WFH vs Exclusive in perpetuity

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This topic contains 14 replies, has 5 voices, and was last updated by  Art Munson 5 months, 1 week ago.

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  • #24671 Reply

    Musicmatters
    Participant

    Greetings folks,

    I am wondering about the practical differences between signing a work for hire (WFH) versus an exclusive in perpetuity agreement. I would love to hear your thoughts. Thanks,

    MM

    #24672 Reply

    MichaelL
    Participant

    I am wondering about the practical differences between signing a work for hire (WFH) versus an exclusive in perpetuity agreement.

    1. Generally, under “Work for Hire” (WFH) agreement you get paid a fee upfront, in addition to your writer’s royalties. WFH agreements are exclusive and in perpetuity because you usually assign the copyright to the company that hired you.

    2. An “exclusive in perpetuity agreement” for which you are not paid upfront basically amounts to you granting a perpetual “exclusive license” to whomever. While you have not transferred the copyright, you may as well have because you’ve given up the right to reproduce and sell the work in question.

    Note: The transfer of copyright under a WFH agreement MUST be put in writing. Without a written transfer, no WFH agreement exists and the copyright does not transfer, even if you were paid for the music. You have merely granted the other party a perpetual non-exclusive license.

    The case law is pretty clear on what constitutes work for hire. In addition to being paid a fee, other factors including where the work was performed, who owned the equipment used to produce the work, whether or not taxes withheld, etc., figure into the determination of WFH status.

    Cheers,
    Michael

    #24673 Reply

    Musicmatters
    Participant

    Thanks @michaell. I was hoping you would chime in. So this is what i gather, practically, they are the same as in both cases you have lost control of your music, forever. However, for a WFH, you have a good case for asking for money up front but does not mean you will get it and this explains why many WFH agreements have a trivial amount written down.

    Is there an advantage for the library in the WFH, it may have to come up with upfront money ? Should composers encourage or discourage this practice which seems to be gaining ? I have found that many exclusive libraries are now using WFH agreements

    #24675 Reply

    MichaelL
    Participant

    @musicmatters, one advantage libraries gain by offering money upfront is that it attracts better composers.

    Also under a WFH agreement, your music/copyright becomes an asset of the company, which can be sold.

    WFH had been the traditional practice of libraries for decades. The difference now, due to the proliferation of composers, is that upfront money is disappearing.

    As long as the number of composers continues to escalate these conditions will exist.

    #30241 Reply

    Abby north

    There is no termination right with wfh. For exclusive, there is a United States termination right.

    #30242 Reply

    Michael Nickolas
    Participant

    There is no termination right with wfh. For exclusive, there is a United States termination right.

    Terminate an agreement you agreed was in perpetuity?

    #30245 Reply

    MichaelL
    Participant

    There is no termination right with wfh. For exclusive, there is a United States termination right.

    I’m curious as well. Contracts are governed by state law and, as such, Contract Termination at will may vary from state to state.

    #30246 Reply

    Advice

    2. An “exclusive in perpetuity agreement” for which you are not paid upfront basically amounts to you granting a perpetual “exclusive license” to whomever. While you have not transferred the copyright, you may as well have because you’ve given up the right to reproduce and sell the work in question.

    Some exclusive music library contracts DO involve assignment of copyright.

    #30248 Reply

    MichaelL
    Participant

    Some exclusive music library contracts DO involve assignment of copyright.

    Ah, the fuzzy area surrounding the term “exclusive.” Prior to the advent of the new models, “exclusive” and “work for hire” were synonymous.

    Yes, I’m aware of at least one such non WFH library that requires copyright transfer after they’ve placed your music.

    #30377 Reply

    Abby North

    In the United States, there is a statutory right of termination of a transfer, but this does not apply to works for hire.

    Lisa Alter is one of the experts in terminations in the US, and her section 203 and section 304 articles are below.

    Here’s more on sections 203 and 304

    https://www.copyright.gov/docs/203.html

    https://www.law.cornell.edu/uscode/text/17/304

    In a nutshell, the US allows for a termination of the grant, either two copyright terms (56 years) or 35 years from the data of the grant. The differences are based on when the original grant was made and whether section 203 or 304 applies.

    Outside of the US, the British Reversionary Territories (BRTs) allow for terminations 25 years after the death of the author.

    #30378 Reply

    Abby North

    Yes, termination of a transfer made in perpetuity. Copyright law trumps the contract.

    #30393 Reply

    Michael Nickolas
    Participant

    In a nutshell, the US allows for a termination of the grant, either two copyright terms (56 years) or 35 years

    Oh, I see what you were referring to, thanks. We’re not talking about a two or three year time frame here, like a reversion clause has.

    #30399 Reply

    MichaelL
    Participant

    In a nutshell, the US allows for a termination of the grant, either two copyright terms (56 years) or 35 years from the data of the grant. The differences are based on when the original grant was made and whether section 203 or 304 applies.

    Yes, I was aware of that. Like Michael Nickolas, I initially thought that you meant termination in a shorter time frame.

    This may not be of much use to production music composers looking to recover recent compositions, but for someone managing a legacy catalog it’s certainly a valuable tool, especially for recording artists and songwriters.

    #30427 Reply

    Elliot Callighan

    Hi All,

    Just to help distill and simplify the difference between WFH and Exclusive in Perpetuity. This is my understanding – please let me know if I’m wrong!

    For EiP, you as the writer still maintain a share of generated royalties (specific writer or publishing shares can be negotiated upon), but you are allowing the entity you are working with (game developer, film producer, video production company, etc) to use the music you wrote for one specific purpose/project. The scope of that specific purpose is up to you and whomever you are entering into a contract with. BUT, they cannot use your music for anything other than what you agreed upon. AND, you cannot exploit that musical work through any other means.

    In WFH, you’re giving up everything. You will make no royalties on the work, ever (unless part of the agreement is you maintain your writer’s share – but there’s pretty much no chance you’ll maintain any publishing). Your only compensation could be the upfront fee. Additionally, whomever is contracting you for the work owns everything for that musical work. They can use that work for any purpose they want whatsoever in the future without your knowledge or permission. It is totally, completely, utterly theirs. Since you’re giving up royalties as well as any control of your work, the upfront fee is (or at least should be) much higher than an EiP situation.

    All that being said, I’m not a lawyer and have only been involved with production music for a short while. Please let me know if my understanding is incorrect!

    #30428 Reply

    Art Munson
    Keymaster

    For EiP, you as the writer still maintain a share of generated royalties (specific writer or publishing shares can be negotiated upon), but you are allowing the entity you are working with (game developer, film producer, video production company, etc) to use the music you wrote for one specific purpose/project.

    Generally, I would say that is not correct. They would have the right to license that piece of music anywhere.

    AND, you cannot exploit that musical work through any other means.

    Generally true.

    As in all things, the devil is in the details. One could be in the position to modify any of the scenarios you brought up.

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