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Q&A: Do We Need Permission To Make A Compilation CD?
By Duman & Fiero - 04/09/2005 - 08:32 PM EDT

Dear Jon & Gian:

I am managing and producing a musician who paid to have masters made of 3 different albums in the 80's. He then allowed a specialty company to sell the albums for him.

He has never received any royalties.

I contacted the company, but the owner refuses to give the masters back and will not send a copy of the contract he claims the musician signed.

He has admitted in writing that he did not pay for the masters and that the supposed contract he has was not drawn up by a lawyer.

The musician would like to use cuts from each of the albums to make a retrospective of his work. Some of the songs he wants to use are ones he has written as well as performed.

My Question is this:

Do we need permission from the specialty company for this?
Thank you,
Linda S

Dear Linda:

As you may have already guessed, the answer to your question will likely depend on the terms of that “contract” your musician allegedly signed (assuming it does exist).

Ultimately, a court of law (or other ruling body) can compel the owner of the “specialty company” to produce a copy of the agreement, if he persists in refusing to do so voluntarily. Although the inconvenience and expense of having to initiate civil judicial proceedings for this purpose may seem to be an overly harsh consequence of your musician’s apparent failure to keep adequate business records, the type of situation you've described is precisely why it’s so important to retain copies of all signed legal documents, regardless of their perceived importance.

Unfortunately, without knowing what contractual obligations actually exist between the parties, it’s difficult to gauge the legal significance of the other facts you've provided. For example, depending upon whether or not the musician’s albums made a profit, the fact that your musician hasn’t received any royalties may not be determinative, if the agreement in question provided for the specialty company’s right to “recoup” (deduct) its expenses incurred in promoting and selling the albums, as a “first charge” against any profits received. Likewise, the fact that the specialty company did not “pay for the masters” would not necessarily preclude the company’s exclusive rights to exploit them, nor would the fact that the agreement was not “drawn up by an attorney”.

In other words, subject to few basic restrictions, parties to an otherwise valid contract are generally free to negotiate whatever arrangement they agree is appropriate for their particular circumstances, regardless of whether or not the arrangement is consistent with applicable “standard industry practice”. However, one such “basic restriction”, set forth under U.S. copyright law, may pertain especially to the situation you describe. Specifically, Section 204 of the Copyright Act (17 U.S.C. §204) provides that transfers of copyright ownership in creative works (such as sound recordings and musical compositions) are only enforceable to the extent expressly made in writing, and signed by the transferring party. This restriction applies not only to outright transfers of ownership, but also to “exclusive license” agreements (under which one party agrees to “rent out” certain rights to exploit a creative work, along with the promise that the “renter” will be the sole party authorized to exercise those rights).

Simply put, assuming that there is no question regarding your musician’s initial ownership of his recordings and songs, the burden would be on the other party to prove that a written agreement exists, which was signed by the musician, and which expressly provides for the specialty company’s exclusive right to exploit those creative works. If no such written agreement can be shown to exist, your musician would presumably be free to proceed with his planned retrospective (although he might still bear liability for monetary damages, to the extent that he is deemed to have breached some other contractual obligations owed to the other party).

It should be noted that, even if your musician no longer owns the songs featured in those earlier recordings, he would presumably be able to re-record new versions of those same songs, under the “compulsory” mechanical license laws (which permit anyone to record “cover” versions of songs which have already been recorded, provided that notice is given to the owners of the songs, along with payment of the appropriate statutory royalty).

Your musician is best advised to seek legal representation in any case. Whether he is, in fact, the rightful owner of his recordings and songs, or merely has the contractual right to share in the profits derived from exploiting them, he may have actionable claims for unpaid mechanical royalties, public performance royalties and other streams of music publishing income generated over the years in connection with these creative works.

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