Business Musings: Copyright Fun Part 3

Let’s talk money for a minute, because really, copyright and copyright licensing translates into money, if you do it correctly. Copyright is one of those lovely assets that will continue earning for writers if the writers manage the copyright correctly.

A short story can become a novel (more money, different licenses), sell in foreign editions (more money, different licenses), become an audio book (more money, different licenses), be reprinted in anthologies (more money, different licenses), become an hour-long TV special (more money, different licenses), become a TV series (more money, different licenses), become a movie (more money, different licenses), become a video game (more money, different licenses), become a board game…

Well, you get the idea. And the writer really doesn’t have to do any more writing after finishing that short story. Everything I mentioned above is licensing little snippets of copyright. Once writers start understanding that, then they can manage their assets for the rest of their life…and beyond.

If you don’t understand what I’m talking about, check out this post. And if that scares you sufficiently into learning how to run your business, then get The Copyright Handbook and read it.

But let’s ignore copyright for a moment, and simply think about money. Boatloads and boatloads and yachtloads of money. Rivers of money. Oceans of money.

One thing we all know, because we read books and watch TV, is that lots of money makes people crazy—both in fiction and in real life. Financial expectations, even in the smallest instances, can cause some people to become homicidal when those expectations go awry. That’s the basis for entire subgenres of mystery fiction.

In real life, few people kill over financial matters. Most people go to court, and those court cases drag on for years.

As an example that hits the publishing industry, let’s take a look at the big shocker that happened to the supposed heirs of Scholastic Corporation in June of 2021.

For context, Scholastic Corporation grew from a magazine published in the 1920s to a $1.2 billion dollar corporation with most of its revenue still in publishing. Scholastic has had amazing success over the years. They publish Clifford: The Big Red Dog, Captain Underpants, The Hunger Games, and…oh…some little series called Harry Potter. Their contracts, while not draconian, aren’t really writer-friendly either, so all of that merchandising you see for most of the big series that Scholastic publishes? Yeah, that money mostly goes to Scholastic, not to the writers.

Scholastic has done some great things for literacy and for children’s literacy in particular. It also has worked with schools for more than fifty years to make sure that kids get books to read. I still remember Scholastic Day at my school, and I looked forward to it.

Corporations aren’t really soulless things. People exist behind the corporation. And in this case, Scholastic was a family business. That little magazine was started by Maurice R. Robinson. His son, M. Richard Robinson Junior took over the company as CEO in 1975, and ran it until 2021…when he died suddenly while on a walk with one of his sons.

Richard Robinson was 84 years old, so there’s sudden and then there’s well…not as sudden so much as unexpected right now. He did have a will, however, and rather than leaving his estate and his interest in Scholastic Corporation to his sons, he left everything to his girlfriend.

The will wasn’t new though; it was executed in 2018.

Let’s ignore the family drama part of this—that all of his belongings and such and his personal $100 million fortune went to his girlfriend. The real interest are the Class A voting stocks in Scholastic Corporation. Robinson owned 53% of those stocks, which meant that he had a majority on the board of directors. He could outvote all of them, and now his girlfriend can.

This isn’t as random as it sounds. She is Iole Lucchese, the chair of Scholastic’s board,  as well as executive vice president and president of Scholastic Entertainment. In other words, she knows business and she knows the company very, very, very well.

The adult sons are contesting the will. Neither of them works in the family business. At a quick glance, it doesn’t seem like either of them ever did.

As a number of experts have said in the various articles about this battle, companies are difficult to run when the ownership of the company is under dispute. And these cases can drag on for years.

As an example, let’s look at another estate in the arts. Prince died in April of 2016 of a fentanyl overdose, and he did not leave a valid will. His heirs—or potential heirs—ended up working together to find an administrator for the estate, which is required under Minnesota law. But there was still a lot to do, all of it legal wrangling. Then the IRS got involved. At some point, the IRS determined that the estate was worth twice the amount listed on the estate tax return, so that meant more legal wrangling, which finally got settled in January.

Now that the estate finally has a value ($156 million), it can be properly divvied up between the heirs. Two of the heirs died as the legal wrangling was underway; their shares will go to their families (I assume). According to Billboard in that December article, it looks like the

…estate likely will be divided between New York music company Primary Wave and Prince’s three oldest heirs or their families. Primary Wave bought out all or most of the interests of Prince’s three youngest siblings.

Six years, almost to the day, after Prince’s death. That means for six years, no one has really managed the assets in Prince’s estate. Sure, some things were done. Contracts renewed, items catalogued, a few changes made. But musically, nothing.

And who knows what will happen when three heirs (or their families) and a New York Music company try to work together on all the things that need to be done to manage a music catalog as large and vast as Prince’s.

The clusterfuck will continue.

And if you think the aging rockers from rock’s golden years aren’t paying attention to the Prince debacle, then you’re not paying attention.

Music copyrights are extremely complicated. Some portions of them are regulated by U.S. law, including royalties and percentages that must be paid to the songwriters by cover artists. Music copyrights fall into several categories, which make my head hurt when I think about managing them, even as a low-level musical artist. I’m not going to try to explain them here.

Just put a pin in complicated.

I’ve done a lot of work with the heirs to writers’ estates. When the superagent Ralph Vicinanza died suddenly and his sister initially handled the estate, a bunch of writer heirs—who had been relying on Ralph to handle all things writing and publishing related—contacted me. I couldn’t say anything bad about Ralph at the time (except to hang up or walk away from my email cursing the contracts he had gotten them all into, contracts that benefited him more than the writers), so I listened.

And realized that these people, who were farmers and professors and stay-at-home parents, had no idea how the publishing industry worked and worse, had no real interest in learning it.

They just wanted Mommy or Daddy’s royalties, which to them were like a stock annuity, an income they could rely on so they could continue living their lives.

Publishing contracts and licensing agreements for novels and short stories are so easy compared to music industry contracts, copyrights, and licensing agreements, the differences are like this: Publishing is arithmetic; music is calculus.

Not kidding.

So when some of the biggest musicians in the world started selling their entire music catalogs, I was not surprised. Intellectual property has become an asset that large corporations want on their books. To say that they own all of Big Name Musician’s catalog is a coup. It’s also a really good investment.

It’s great for the musician as well. Paul Simon was about to turn 80 when he sold his music publishing rights to Sony Music Publishing for $250 million dollars. Not every musician you follow writes songs or owns music publishing rights, by the way. The singer-songwriters are the ones cashing in here.

And the songwriters are too. The ones who write major hits for other artists because, as I said, the copyrights and licensing agreements in the music industry are complicated.

Shorthand, though, Sony Music Publishing will control the licenses for Simon’s most famous songs (and the not-so-famous ones too). So when you hear a Paul Simon song in a commercial, it will have been licensed by Sony now, instead of Simon himself.

He wasn’t the only artist to sell his catalog outright in 2021.

In fact, there’s been a lot of money tossed around for music IP in 2021. Here’s a link to a rather staggering list of all of 2021’s music industry purchases (and not all of them were music publishing rights. Some were for master recordings, some were for even more music rights, some were for stakes in existing companies, and so on and so forth. More than I can comprehend, really). Music Business Worldwide  estimates that $5 billion was spent on music rights acquisition in 2021. Yes, billion with a “b.”

And half a billion of that was for Bruce Springsteen’s entire masters-plus-publishing catalog alone. Bruce Springsteen, age 72.

People are looking at their legacy, especially after Prince. Rather than have their catalog dissolve into disuse after they die or their heirs squabble over publishing rights, these already-rich artists are taking an extra payout.

Now, the heirs will be able to squabble, but they’ll be fighting over money, not over whether or not “Born in the U.S.A.” gets played in a scene in a movie.

There are a lot of other reasons to do this, of course. Managing all of this—or managing the managers—is time-consuming and very unfun. And right now, companies all over the world are paying top dollar to control the copyrights to music that everyone knows and loves.

Cashing in is a really good idea for older musicians (and even some younger ones: John Legend has sold his copyrights for music he composed between 2004 and 2021.   Legend is 43 years old, and presumably has decades of composing and recording ahead of him. None of those rights in future compositions were sold.

John Legend makes money on more than his music. As Bloomberg helpfully explained,

Dubbed “Music Mogul of the Year” by Variety in 2020, Legend … has gone on to expand into other areas of the entertainment field, in part through the founding of a production studio that’s created shows for Netflix Inc. and ABC. Variety estimates that Legend, born John Roger Stephens before adopting his stage name, takes in between $50 million and $100 million annually from his various enterprises, including LVE, his Napa Valley wine brand. 

 

Legend made a business transaction. I’ll wager he and his advisors are thinking that the payments for music catalogs will go down by the time he’s Paul Simon’s age. Better to cash in now.

This is how you leverage copyright. What these musicians—these business people—are doing. They’re looking at the value of their complicated music catalogs to them over the next ten to twenty years or the value to others. Given the estate benefits as well, these deals will (with luck) protect their legacy in this way:

Art—be it actual paintings or plays or novels or songs—dies when its mismanaged or argued over. Copyright in the U.S. is life plus 70 years. So heirs spending a decade or two…or 5 decades in the case of the Jimi Hendrix estate, is ridiculous and can really cut into the legacy of the artist.

This entire short series has been about ways to use copyright or ways others use copyright to control an artist’s work. I’m hoping you’ll all find this as fascinating as I do and maybe start understanding why I read articles about copyright and licensing.

It’s better to learn as things happen and change. It’s also kinda fun to learn some of the more esoteric versions of copyright law. Or how others decide to license or outright sell their copyrights, and the reasons they do so.

2021 was a complicated copyright year. It took three posts for me to explain that, which is why I didn’t put them in the year in review.

And then I found all the lists, which is fun for me.

Thanks for coming along on the ride.

 

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“Business Musings: Copyright Fun Part 3,” copyright © 2022 by Kristine Kathryn Rusch. Image at the top of the blog copyright © Can Stock Photo / Krisdog.