Retaining your master rights is smart business.

Retaining your master rights is smart business

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Owning your master rights is one record deal point you can’t afford to ignore.

For decades, artists who signed a record deal with a label were expected to turn over the master rights to their sound recordings – the actual studio/live recordings of their material. This is often confused with general song copyright ownership. As part of a typical record deal, relinquishing your music’s “master rights” was part of how an artist secured the financial support of the label to pay for the recording and release of the record.

With the music master rights under their control, labels could then license the master recordings to third parties for placement in TV or film, use in commercials, or for use in another work (e.g. sampling) without the artists’ consent or monetary gain. Unless an artist had earned back all the money invested by the label in the recording and promotion of a record, all master license fees would stay with the label.

Songs that become hits can command master license fees as high as $100,000 or more. If the artist has repaid the label’s investment (aka advance) through record sales (or earned artist royalties, a process known as recoupment), then the artist may share in some of these third-party master license revenues. But often, the record labels are able to keep all this additional income.

With the dramatic increase in music licensing and the increase in the percentage of revenue this represents for indie and major artists, retaining the master recordings of your music is ever more important. Furthermore, there are now hundreds of channels for people to discover and enjoy music that didn’t exist even a decade ago, including streaming sites like Pandora, Spotify, and Rhapsody; download sites such as iTunes, Amazon, and eMusic; mobile carriers such as Cricket; and hundreds of unauthorized sites around the globe. For most of these new legal music delivery systems, playing a recording results in a payment to the master rights holder.

Songwriters – or more correctly, copyright holders – have always been compensated for the use of their songs, whether it was via traditional radio or new streaming services. With the rise of more and more new outlets for music consumption, music master rights are an essential asset to leverage for artists and labels to earn money.

This brings up the question, “Should an artist try to keep his master recordings, or sign them over to a label to secure a deal?” There’s been little change from the perspective of the labels: they clearly understand that holding the master rights can generate income. But artists and managers are recognizing that there are options to retain the rights to the master recordings and still work with a record label to help build an audience willing to pay for music.

Here are three options to consider when negotiating with a label to insure that as an artist, you will benefit from the increasing array of earning opportunities that accrue to master rights holders.

1. Pay to record your album

The cost to produce a high quality album in the 20th century often would exceed six figures. What new band had a cool $150-300K to drop on studio recording and associated costs? Labels provided that infusion of cash, which resulted in a professionally-recorded commercial release.

Today, artists have a range of options to record for much lower studio rates, or record their project at home using pro-quality systems. Many artists use a blend of both, choosing to track at a professional studio, and then complete the album at home, before using a top mastering engineer to polish the final release. The net result is that many artists are recording albums for a fraction of what is used to cost. For an artist who can afford to cover this expense, it provides a strong advantage, as they don’t need a label to pay for the recording.

With a recording that is comparable in quality to what’s on the charts, you will be in a strong position to look for a deal with a label that leaves master rights ownership in your hands and saves the label the time, expense, and uncertainty regarding whether your recording will result in a quality master.

2. Master rights reversion

Let’s say you don’t have the resources to record your own album, but have a strong set of original music and interest from a label. In the process of negotiating a record deal, you can work to secure return (aka reversion) of master rights to you after a pre-determined period of time. Unless the album or a particular master becomes a mega-hit, many albums have a product life cycle of 1-3 years before a new recording by the same artist takes center stage.

By securing a clause specifying that master rights ownership will revert to you after a period of time (say 2-5 years), the label would likely have earned the majority of the revenue likely to accrue from that project. Remember, if you do regain your master recording rights, it will be up to you to secure and negotiate licensing deals. The label will no longer have any interest in helping with any such deals, as they would no longer earn any money from them.

Another variation is to insert a clause that states that should the label no longer offer the master recording for sale (usually dubbed “deleting the album from their catalog”), then the rights to the master – as well as the rights to sell the recording – immediately reverts to the artist.

3. Share the revenue, not your music’s master rights

In this option, the artist and her team of advisors has made the decision that they don’t want to be in the music licensing business, so they cut a deal to have the label act as the master licensing representative for the sound recordings. Similar to the P&D deals (Pressing and Distribution) used by savvy artists, a “master license deal” cuts the label in for 15-25% of all licensing earnings. This allows the label to secure and share in master license revenue, while allowing the artist to retain a majority revenue share and ultimate control of his or her master recordings.

Sound Exchange

One more important piece of the puzzle of earning money with your master rights is joining the digital performing rights society, Sound Exchange, assuming you own your own masters. Membership is free to all master rights holders, whether it is a label or an indie artist. Featured recording artists may also join. According to their website, “the royalties that SoundExchange collects and distributes are for the featured artist and the sound recording copyright owner. ASCAP, BMI and SESAC collect and distribute royalties for the songwriter, composer and publisher.” So even if you are receiving royalties now for the use of your songs on radio or TV from ASCAP or BMI, if you also control your masters, Sound Exchange will pay you digital performance royalties for spins of your masters on satellite radio (Sirius/XM), Internet radio (Pandora, Spotify, LastFM, Rdio, etc.), webcasts, cable music channels, and other digital streams. (See SoundExchange’s FAQ page for more on how the service works.)

Final thoughts on Retaining Music Master Rights

In large part, the basis for a successful career in the music business relies on establishing predictable and stable income sources. For previous generations, this meant selling records, touring and gaining airplay for your music. Today, there are many more paths to building a successful career, to the point that Kevin Kelly, Editor-At-Large for Wired Magazine has suggested that if a solo artist has 1,000 true fans, they can have a viable career. This flies in the face of the view that an artist’s success relied a radio hit, and/or being backed by a major label.

One of the keys to monetizing your own creativity is to maintain control of as much of your content, or IP (intellectual property), as possible, which includes retaining your master rights. The more you know about the music business, the more you’ll see that the smartest players always know when to retain 100% control and when to enter into some type of partnership deal, giving up some control to maximize revenue. A perfect example is the band Radiohead, who chose to use a major affiliated distributor, XL Recordings, to mass market their game changing album, In Rainbows, after they made the download available worldwide to their fans on a “pay what you want” model. The band’s true fans got it right away and paid what they felt was fair. More casual fans could shop for the CD a few weeks later at all major record retailers.

Ultimately, it’s only by retaining some or all control of your master rights and other creative endeavors that you’ll be in a position to maximize your earnings throughout your career. More and more artists are discovering that it is possible to manage their own careers and make a living, and maintaining control of their creative works is central to this new paradigm.

Looking for more information  on master rights, master recordings, and other music business related terms? Check out this copyright overview post.

HatschekHeadshotKeith Hatschek is a regular contributor to the Disc Makers Blog and directs the Music Management Program at University of the Pacific. He has also written two music industry books, How to Get a Job in the Music Industry, which just came out in its third edition, and The Golden Moment: Recording Secrets from the Pros His latest book, The Historical Dictionary of the American Music Industry, has just been published in fall 2018. Keith was recently featured offering a range of music industry career advice in Episode #33 of the Scharff Brothers’ Mentoring for the Modern Musician Podcast.

How to Make More Money With Music, the Complete Guide

Keith Hatschek bio pic

About Keith Hatschek

Keith Hatschek is an author and educator who spent two decades in the music industry prior to joining University of the Pacific in Stockton, CA where he directed the Music Industry Program. He’s written four books and more than 100 articles on the music industry. His latest book, The Real Ambassadors: Dave and Iola Brubeck and Louis Armstrong Challenge Segregation, tells the story of the famous jazz musicians’ five-year struggle to create a jazz musical challenging segregation at the height of the Civil Rights movement.

37 thoughts on “Retaining your master rights is smart business

  1. If no Agreement was signed by the Artist & Record Label who owns the Master ?
    The Gentlemans Agreement was I pay for the Session guys the studio pays for the recording….
    Advice ?
    Evan Silva

    1. The owner of the master rights is usually whoever finances the recording. Typically, this is the record label, unless you’re dealing with an unsigned artist. In this case the artist owns the master rights.

    1. Well I have a question I co-wrote a song with a friend and he took the song and put it on Amazon and was supposedly sold the song and he took the money and he saying that he got the three checks now and I just don’t know who to talk to about if it’s been really sold or not it’s called Sweet Country Girl I don’t know who to talk to I co-wrote it with him

      1. Talk to a lawyer, seek legal advice and you must be able to prove that you contributed to the creation of the song and that you received no payment or credit whatsoever for the song that was allegedly sold.

  2. This article rocks! That being said, Sound Exchange is a gray area for artist using a major independent music distributor that collects from some of these same people listed in the article. There are so many different companies who offer to put your music out in different places and collect the income from you that we are afraid to do anything. We don’t even have a list of all the places that our distributor sends to and gets our payments for. They just say a list of places followed by…. …and more! I have tried to get answers from them and another place that we get payments from that we never even registered with. The other company started out with letters for “compulsory” licensing. I don’t think THEY even know if we are overlapping. In this digital age there should be a non-profit board with musicians, a couple of representatives of some of these larger companies who do this, a music attorney, and a technology geek! Everyone needs to be registered in one place. Sound Exchange is already doing, I assume, most of the financial part so perhaps they could be persuaded to be the overseer. The companies, who also distribute the music, are required to log their artist, location of music and song titles. A board to meet a couple of times per year to review the methodology and our interest. Since I am a tiny bit in the scheme of things, I am merely thinking out loud without the knowledge needed to really solve this. This is a discussion that needs to be had quickly and solved quickly. This is just a start.

  3. Pingback: Don't miss out on SoundExchange royalties | Disc Makers Blog
  4. I get the basis of the whole “owning your masters” concept, but i am still confused. If a master can be either a pro tools file, mp3 or CD, How can you tell if your version of the copy is just a copy? If i recorded my song in a studio, the Pro tools session would be the master.. so if i just transfred the session onto my drive, wouldnt it just be a copy and they still have my master recording? Unless they deleted it? The new digital age is confusing with all of this. If i have only an MP3 of my recording, it can just be a copy that the engineer still has.

    1. Ryan, he is not talking about the session file per se’ he is referring to recording that is being used. It doesn’t matter the DAW, the session, or whose computer it resides on. It’s not like lending someone a CD of a song. You can do that but the owner of that RECORDING still owns THAT recording. Hope that helps, cheers,

  5. This is a VERY CONFUSING area and I believe that some of the assertions people are making here are incorrect. Get yourself a good lawyer. Get to know ALL these terms and find out what they really mean, and who can control what.

    Everyone: the term is CopyRIGHT, not write. It means that “you” control the RIGHT to make copies. Not the right to SELL copies – the right to MAKE them. Meaning, don’t think that you don’t have to pay for a right to copy something because you aren’t charging people for the copy. If you MAKE the copy, you OWE to copyright owner.

    If you create a work, you own the right to copy it. You don’t “copyright” something. You may REGISTER it with the copyright office, but you don’t have to – you still own the right. You don’t even have to put a copyright notice on it. It’s just smart to do that to avoid any confusion.

    But having said that, it ain’t over. What is a “work” and who “creates” it? There are layers. If we’re talking songs (a lot of us are), there are the writers of the words and the music. OK, you want to record it, but you didn’t write it. You have to pay for the right to record it and publish the recording. That’s fixed by law. But then if someone wants to USE that recording, THEY have to pay YOU to use it. AND the songwriters. So whoever owns the RECORDING must be paid for the right to USE it – and the owner must pay the author for the right to GRANT the right to whoever uses it… it gets VERY murky.

    I would recommend that you not attempt to understand all this yourself! Do read up on it – start here:
    but then get a good lawyer!! And get as much as you can written down and signed by everyone involved.

    (Said she, who has failed miserably at this, and knows how easy it is to say you can’t afford it. Enough said.)

  6. I know from older colleagues that the “olden days” used to be really tough where rights were concerned. Thank you for explaining this to us, because it really puts it into perspective how lucky we are these days by comparison. I am lucky to own all my rights (well- except where it concerns covers obviously), masters and all! 😀 So glad.

  7. I have been writing lyrics for many years and always had tunes for them in my head.i picked up guitar a year ago and can now do a dozen or so.i don’t read or write do I copywrite my songs?i had an associate say he would love to produce these songs,but have been cautious because how can I be sure they remain my I.P.? how can I market these songs ? yours truly,buzzerker

    1. Get an agreement in writing that states the songs are & will remain yours in every way. Your associate is only producing them to make them sound better. Look up the U. S. Copyright Office online for info on copywriting.

      1. Hello
        My name is tracey mayas … Ive been singing and writing songs since i was 16!
        I am now 26 and feel it is my time to make something happen with my music (i.e)
        Im ready to make a living off of my music.

        I copywrite everything i record and write..
        Specifically my lyrics and melodies… As the instrumental tracks i use are created by another party!

        My question to you is copywriting enough to protect myself?….
        Also… I struggle with which publishing company to go with (i.e)…. Bmi.. Ascap… Sesac etc?

        Im ready to make money with my music… I just want to be smart abour it as i have great material!!….

        Pls help!!

  8. Quick one for anyone here who can answer. I produced, co-wrote a track that was released 15 years ago with a record label. The record label is long since out of business. Who owns the master? The reason being is that another label wants to re-release it, which is a strong argument for keeping some control of your IP as suggested above.

    1. The record label technically still does. The question now is, Who took legal control of the assets of the label after it went out of business? Was the master part of the dissolution of assets? Start there.

  9. If you go in to any professional recording studio they own the sound recording—they recorded it. You only own the songs. If you recorded it yourself/own studio/bedroom internet/etc you own the recording–If you go to a friends studio whether you pay them or not THEY own the sound recording unless you get an agreement in writing to the contrary.

    1. This isn’t an entirely true statement. I believe that at one time, this was a more common practice than it is today. I’ve recorded at a professional studio and owned the recordings with no formal agreement as have many others I know. In many cases now, studios just charge for all their expenses/labor/expertise. They have no legal claim to the rights of the recorded material unless you give them those rights. If you’re worried about that, clarify ahead of time. As the article says, it is up to you to make the arrangements you want with everyone you work with.

    2. Whoever pays for the sessions owns the masters outright !
      Not the studio not the friend
      Whoever pays the bills for the studio time the musicans the producer the engineers The pizza the drugs
      Usually that’s a label
      Or a producer who might believe in an act or its you paying your own money

  10. I’ve seen many articles on retaining your master recording rights. But not how to actually go about doing it. After reading some of the articles, I gather, aside from actually putting your music on CD-quality/commercial quality, well, CD’s or other media, and physically have them “mastered”—with the radio-playing correct levels and the codes inserted on them, you need to file an SR with the copyright office? So this is my question more succinctly—is the bottom line for securing a master of your recording to just file an SR form with the copyright office? Thank you for your concern in this matter. Ron

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