The Waterfront Partnership

Case Studies

Digital Media & Entertainment Case Studies

Music 

"I want to set up my own publishing company but do not have the resources to administer the royalties - can another publisher help me administer the royalties to the songwriters?"

DJ Utilo found The Waterfront Partnership on the internet. He had been in the music industry for some time and was quite well known on the Hip Hop scene through playing at club nights around the world. He had his own studio and had written and recorded a lot of his own music. He also allowed his studio to be used by other artists and had various verbal agreements with them as to what would happen if any of their songs were released. At this stage, DJ Utilo was looking to make the most of his experience and set up by starting a record label and publishing company.

As DJ Utilo was based in Manchester, it wasn't really practical for him to come into our offices, so we had a series of conference calls about how to set up the business. These included details of how to set up his company and how the different rights in music are exploited by publishers and record companies.

Having had a couple of single song deals with record companies in the past, DJ Utilo knew something about how these sorts of contracts worked. However, he didn't really know anything about publishing, but he still wanted to keep this in house as much as possible. We advised him that administering royalties can be a complicated and time-consuming business and suggested that he found an established publisher who would administer these for him. DJ Utilo thought this was a good plan and, after a few weeks of looking for the right partner, decided to go with Prospective Music Publishing.

Relieved that he wouldn't have to learn all about publishing himself, DJ Utilo forwarded a contract that had been sent to him by Prospective. As far as he was aware it seemed quite reasonable, but as soon as we looked at it we could see that, as we had expected, this contract was drafted very much in Prospective's favour. There was nothing to say that Prospective had to get DJ Utilo's approval for any use of the published music, which means that it could have been used for anything from a TV commercial to a porn film without his say so. Additionally, there was nothing to say that he would get a share of any 'blackbox' income that they received (i.e. income that can't be allocated to a specific song), so they would have got to keep this for themselves as an extra bonus.

We explained our comments to DJ Utilo and he was happy for us to feed these back to Prospective. Prospective were friendly, but wouldn't agree all of our points, but after a few short rounds of negotiation we were able to come to a position that both parties were happy with and very soon the deal was signed!

Once the admin deal in place, we also put together a publishing agreement for DJ Utilo to use with his artists (in their role as composers) - this was along broadly similar lines as the admin deal, to ensure that he wasn't promising anything to his artists that he couldn't deliver.

DJ Utilo was very keen to be fair to his artists. We gave him a bit of background info about how his deals could be structured and quite soon he needed to put in place an agreement with the first artist. In order to save costs, we drafted this agreement so that he could use it both with this artist and with other artists in the future with only minor amendments.

Having signed up a couple of acts, DJ Utilo is now in the position of needing to get contracts with the people who will help him make money from the music his artists create. We have therefore advised on contracts relating to all manner of exploitation from physical distribution, to digital download, to TV uses and ringtones. We have also helped him ensure that all samples are properly cleared prior to release.

"I have just set-up my own digital download store and have been approached by a distributor of digital entertainment content. What are the main issues I should be aware of?"

Freddy was a massive house music fan and decided to set up his own download site called FabHouseMusic.com. When he came to us he was already up and running, had registered with the MCPS and had quite a few agreements (in one form or another) with artists and some independent publishers.

The business was going well, but was still really a hobby and Freddy had decided that he wanted to move it to the next level. This meant approaching much bigger labels.

Freddy arranged a meeting with The Waterfront Partnership at a leading music industry event. He explained that he was about to go into negotiations with Big Digital, one of the largest distributors of digital entertainment content and that he would like some help with getting the deal done and the contract executed.

Separate from the Big Digital deal, we brought another potential issue to Freddy's attention. His agreements with content owners to date had been very much ad hoc. Not all the deals were the same, not all of them were in writing and with some of the artists he hadn't confirmed that they definitely had all the necessary rights to use the music. There was a definite area of risk here!

When Freddy received the draft contract from Big Digital, he sent it over to us for review. We went through it and commented on a few matters that we didn't think worked for him, for instance Big Digital's agreement said that Freddy had to:

• ensure that tracks would only be provided to individuals (as opposed to businesses) - it would be impossible for Freddy to ensure that this is the case, although he was happy to include a provision to this effect in his own contract with users;
• verify that every user was located in the UK - again, this was impossible. The best Freddy could do was to ensure that the user provided a UK post code and used a UK credit or debit card.

There were also a few matters in respect of which Big Digital were not treating Freddy fairly. For example, the agreement gave them the right to audit his books and records but did not give him the right to audit theirs, even though it was they who would be collecting and calculating the revenues for the use of the music they were licensing.

This deal was obviously important for Freddy, and we understand how the major's negotiate, so we were very careful only to suggest changes that were really vital to protect Freddy's interests. Consequently, when we went with Freddy to meet with Big Digital they responded very well to our comments and agreed to nearly all of them. This approach was much more cost effective for Freddy than a drawn out negotiation.

Once the deal with Big Digital was done and dusted, Freddy turned his attention to bringing the artists and smaller labels into line. We drafted a 'generic' agreement for him to use with all the unsigned bands and for smaller labels who don't have their own agreement. Freddy tells us that this is making life a lot easier!

 "Are £1million record deals really too good to be true?"

Sally (the Singer), Gary (the Guitarist), Barry (the Bass player) and Dolly (the Drummer) (aka "MayDay"), had been playing and writing music together since school. They had recently played some gigs in a couple of the smaller London venues and had got talking to Ted, the A&R guy from Too Good To Be True Records, who said that he liked their music and "why don't we meet up tomorrow for lunch..?"

The next day, MayDay were totally bowled over when Ted said that he could get them a deal with an advance of £1 million! He gave them a contract to sign, which he said was 'kept short and sweet so it was easy to understand'. He pointed to the bit where the money was written in saying 'this is really the only important bit anyway!'

MayDay were so excited that they nearly signed it there and then, but Barry noticed something about them having taken legal advice. He asked Ted about this and he said 'we just have to put that in the contract, but no-one ever really bothers'. Barry thought that this was a bit weird and decided to call his brother, Billy, who manages a couple of bands and knows a bit about this kind of thing. Billy told Barry that they should definitely get legal advice 'Just think about what happened to George Michael and Prince. You don't want to be tied into some sh*t deal forever!'. He'd heard of the Waterfront Partnership through a friend, and suggested that MayDay give us a call.

We arranged for MayDay to come in for a free, no-obligation chat the following day. We asked Barry to send us a copy of the contract from Too Good To Be True in advance so that we could have a look through it prior to the meeting.

When MayDay arrived, we spent some time talking about what they really wanted (in short, for their music to do well!) and what their thoughts were about the deal they had been offered. They said they were happy with the money but needed to know more about what the contract tied them into.

Billy also came along, as he had agreed to manage the band.

Having read through Too Good To Be True's contract, we could immediately see that there were some problems. Amongst other things, the wording over what rights the band were giving away was unclear and the deal was for 8 albums, with the advance being split between all of these. To make matters worse, MayDay could not get out of this deal until all 8 albums had been released, something over which they had no control because Too Good To Be True didn't have any obligation to actually release anything!

A million pounds may sound like a lot, but when it's intended to pay for 8 albums, and could possibly be the only money that the 4 band members could earn from making music for the rest of their lives, it's actually not very much!! We talked through the problems with the band and agreed that we would draft a quick email summarising the points of concern, which Billy could forward to the label for their comments.

We also discussed putting in place two other agreements, one between Billy and the band, to govern the relationship between the band and its manager and one between all the band members themselves. The band agreed that they should think more about these.

The bad news was that Too Good To Be True didn't like the fact that MayDay had taken legal advice and now weren't happy to sign their lives away. In fact, they were so unhappy that they wouldn't agree to make any changes to their contract and told Billy to tell MayDay to 'stick it' in no uncertain terms...

The good news was that a few days later Billy bumped into Andy from All Above Board Records at another gig. Andy was very keen to hear the band's material and before long there was another deal on the table for MayDay. This deal was much more realistic than Too Good To Be True's offer - initially just to record a single and then to see how it went from there.

Although MayDay were now more confident that they knew about record deals, they came back to us to look over the new agreement. We recommended a few minor tweaks, which All Above Board were happy to incorporate. After that the recording went ahead as planned!

A few weeks ago MayDay came back to us with an offer from All Above Board for a 3 album deal and asked us to put in place their Band Agreement, just to make sure that they were all protected if they ever fell out with one another (these things can happen!) They also had a Management Agreement from Billy, which they asked us to check through for them.

"A former band member is performing one of our songs in his new band at a local night club! Is this not copyright infringement?" 

No sooner was the ink dry on MayDay's band agreement than Gary and Barry had a falling out. They tried to resolve it but things weren't really the same afterwards and within a few days Gary announced that he was going to leave.

The band was shocked, but thankfully Billy (who had been working really hard as their manager) knew of another guitarist, George, who had just split from his band. The remaining band members met up with George in Camden one evening and before long everything was back on track with George on guitar.

Then, one evening, Sally and Dolly decided to go and see a band at the Flyby Club. They arrived quite early, in time to see the end of the opening act. To their surprise, when they got to the top of the stairs they could hear one of their songs being played! They came through the doors to see Gary on stage, with a bass player and drummer who they didn't know, singing and playing one of MayDay's songs!!

Sally was very upset and called the other members of MayDay to tell them. The others were outraged that Gary was using their material - Sally had written all the lyrics and most of the melodies and, although Gary had laid down some of the guitar chords, George had never heard most of the chords that Gary had played and had now re-recorded most of Gary's tracks anyway. Barry called Billy, who phoned The Waterfront Partnership and set up a meeting for the next day.

MayDay couldn't believe that Gary could be allowed to use the songs that they had written, even if he had been part of the band when they wrote them. Although they were really upset that their songs had been used in Gary's gig already, MayDay were more concerned that he shouldn't be able to claim that they were his.

Sally explained to us who had written what. The band agreement that MayDay had signed clearly stated that each band member owned the material that they had written and therefore Sally owned all the rights in the lyrics and melodies. Gary would own the rights in the guitar parts that he wrote, however, MayDay were no longer using these and, as George's guitar parts were created without him having heard Gary's work, he couldn't have copied them would therefore own the copyright in them himself.

Sally could prove that she had written many of the songs because she had written out and posted the lyrics and melodies to herself ages ago. Although this didn't give her any additional rights, it was still good evidence of when the songs were written.

Having established that MayDay owned the songs, we then talked through what they could do to stop Gary from using them. Barry was all for 'suing the b*****d!' but we explained that because the venues would have a PRS licence, MayDay couldn't sue him for performing their songs live (in the same way that loads of cover bands perform other people's songs without getting sued). He may also be able to record them, so long as he didn't make any changes to them, however, he certainly was not entitled to claim that they were his.

Additionally, we advised the band to notify Gary that they were terminating the Band Agreement with him (which they could do by a majority vote, according to the terms of the agreement). We reminded them that, as George was now a band member, he should sign up to this agreement as well!

In the first instance, MayDay agreed that the best option was for The Waterfront Partnership to write to Gary, setting out the legal position and giving him instructions on what he was not allowed to do. The band hoped that this would let him know that they were prepared to fight him if it came down to it, and would make him give up any idea of using their work going forward.

We did this and, as far as anyone has heard, Gary has now stopped playing MayDay's songs. They're still listening out for them though!