WALDHORN.AIThe Review

No. 03Casebook

Six cases,and the linethat decided each.

Four are on the public record and two are composites. Every one turned on words that were written down, or a date that could be counted, before anyone signed.

  1. 1TLC: fourteen million records, and bankruptRoyalty rate and recouped costsAbout 1%
  2. 2The Verve: a five-note licence that took the songSample clearance22 years
  3. 3F.B.T. v. Aftermath: a sale, or a licenceOne definition50%
  4. 4Victor Willis: the songs that came back after 35 yearsTermination of transfers35 years
  5. 5Ottilie Vane: her masters sold, and the day she could record them againMasters and re-recording, a compositeTwo years
  6. 6Kasi Vex: an album the label said did not countA defined term, a composite9 of 18

Case 1Royalty rate and recouped costs

TLC: fourteen million records, and bankrupt

About 1% of an estimated $175 million in album sales reached TLC, the Los Angeles Times reported.

In February 1991 two members of TLC signed production, management and publishing deals with Pebbitone, the company of Perri “Pebbles” Reid, who became their general manager. That May the group was signed to LaFace Records through the production deal. LaFace had been co-founded by her then husband, L.A. Reid.1

Their second album, CrazySexyCool, sold more than 14 million copies worldwide and spent over two years on the Billboard 200.1

On July 3, 1995, all three filed for Chapter 11 bankruptcy, declaring debts of $3.5 million. Part of that was an insurance claim and medical bills. The rest of the story was in the contract.1,2

It paid 56 cents for each album sold, less for a single, split three ways. Charged against it were airline travel, hotels, promotion, music videos, food and clothing. Once managers, lawyers, producers and taxes were paid, each of them was left with less than $50,000 a year.1,2

In 1996 the deal was renegotiated with LaFace. Pebbitone let the group out of its production and management deal in exchange for a percentage of royalties on some future releases, and TLC bought back the rights to its own name.1

How the contract worked

A royalty of 56 cents an album, less on a single, shared three ways, with the costs of making and selling the records charged against it. The company that managed the group also held its production and publishing deals, so the adviser on the contract was a party to it.1,2

Figure 1Where the money went

An estimated $175 million in album sales

  • 99%Retail, distribution, the labels, production, management and costs
  • 1%T-Boz, Left Eye and Chilli, together

The one per cent is the Los Angeles Times figure. How the other 99 was divided was never published.

Where WALDHORN.AI stands

01Review
Grades the royalty rate against the market, and reads every cost the contract lets the label charge back before a royalty is paid.
03NegotiationNegotiate
Puts a counter to the rate and a cap on recoupable costs to the other side, and keeps each answer on the record.
06RelationshipsCarry forward
Files the management, production and publishing agreements by the relationship they belong to, so one company holding all three is plain to see.
07Audit StatementAudit and resolve
Recomputes each royalty statement against the signed terms, and lists every charge the contract does not allow.

Sources

  1. “TLC (group)”, Wikipedia, citing The New York Times and the bankruptcy filings Read the source
  2. “The dark tale of TLC going bankrupt in the ’90s”, Beat Magazine Read the source
  3. “TLC bankruptcy”, AfroTech, reporting the Los Angeles Times Read the source

Case 2Sample clearance

The Verve: a five-note licence that took the song

22 years before Richard Ashcroft’s name went back on his own biggest song.

“Bitter Sweet Symphony” was The Verve’s hit of 1997. It was built on a sample of an orchestral version of “The Last Time”, a 1965 song by Mick Jagger and Keith Richards, recorded by the Andrew Oldham Orchestra.1,2

There were two permissions to get. The band’s label had one from Decca, which owned the recording. The song was licensed separately: a five-note segment, in exchange for 50 per cent of the royalties.1,2

As the single was about to come out, Allen Klein of ABKCO, which controlled the song, refused clearance, saying The Verve had used a larger portion than agreed. After a lawsuit the band gave up its royalties, and the songwriting credit went to Jagger and Richards.1,2

By 2019 Billboard estimated the song had earned almost $5 million in publishing. That April, Jagger and Richards agreed to return the credit to Ashcroft and to pass him all future songwriter royalties. The publishing stayed with them.1,2

How the licence worked

A sample is two licences: one from the owner of the recording, one from the owner of the song, each for a defined portion and a defined share. The song’s licence here covered five notes. The owner said the record used more, and the whole song went with the difference.1,2

Figure 2Whose song it was

  • The licence as agreed
    The Verve, 50%
    Jagger and Richards, 50%
  • After the dispute, 1997
    Jagger and Richards, 100%

    The Verve, nothing

In 2019 the credit and the songwriter royalties went back to Ashcroft. The publishing did not.

Where WALDHORN.AI stands

05Draft
Drafts a sample clearance with the label for the recording and one with the publisher for the song, each naming the portion used.
01Review
Reads a licence for its scope: what is licensed, for which use, and what happens if the use goes beyond it.
06Rights VaultCarry forward
Marks a release that uses a sample as not ready until the clearance is on file.

Sources

  1. “The Rolling Stones Return ‘Bitter Sweet Symphony’ Songwriter Royalties to the Verve’s Richard Ashcroft”, Digital Music News, 24 May 2019 Read the source
  2. “Bitter Sweet Symphony”, Wikipedia, citing Billboard, BBC News and Rolling Stone Read the source

Case 3One definition

F.B.T. v. Aftermath: a sale, or a licence

50% of net receipts, not 12 to 20% of the retail price: what the Ninth Circuit held Eminem’s first producers were owed on downloads.

F.B.T. Productions signed Eminem in 1995. In 1998 it transferred his exclusive recording services to Aftermath Records, and in 2003 the two companies made a new agreement.1

It paid F.B.T. two ways. On full-price records sold through normal retail channels, 12 to 20 per cent of the adjusted retail price. On masters Aftermath licensed to others, 50 per cent of its net receipts.1

In 2002 Aftermath’s parent, UMG, agreed with Apple to sell its recordings on iTunes as permanent downloads, and from 2003 it sold them to mobile carriers as mastertones. Aftermath paid F.B.T. on both as records sold. A jury found for Aftermath, and the district court awarded Aftermath more than $2.4 million in attorneys’ fees.1

On September 3, 2010 the Ninth Circuit reversed the judgment and vacated the fees. The Supreme Court declined to hear an appeal in March 2011.1,2

From the Ninth Circuit’s opinion
“The agreements unambiguously provide that ‘notwithstanding’ the Records Sold provision, Aftermath owed F.B.T. a 50% royalty under the Masters Licensed provision for licensing the Eminem masters to third parties for any use.”1

Figure 3One download, two rates

  • Records sold
    12 to 20% of the adjusted retail price
  • Masters licensed
    50% of Aftermath’s net receipts

The two rates run on different bases. Which one applied was a question of definition, and the definition was worth more than either number.

Where WALDHORN.AI stands

01Review
Reads the royalty provisions against each other, and flags a “notwithstanding” that decides which rate a new format falls under.
07Audit StatementAudit and resolve
Recomputes a statement at the rate the signed terms give each source of income, and puts the difference in a memo and a demand letter.

Sources

  1. F.B.T. Productions, LLC v. Aftermath Records, 621 F.3d 958 (9th Cir. 2010) Read the source
  2. “F.B.T. Productions, LLC v. Aftermath Records”, Wikipedia, on the denial of certiorari Read the source

Case 4Termination of transfers

Victor Willis: the songs that came back after 35 years

35 years after he signed away his share of “Y.M.C.A.”, the law let Victor Willis take it back.

Between 1977 and 1979 Victor Willis wrote lyrics for the Village People’s songs and transferred his copyright in them to the publisher. Among them were “Y.M.C.A.”, “In the Navy” and “Go West”.2

United States copyright law lets an author end a grant made on or after January 1, 1978, during a five-year window that opens 35 years after the grant. Notice has to be served two to ten years ahead. Miss the window and the grant stands.1

In January 2011 Willis served notice terminating his grants in 33 songs. The publishers, Scorpio Music and Can’t Stop Productions, went to court. On May 7, 2012 the court held that a joint author who transfers his interest separately may end that grant on his own.2

What he got back was argued too. In 2015 a jury found that the producer Henri Belolo was not an author of 13 of the songs, “Y.M.C.A.” among them, and Willis’s share of those became 50 per cent.3,4

From the statute, 17 U.S.C. § 203
The right runs from the date of the grant, not from anything in the contract: termination “may be effected at any time during a period of five years beginning at the end of thirty-five years from the date of execution of the grant”, with notice served “not less than two or more than ten years before that date”.1

Figure 4The window

1980199020002010Notice for a 2013 end
  1. 1978A grant
  2. 2011Notice served
  3. 2012The ruling
  4. 201335 years
  5. 2015The jury

Drawn for a grant made in 1978. Each grant’s window runs from its own date.

Where WALDHORN.AI stands

01Review
Names the termination right in a grant of copyright, from the legal register and with its source, and when its window opens.
06Rights VaultCarry forward
Records who holds each work, since when, and under which agreement.
06CalendarCarry forward
Carries the dates the Rights Vault holds, and any reminder set on them, such as the first day a notice may be served.

Sources

  1. 17 U.S.C. § 203, Termination of transfers and licenses granted by the author Read the source
  2. “Scorpio Music S.A. v. Willis”, Loeb & Loeb LLP, on the ruling of the Southern District of California, 7 May 2012 Read the source
  3. “Jury Decides Village People ‘Y.M.C.A.’ Songwriter Has 50 Percent Song Share”, The Hollywood Reporter, 2015 Read the source
  4. “Henri Belolo”, Wikipedia, on the 2015 verdict Read the source

Case 5Masters and re-recordingComposite

Ottilie Vane: her masters sold, and the day she could record them again

Two years after her contract ended, a restriction lapsed, and she began recording all six albums again.

A composite. The artist, the label and the details are invented. The mechanics follow disputes that are a matter of public record.

Ottilie Vane signed her first record deal at sixteen, with an independent label, Calder Row Records. The label owned her masters for the life of their copyright. Over twelve years she made six albums for it.

She asked more than once to buy them. The offer she had was to earn them back, one new album at a time. She left when the contract ended, and a year later the label was sold, catalogue and all, to an investment fund. She learned of it from the announcement.

One clause still bound her, and it also gave her a date. It barred her from recording any of those songs again until two years after the contract ended.

Five months after that date her new recording of the first album came out, and licensing requests began to go to her versions instead of the fund’s.

The two clauses

Ownership of the masters “throughout the universe in perpetuity”, and a re-record restriction: no new recording of any song on a delivered album until two years after the term. The first clause took the recordings. The second set the day she could make them again.

Figure 5The date that mattered

20102020Restricted
  1. 2006Signs, at sixteen
  2. 2018The contract ends
  3. 2019The label is sold
  4. 2020The restriction lapses
  5. 2021The first new recording

Composite dates. The restriction ran from the end of the contract, so its last day was known the day the contract was signed.

Where WALDHORN.AI stands

01Review
Grades ownership in perpetuity, and reads the re-record restriction for the day it ends.
03NegotiationNegotiate
Asks for the masters to revert after a fixed term, or for first refusal if the label is sold, and records the answer.
06Rights VaultCarry forward
Holds each album with its release date and the date its rights term ends.
06CalendarCarry forward
Carries those dates from the day the contract is signed, so the day she may record again is known years ahead.

Case 6A defined termComposite

Kasi Vex: an album the label said did not count

9 of 18 tracks had been heard before, and her label said the record was not an album.

A composite. The artist, the label and the details are invented. The mechanics follow disputes that are a matter of public record.

Kasi Vex owed her label, Lark Hill Music Group, one more album. The contract defined an album with care: at least twelve master recordings, at least forty minutes long, of her featured performances, not previously released.

She delivered eighteen tracks and forty-four minutes. Nine of them had first appeared as freestyles on her own social accounts. The label said those nine had been released, so the record was not an album, and she still owed one.

She said a clip on her own page was not a release. The contract did not say either way. Both sides went to court over one word while the record sat between them.

They settled the following year, and the terms were not published. Nobody ever answered the question underneath.

The definition

“Album” meant twelve or more master recordings, forty minutes or more, of the Artist’s featured performances, “not previously released”. The contract never defined “released”. The rest of the definition could be checked by counting and listening. That word could not.

Figure 6Does it count?

“Album”

  • Twelve or more master recordingsMet: Eighteen delivered
  • Forty minutes or moreMet: Forty-four minutes
  • The Artist’s featured performancesMet: All eighteen
  • Not previously releasedNot met: Nine first posted as freestyles

Three conditions were met. The fourth turned on a word nobody had defined.

Where WALDHORN.AI stands

01Review
Reads each defined term for the words it relies on and never defines, such as “released”.
03NegotiationNegotiate
Settles the definition with the other side before signing, and keeps every version and answer on the record.
04Sign and verify
Seals the executed text with its fingerprint, so which definition was signed is never in doubt. A later change becomes an amendment both sides sign.

The pattern

None of the six turned on a secret. The rate was printed, the licence named its five notes, the definition said what it said, and the statute gave its date thirty-five years ahead.

What went wrong in each was reading and remembering: a clause read too late or not at all, a date nobody was holding, a statement nobody checked against the contract that produced it. WALDHORN.AI does both halves of that. It reads the agreement before signature, and after signature it keeps the terms, the rights, the dates and the statements together, for as long as the deal runs.

Every one of these was written down. See what is written in yours.

Free to start. WALDHORN.AI is a tool, not a law firm, and does not provide legal advice. The cases are told from the sources listed with each; the composites are invented and say so.