal with this? They want to make sure they're protected. And the, the music's protected. They've already got their money out. So they kind of, that takes a big weight off of them, trying to chase down royalties, right? Yeah. Yeah. Yeah. I think that's right. But it, it becomes somebody else's problem that she's telling the truth. Yeah. Um, what's, uh, because obviously you're very experienced. You, not only from, um, just representing, uh, artists, but just in, as being an attorney, what is some of the, a couple of really big points for a younger artists and younger musicians that you like to tell, especially when you're teaching in class, what are some bullet points that you really think they need to pay attention to when they're releasing their music, uh, and to protect their music? Yeah. I mean, one is, um, don't pay for streams. Um, there's way too many, kind of, uh, opportunities that are that are put in front of independent artists these days that promise to boost your, your stream counts because that's sort of the, the currency these days is, as you look at, you know, monthly listeners or stream counts or whatever. And, um, if somebody's trying to catch the attention of a label or something, you know, they, they, they want to make sure that their stream counts look good. And so they'll, uh, boost their numbers on social media or streams. And, and that sort of artificial streaming is, is really being cracked down on. Um, and so that's, you can get your entire profile wiped out overnight. Um, if your distributor catches you, you know, inflating your streams or purchasing, uh, streams in that manner, so that's, that's one, you know, try to, don't try for, you know, overnight success in that regard. It does, this is a, this is a business and it, it takes time. You know, you don't have true overnight successes. It, the people who you think are overnight success, and said, have been putting in countless hours behind the scenes, um, where, you know, they're, they're striving for success. So, take the long view is one, um, my law partner always likes to stay follow your momentum. Um, and I think that there's an incredible wisdom in that. If you see the direction that things are working, um, or whatever reason and, and look, I'm an artist myself. I started out playing music before I ever became an attorney. So I have a certain appreciation for this. But sometimes, like people say, Oh, well, you know, I want to go in a different direction. Our, our taste change, or we don't want to be boxed in to a particular way of that people perceive us. And so we try and fight against that when really, uh, there's some real value in just following that momentum, uh, and not fighting against it, right? So like swimming with the tide as against as opposed to that's it. And I think that there's some truth of that. Find out what works and when it's working, run with it. And, but then by the same token, don't, uh, you know, don't be so blind to realize when that momentum shifts. Like, it, what it would, you do to get you one place will not necessarily be the same thing that gets you to another. And so, you know, be versatile, be flexible, but, but followed that momentum. Um, and lastly, I think to be authentic. Uh, I think authenticity in artists has always been value, but I think it's going to become all the more so valued. Um, as we move into an era of artificial intelligence and, um, where you've got music that is being created by bots. I think people want a real connection with their artist, with the artists that they follow. And being your authentic self, um, is the only way to do that. Uh, anything else is going to be a time bomb, you know, if you are not being true to your authentic self, then I think that you're, you're not in it for a career. You may be in it for a minute, but it's not going to last. Yeah, I think that that's 100% true. And ultimately, if you want, if you're going to be successful, you want it to be because you are being yourself. And, and that's how you get authentic long lasting fans, I think. Um, Tim, a lot of people know how they can reach you if they want to find out more information. Um, and also I, you mentioned you're an artist. If you have an artist, social media thing, I'd love to check that out as well. And yeah, it's been a long time since I've been, uh, been missing music, but that's all good. And, uh, even if I did, I would try and bury it somewhere. Um, uh, you can reach us at Wellscapil.com. Uh, Wellscapil is, is, is our law firm. Um, I love our nurse based out of Chicago. We've got sort of the middle of the country, you know, a lockdown, although we were practices national and international and scope. We've chosen to make careers sort of in the middle of the country outside of the, uh, the coastal music, three epicenter. So Wellscapil.com, uh, you can get in touch with us that way. All right. Awesome. And thank you so much for the information. I actually, you mentioned AI and, and that I would ask you now, but that's such a big topic. And I'd actually maybe we can read, we visit this in a month and talk about that specifically and have another conversation with you because I know that's, I'm sure you're getting a ton of questions about that right now. These days, and inquiries about AI and how that's going to affect artists. You're absolutely right. It's a message, but it's a massive door to open. Yeah. And again, there's a lot of amateur attorneys out there, uh, thinking that they know what the rules are and are not. So I think it would be important to talk, talk about that. So maybe we'll do that again down the road. I'd be happy to. Awesome. Thank you so much, Tim. Have a great day in New Orleans as your end. Uh, I, I'm jealous of all the food you have down there. I'm visiting and we'll, we'll save some, we'll save a play for you. I definitely will. Thanks so much. Sorry. Take care. Bye.
