Independent Record Label Laws
- In the age of the Internet, more musicians are able to start their own independent labels.man playing guitar in central park image by Ben Keith from Fotolia.com
There are literally thousands of independent record labels in the United States alone, each with its own recording artists. Some labels are owned by the recording artists themselves as a way to distribute their music. Though the Federal Trade Commission, the U.S. Copyright Office and musician's unions help protect musicians and consumers of music, independent record labels are mainly self-regulating with their own artist contracts and distribution agreements. - Like any business, a label needs to develop its business plan and prepare boilerplate contracts to use for signing artists to the label. Any time contracts are involved, an entertainment attorney should be consulted in order to determine whether all parts of the contract are legal. Most record label contracts include the services the label expects from the artist---for example, the number of songs, etc.---the percentage of royalties the label intends to pay the artist from the sale of songs and how much, if any, the label intends to pay as an advance against those royalties.
- Some of details of a record contract that bear extra scrutiny include how much of the publishing rights the label wants---for example, a 50-50 split, or the label retains all of the publishing rights. Though this is legal, it's not such a great deal for the artist---it means the artist gets nothing from the publishing sales. Merchandise deals such as T-shirts and pins are also an important source of income for a musician and should be included in the contract. The number of CDs the company expects the artist to produce after the current one is another important detail to watch.
- Some of the things that have been regulated over the years by Congress and the Federal Communications Commission include payola, or "pay for play," which involves record labels paying radio disc jockeys to play their songs. Since the 1960s, this practice has been punishable with a $10,000 fine and up to a year in jail, and it has actually helped independent labels by allowing them to become more competitive.
- FTC rules have come down on the recording industry for deceptive practices over the years. They forbid misrepresentation of the contents of recordings and price fixing, which guarantees a retailer a lower price for not carrying competitive brands, sound-alike recordings made by artists other than the original artist, and use of the terms "close out" or "special bargains" on items that are not actually on sale.
- The U.S. Copyright Office stores millions upon millions of documents and sound recordings in the Library of Congress. These sound recordings are what independent labels and artists use to guarantee that their recording is protected from theft for approximately 70 years from the date the office receives the recording, or 95 years after the song has been published.
