Master Ownership & Copyright in the Music Industry

Do artists have the right to own their ‘masters’ back; and if so, when can they exercise that right? When does the same recording have two copyrights - the original lying with the artist & the re-recording with the producer? Read this article for answers.

Thu Jun 16 2022 | Business Law | Comments (0)

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Taylor Swift is one of the most successful music artists in history, and an enormous superstar of our generation. Her music has created a legion of loyal fans and an immeasurable impact on the industry. However, her feud with her former record label company and a music industry mogul – Scooter Braun – has created waves in the industry regarding the extent of music rights of artists. It has been a fascinating copyright dispute that has posed a question to many artists about their rights and obligations in the industry. The core of the dispute lies with the ownership of master rights of the songs.

Although the Taylor Swift case has had little to no impact on the Indian music industry, this article attempts to examine the re-recording route in the Indian industry and its implications in light of the factual matrix of the case.

  1. What are Master Rights?

    Master right is derived from the phrase ‘master record’ – which is understood as an original sound recording that is produced by a music studio. A person only owns the master rights if it has been produced and recorded of their own accord. In most cases, artists sign contracts with a producer (company or individual), who produces the master recording for the desired song(s). If produced by a producer, the artist would need the approval of the producer to release/sell the song. The artist is not in complete control of the copyright of the song; but only certain elements of it.
  1. Case Background

    Following is a background to the case and the issue at hand.

    Facts: A 15-year-old, Taylor Swift had signed a contract with Big Machine Label Group (BMLG) till 2018, which gave them all the rights over her ‘master rights’ in all her albums for the length of the contract, in exchange for promotion of her music and consideration (royalties). Master recordings are crucial because they are the original recordings of the music that can later be licensed out by labels for various uses, such as advertisements and, thus, are primary revenue for music labels.

    The Conflict: After her rise to fame, Swift tried to re-negotiate the deal with BMLG to gain full control of her songs, including the master rights. This was unsuccessful and led to further complications when BMLG was acquired by music industry mogul, Scooter Braun and his company - Ithaca Holdings LLC. Swift accused Braun of imposing unreasonable restrictions on the use of her music catalogue and concerts and other events, as he now controlled her master rights, and also mentioned how Braun refused to re-negotiate any terms. Subsequently, Swift decided to take the radical and long step of re-recording her first six albums to control the master rights. Later, Braun sold her master recordings to Shamrock Holdings for an estimated USD 300 million. Swift’s contract with BMLG stipulated that she cannot re-record her music until two years after the contract expires or five years after the commercial release of any record. Her contract with BMLG expired in 2018, and thus Swift was free to begin recording her albums from 2020 onwards.
  1. What worked in Taylor Swift’s favour?

    Around the world, certain Intellectual Property (IP) principles are the same. Copyright in songs, for instance, lies in different components/elements. Copyright lies in the different musical components, i.e., lyrics, melodies, compositions, performance, editing and, simultaneously, in the original sound recording, which is being referred to as ‘masters’ here. Swift used copyright in her musical components to her advantage.
  • Composer of own work: Since she was the lyricist and composer of her own works, she already owned the copyright. Thus, Taylor Swift was the copyright-holder over the ‘musical work’ element of her songs. This is not always the case with artists, or in general. Often, you have a different lyricist, different composer, and a different performer/singer, leading to the creation of individual copyrights in each element depending on the person’s contribution to the work.

  • US Copyright Act: The question of infringement for Swift while re-recording did not arise because, according to Section 114(b) of the U.S. Copyright Act, she is entitled to re-create a previous song or sound recording as long as it is done with a distinguishably different new recording.

  • Moral Rights: What Taylor Swift used in her favour was her ‘moral rights’ as the author/creator of the work; moral rights are inalienable and cannot be transferred to anyone except the creator of the work. Thus, music contracts often recognize that certain moral rights and copyright in lyrics and ‘music’ of the song will forever remain with the artist. The contract Swift signed when she was 15 is a common occurrence for artists looking to launch their careers. This hands the copyright to recording companies for the period of the contract. Artists often receive cash/royalties in return, depending on the success of their music.
  1. Re-recording musical work: India

    In India, the Indian Copyright Act, 1957 (the “Act”) governs all matters related to copyright. Section 14 of the Act deals with the “economic rights” enjoyed by the copyright holder. Economic rights are rights that are exclusive to the copyright owner and which can be exploited for commercial gain out of the work they control. Re-recording of a master recording is essentially replicating a major portion of the original sound recording with certain modifications. It can also be an exact copy if the circumstances permit. Section 14(e) of the Act provides the right to the copyright holder to complete a re-recording of the sound recording with full legality. This means that the producer, be it a music label or an individual, holds copyright over the re-recorded song which originally may have been made for a cinematograph film, for instance.

    Now let us understand the two scenarios of re-recording in the Indian context and its connection with the Taylor Swift factual matrix. The two scenarios are as follows:
  • When does the producer have all rights?

    Firstly, when a song is written, composed, and sung specifically for a film. The artists responsible for the song have been a paid a consideration for their contributions in creating the sound recording. Thus, all economic rights are now assigned to the producer who can use it for commercial gain. The producer now owns the copyright in all aspects of the musical and literary works related to the song. This also means that the producer has the legal power to remake the original sound recording in any way he so pleases. In such a scenario, if the artists who originally created the sound recording wish to re-record their work(s), they have to take the permission of the producer who holds the copyright in the work.
  • When does the artist have all rights?

    Secondly, when the song is independently made by the artist, i.e., the composition, lyrics, and sound recording. In this, the artist will also hold the master rights or sound recording rights and all the other underlying rights within the song, thereby empowering the artist to create a new version of the sound recording, if they so wish. This also ties up with Section 57 of the Act that secures “moral rights” of artists. Since they created every aspect of their work independently, they hold the right to re-record their master recording as they wish. This is the aspect that worked in Taylor Swift’s case and will similarly work for any Indian artist in the Indian music industry as the principle of moral rights is the same across the globe.
  • When are there two copyrights – one held by the artist & the other by a producer?

    If a film producer approaches an artist for the creation of a new version of the original sound recording and such permission is granted, then the producer may own the copyright of the new master or sound recording – even though it was derived from the original sound recording over which the artist had complete control. This will create two copyrights – the original lying with the artist and the re-recording with the producer.
  1. What is different in the Taylor Swift case?

    By re-recording her songs, Taylor Swift has created a new copyright in her works, including the ‘master rights’ and avoided any dispute, litigation or commercial negotiations. It is a radical and long process, but effective, nonetheless. Any prevalent artist before, especially at the peak of their career, has not done this. By gaining complete control over her music, Swift has ensured that she is the only one who can license her music to streaming platforms. Usually, it is the record companies who own the master rights and license the rights of an artist’s music to streaming platforms. Swift has thereby ensured that any gains/profits from her work is solely her own and that no individual or company can reap the benefits of her work, be it the master rights or any other element of her music. All Swift had to be wary of was the ‘original production clause’ in her BMLG contract. Experts have pointed that as long as she makes her re-records at least slightly distinguishable from her original music, there should be no legal issue.
  1. Impact of the case on the music industry

    An artist has no way of analyzing the potential success of their work and, thus, negotiating a favourable contract is often unfeasible in this regard. Therefore, they often end up with less consideration than what their work deserves. For the recording label/company, their main source of income is the artists they sign up and their commercial success. Swift’s case may have created a potential impact on the industry in the following manner:
  • Bargaining Chip: Taylor Swift has showcased how re-recordings can be a success too – thanks to her own hard work and the loyalty of her vast fanbase, who ensured that they streamed and downloaded the re-recorded version of Swift’s songs. Now, this case can be used as a bargaining chip in most contractual agreements, especially if an artist does not get what they believe their work deserves; the threat of re-recording music looms large over recording labels. A label would definitely consider negotiating a balanced contract rather than risk losing the value of their recorded works in the event of a re-record, as has happened in this case.

  • Public Awareness: The publicity of Swift’s case has made us all aware that music artists often do not reap the benefits of their hard and quality work. When they sign contracts at a young age to kickstart their careers, contracts are one-sided and arbitrary; artists fail to analyse its future impact. This case has, to an extent, helped the general public understand how the industry works and created much-needed awareness about the industry practices.

  • Contractual Awareness: Music artists must be aware of what they are singing. Constantly question the terms of your contract, even at a young age when one is just starting out – have someone elder and experienced in the industry, if this is the case. Try to build a contract that rewards you, as the creator of the work, as much as possible and not your recording label. Utilize any option to buy back, in this case the master rights, at any point in the future. Ensure that no agreement waives the ‘moral rights’, thereby rending any assignment or transfer of certain rights ineffective.

Conclusion

The Taylor Swift case has increased the scrutiny on music contracts and the control recording labels wrestle on their clients. It is imperative to completely comprehend the terms of a contract before committing to ensure that the recording labels do not reap the benefits of the commercial success of an artist completely.

Regardless of any contract, an artist will always have an element of control on their work due to the ‘moral rights’ that are inherent in each work and IP law. The key is to be aware of such rights and exercise them, if needed.  Taylor Swift was aware and took a drastic, yet effective step to gain back complete control of her music. This is a lesson for all other artists who, perhaps unknowingly, are puppets to their recording labels. As it did for Taylor Swift, the moral rights under Section 57 of the Indian Copyright Act would also protect any Indian music artist who wishes to re-record their work – provided that, like Taylor Swift, they are creators of their own musical work in every important element, i.e., composition, lyrics, sound recording etc. These moral rights are inalienable.

Copyright 2022 – Helpline Law

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