Successful CD Replication: Recommended Licensing Tips & Considerations.

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Everything You Need To Start and Operate a Record Digital Label

Anyone with a talent for music - particularly writing and recording songs - is now sitting on a potential gold mine.

What would have been unthinkable just a few short years back – is now not only possible, it’s being done with enormous success by individuals across the globe. What am I talking about? A digital record label.

Before I discuss the advantages of running your own digital label - I'd like you to imagine what it would have been like starting a physical label just ten years ago. A minimum investment of $350,000 would have been needed. This would have enabled you to rent an office sufficient to hold yourself plus a secretary, an a&r manager, a talent scout, a plugger/ promoter, and a receptionist. You would also need a copyright and royalty manager.

Your next task would have been to acquire good commercial recordings - with emphasis being on the word "commercial". Finding recordings was one thing, (as is the case today), finding good commercial product is something else. Unless you were able to acquire ready made masters under license from a third party, you would have had to pay for your artists to record the masters yourself. In addition to hiring a recording studio, you would also have had to pay a producer - plus a recording engineer (although the engineer's costs were usually included with the studio hire) - thus eating further into your $350,000 budget.

Assuming your product proved to be commercial (after heavy promotional costs), and sales from your first album had started to feed back from around the world. Eighty percent of your income would have been taken up in overheads through royalty payments to the artist, producer and the music publisher (mechanical license). Then, there would have been your general overheads: salaries, expenses, office rent and so on.

But we're getting ahead of ourselves. Before selling any records you would have needed a reliable manufacturer and a distributor to create and disperse your cds, (and maybe some dvds to promote the records), to the shops.

Getting a distributor in the first place was one of the most difficult things for any new record label. Ever watchful of stores and outlets unwilling to give shelf space to unheard artists, (i.e. artists yet to achieve a playlist position on radio), many would refuse to get involved with a new untried label. Not surprising when, given the choice, retailers could choose from any of the big selling artists such as Nickelback, Beyonce, Pussycat Dolls, Justin Timberlake, James Blunt etc against the poor new artist. So, you with your new label and new artists, would be forced to plough more money to promote your record, in the hope of getting on the playlist – in the hope of securing that elusive distribution deal. At this stage you would be wondering why you had started a label in the first place.

So, what enormous monstrosity of a thing happened in the music industry to change the old physical method of selling records? Enter, the golden dawn of digital music. Now, suddenly every artist, songwriter, producer, engineer and, even manager who once had a notion of starting his/her own physical label but didn't have a $350,000 budget - is able to start and operate his/her own digital label for about the price of a new laptop.

For the first time - individuals have a great opportunity of developing their own label from zero up - and making a very healthy living. Unlike the older physical system of starting and operating a label - with all the huge overheads - the digital label operator can start a catalog and operate it at his own pace without the need to employ several individuals. You can start with as little as two tracks - and build a catalog at your own pace - concentrating on your niche in the music industry, testing and probing the markets as you go along. Compare that to a physical label spending wads of money hoping their records chart. Failure to chart would often spell disaster for many a physical independent and domestic label - leaving only the majors to compete. Not so for a digital label. If a particular recording isn't selling over a period of time - you simply delete the product from your site. Updating your catalog can be done in minutes. Some digital labels regularly update their catalogues every few days.

If you're not an artist yourself - but someone who is drawn to a special style or genre - or just someone interested in music in general - here's what you can do to start your digital label: Firstly, you'll need a good web host. Basic as this sounds, some people go with an outfit they think is good - then, six months later they vanish into cyber space - leaving you and your site high and dry. So, please do homework before opening a web host account. I recommend you check for independent reviews on hosts you're thinking of going with. Once your web host is confirmed, you should get a confirmation email from your host confirming your space is ready so that you can move forward and publish your site.

Some people are very creative and skillful in being able to create their own web site. Others, like me, are not. I was contemplating having someone design my web site for me when, by chance, I came across a web design system called Xsitepro, but there are many to choose from. As with the web host, look for independent reviews before making a decision.

Next, make sure you have an up to date digital contract - one you can offer artists (or the owner of the masters). If you're not an artist yourself, you can enter into a license deal with any artist or production company willing to have you promotes and sell his/her product. By knowing a particular field or style of music well, will help you no end build your catalog faster than if you're someone learning as he/she goes along. However, enthusiasm will go along way. What you need to do when you start off is to ask yourself this question - "Why would an artist license his/her rights to me and not someone else?"

Firstly, to have an artist (or production company) freely license his rights to you - you need to convince him/her that you have a powerful distribution system. Unlike physical labels, with a web site, you have the ability to create your own "built in distribution system". Having a digital distribution account is an excellent idea - but you will still need to promote your product if you want to draw large numbers to your site. In my view, a newsletter, blog or e-zine, is the one of the best ways of drawing a high reading audience. Ten thousand plus is a good target to work toward. This will help you pick up more recordings from artists looking for a site attracting thousands of hits - assuming of course artist's genre works well with your label. There are some excellent publishers, blogs and newsletters hungry for good topical articles, presenting you with another outlet. Keep your articles fresh and original, and your audience will grow steadily with each article.

Since distribution is the key to your success - this is where you need to concentrate if you want your label to expand and prosper. Obviously, if your newsletter or e-zine readership is increasing, it's because people are enjoying the articles and information you're publishing - and more people will want to buy your product. A healthy situation all round.

Now, a note on your digital agreement, you can use a contract repeatedly for different artists. I would recommend you acquire rights non-exclusively. Keep in mind that a contract may need to be updated from time to time as new copyright laws come into effect to deal with technological changes. As a rule of thumb you can check back every six months to see if your contract needs updating.

Next, ensure you have a terms and conditions policy on your site. Anyone starting off a digital label, should have a general list of conditions, setting out criteria for accepting product online, together with a privacy policy.

Next, you'll need a strong accounting system. No matter how effective you are selling product online - if you're not accounting to your artists accurately and to the letter of your contract - you're dead in the water. In my view there is nothing worse than a company with a bad reputation for paying royalties. For me, trust and reputation is everything.

Work closely and be up front with the artists who put their faith and trust in you. Your good reputation and name will spread.

Since 1997, Songsalive! is the largest international non-profit membership organization dedicated to the nurturing, support, promotion and education of songwriters and composers worldwide.

Founded in 1997, by songwriters Gilli Moon and Roxanne Kiely in Sydney, Australia   Songsalive! is run by volunteer songwriters for songwriters and has reached the far corners of the globe with over 25 chapters worldwide (International head office in Los Angeles, CA, USA) We provide a "home", a family, for songwriters and composers through our programs, resources, community and support, all focused on the art and business of songwriting. It acts as an epicentre, a heart of the international songwriting community and music markets, bridging the gaps, tapping songwriters into the pulse of the business and at the same time giving them and their music the support they deserve. Through Songsalive!, songs and songwriters can be accessed by the whole world and when the hunt is on, Songsalive! is a one-stop song shop! Songsalive.org

So, your band just finished recording their first album and are now looking to get 1000 retail-ready CD’s inside shiny jewel cases, with killer graphics and all the prerequisite bells & whistles for a CD replication project. Good for you and your band - this is by no means a trivial undertaking!

But WAIT, there are potential land-mines around the corner if you’re not careful. Have you covered someone else’s song? Do you have samples of another artist’s music on your CD? What about copyright issues - both on your material, and anyone else’s? Unless you pay careful attention to the finer details, you could get burned – legally or otherwise… Ouch!

The following tips, recommendations, considerations and answers to common questions that will help prevent you from falling into any land-mines or legal licensing pot holes and enable you to move forward on a successful CD replication project:

Covering Someone Else’s Song:

While many artists think it’s OK to cover someone else’s original performance without the necessary mechanical license - especially if there are no samples of that performance on their disc - you are in a legal grey-area and run the risk of having problems later on. It is therefore recommended that you obtain the mechanical license to comply with copyright laws and to properly pay royalties to the original songwriter.

Tips and Recommendations:

- Contact the Harry Fox Agency in New York. Here you can obtain the license and prepay royalty fees. If you are replicating less than 2500 CD units, you can complete your application online by visiting the Song File website.

- Perhaps a better choice though more time consuming is to contact the copyright holder directly and negotiate a royalty rate. This could be a much better choice for you if your CD sells well. In order to find out who owns the song’s copyright you will have to contact American Society of Composers, Authors & Publishers (ASCAP)

Sampling Other Artist’s Songs:

This is not a grey-area, but a hard and fast rule:

- If you are sampling another artist’s material (regardless of how small that sample), you must obtain the proper license – period!

Tips and Recommendations:

- This license is called a Master Use License. You cannot replicate copies of your CD without this licensing paperwork. Any replicator or CD Replication Company who makes you copies is potentially liable without this license - and will be very firm on this point and will not proceed with your order until you can produce it.

- Again, you can find out who owns the rights to songs by contacting ASCAP. There are no exceptions to this rule, so be prepared ahead of time and don’t get your project rejected by your CD replication partner.

Q: What is an IP Replication Rights Form?

A: Most reputable CD replication companies have joined the Anti-Piracy Compliance Program run by the International Recording Media Association (IRMA). The IRMA protects copyright holders (owners) from unauthorized duplication of their materials (intellectual property). The IRMA also goes after pirates and replicators who duplicate unauthorized product. What this means to you is that if you try to duplicate discs with someone else’s content, without the support rights paperwork you could loose your masters and money as your CD replication company gets closed down by the IRMA.

- Obviously this would be an extreme example, but the threat remains and no reputable replication company would take the risk. They would simply reject your masters and refuse to duplicate - and many change a cancellation fee. It’s your responsibility to gather the required licenses/releases ahead of time.

Q: How do I copyright my own materials?

A: You would get in touch with the US Library of Congress (www.copyright.gov) to request the forms needed to copyright your music.

- Once complete, send them the form, a copy of your recorded materials (on CD), a lyric sheet and the registration fee. Within a few weeks you would receive confirmation that your material was copyrighted.

- Once copyrighted you should seek a licensing agency who can track all radio plays of your songs and pay you for any royalties due.

In Conclusion:

Cutting your master disc is only the beginning on your road to a successful CD release. Before anything else, you need to make sure you have the licensing paperwork in place. If you send a master to a CD replication company who doesn’t ask you for IPR paperwork - RUN! Piracy is a big problem in the industry and agencies like the IRMA are actively pursuing those individuals and companies not following the rules. You have been warned.

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