All You Need to Know about the Music Business

All You Need to Know about the Music Business

by Donald S. Passman


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All You Need to Know about the Music Business by Donald S. Passman

Since the advent of file-sharing technology in the late 1990s, the music industry has been challenged to reinvent itself. What has it done? How have the record labels repositioned themselves to cope with these massive changes? How does all this affect creative artists?

No one understands the music industry -- from the technology, to the legalities, to the new industry practices -- better than veteran music lawyer Donald Passman. In this completely revised and updated seventh edition of All You Need to Know About the Music Business, which the Los Angeles Times called "the industry bible" and which has sold hundreds of thousands of copies over the last eighteen years, Passman offers executives and artists, experts and novices alike the essential information they need not only to survive in these volatile and exciting times, but also to thrive.

Drawing on his unique, up-to-the-minute experience as one of the most trusted advisors in the industry, Passman offers new information on:

- The new 360 model of record deals, wherein record companies share in nonrecord revenue

- The Copyright Royalty Board's latest decisions regarding online transmissions

- The developing customs on new technologies such as streaming on demand, ringtones, and digital downloads

- Updates on recording and publishing deals, as well as film music

He also gives guidance on fundamental issues, such as how to:

- Select and hire a winning team of advisors -- personal and business managers, agents, and attorneys -- and structure their commissions, percentages, and fees in a way that will protect you and maximize these relationships

- Master the big picture and the finer points of record deals

- Navigate the ins and outs of songwriting, music publishing, and copyrights

- Maximize concert, touring, and merchandising deals

Everyone in the business -- musicians, songwriters, entertainment lawyers, agents, promoters, publishers, managers, record company executives -- is scrambling to figure out what's going to happen in the future, and Passman is in the thick of these changes. Anyone interested in a music career will need this comprehensive and crucial guide to making it in one of the world's most dynamic industries.

Product Details

ISBN-13: 9780670918867
Publisher: Viking Penguin
Publication date: 01/28/2011
Product dimensions: 6.00(w) x 9.10(h) x 1.60(d)

About the Author

Donald Passman is a Phi Beta Kappa graduate of the University of Texas and a Cum Laude graduate of Harvard Law School. He is a prominent entertainment lawyer with the firm Gang, Tyre, Ramer & Brown, and his clients include such major entertainers as Tina Turner, Janet Jackson, Quincy Jones, Don Henley, Tom Waits, and Randy Newman. In addition, he represents many music publishers, producers, record companies, songwriters, industry executives, and film companies. He is frequently listed as one of the fifty most influential people in the entertainment industry, and is commonly credited with having won Janet Jackson her $40 million megadeal with Virgin Records. He has taught and lectured extensively, and has been teaching a course on the music industry at the University of Southern California Law School’s Advanced Professional Program since 1978. He lives in Los Angeles, California, with his wife and family.

Read an Excerpt

Chapter OneFirst Steps


For over ten years I've taught a class on the music business at the University of Southern California Law School's Advanced Professional Program. The class is for lawyers, accountants, record and film company executives, managers, agents, and bartenders who want to manage groups. Anyway, at the beginning of one of these courses a friend of mine came up to me. She was an executive at a major film studio and was taking the class to understand the music industry as it relates to films. She said, "I'm here to open up the top of my head and have you pour in the music business." I loved that mental picture (because there are many subjects I have wanted to absorb this same way), and it spurred me to develop a painless way of infusing you with the extensive materials in this book. So if you'll sit back, relax, and open up your mind, I'll pour in all you need to know about the music business (and a bit more for good measure).


I really love what I do. I've been practicing music law for over twenty years, and I represent recording artists, record companies, film companies, songwriters, producers, music publishers, film music composers, industry executives, managers, agents, business managers, and other assorted mutants that populate the biz.

I got into this on purpose, because I've always loved creative arts. My first show-biz experience was in grade school, performing magic tricks for assemblies. I also started playing accordion in grade school. (I used to play a mean accordion; everyone applauded when I shook the bellows on "Lady of Spain." I gave it up because it's impossible to put the moves on a girl with an accordion on your chest.) By high school, I had graduated from accordion to guitar, and in college at the University of Texas, I played lead guitar in a band called Oedipus and the Mothers.

While I was with Oedipus, we recorded a demo that I tried to sell to our family friend, Snuff Garrett (more about him later). Snuff, a powerful record producer, very kindly took the time to listen to the demo and meet with me. That meeting was a major turning point in my life. Snuff listened to the record, smiled, and said, "Don...go to law school."

So I took Snuff's advice, and went to Harvard Law School. In law school I continued to play lead guitar with a band called The Rhythm Method, but it was becoming apparent that my ability to be in the music business and eat regularly lay along the business path. So when I graduated, I began doing tax planning for entertainers. Tax law, like intricate puzzles, was a lot of fun, but when I discovered there was such a thing as music law, the electricity really turned on. In fact, I took the USC class that I now teach, and it got me so excited that I left the tax practice for my current firm. Doing music law was so much fun that it wasn't even like working (I'm still not over that feeling); and I enjoyed it so much that I felt guilty getting paid (I got over that). My first entertainment law experience was representing a gorgeous, six-foot model, referred to me by my dentist. (I promised him I would return the favor, because most of my clients had teeth.) The model was being pursued (I suspect in every way) by a manager who wanted a contract for 50% of her gross earnings for ten years. (You'll see how absurd this is when you get to Chapter 3.) Even then I knew this wasn't right, and so I nervously called up the guy to negotiate. I still remember my voice cracking as I said his proposal was over the industry standards, since most managers took only 15% (which was true). He retorted with, "Oh yeah? Who?" Well, he had me. I wasn't even sure what managers did, much less who they were. So I learned my first lesson in the art of humility.

As I began to really understand how the music business worked, I found that my love of both creative arts and business allowed me to move smoothly between the two worlds and help them relate to each other. The marriage of art and commerce has always fascinated me -- they can't exist without each other, yet creative freedom and the need to control costs are eternally locked in a Vulcan death match. Which means the music business will always need lawyers.

Anyway, I now channel my creative energies into innovative business deals, and my need to perform is satisfied by teaching, lecturing, and playing guitar at my kids' campouts. (I do a great "Kum-Ba-Ya.") Just to be sure I don't get too straight, however, I've kept up my weird assortment of hobbies: magic, ham radio, weight-lifting, guitar, dog training, five-string banjo, karate, chess, and real estate investment. I also write novels, which you are all required to buy.


Speaking of marrying creativity and business, I've discovered that a rock star and a brain surgeon have something in common. It's not that either one would be particularly good at the other's craft (and I'm not sure which crossover would produce the more disastrous results), but rather that each one is capable of performing his craft brilliantly, and generating huge sums of money, without the need for any financial skills whatsoever. In most businesses, before you can start earning big bucks, you have to be pretty well schooled in how the business works. For example, if you open up a shoe store, you have to work up a budget, negotiate a lease, bargain for the price of the shoes, and so forth‹all before you smell that first foot. But in entertainment, as in surgery, you can soar to the heights and never develop even minimal expertise in the business end of your profession.

Making a living from a business you don't fully understand can be risky. Yet a large number of artists, including major ones, have never learned such basics as how record royalties are computed, what a copyright is, how music publishing works, and a number of other concepts that directly affect their lives. They don't know these things because (a) their time was better spent making music; (b) they weren't interested; (c) it sounded too complicated; and/or (d) it was too much like being in school to have to learn it. But without understanding these basics as a foundation, it is impossible for them to understand the intricacies of their professional lives. And as their success grows, and their lives get more complex, they become even more lost.

While it's true that some artists refuse to even listen to business talk (I've watched them go into sensory shutdown if you so much as mention the topic), others get interested and really study their business lives. The vast majority, however, are somewhere in the middle of these extremes. They don't really enjoy business, but want to participate intelligently in their career decisions. These artists are smart enough to know that no one ever takes as good care of your business as you do.

It was for my moderate-to-seriously interested clients that I developed a procedure of explaining the basics in simple, everyday language. With only a small investment of time, these clients got down the essential concepts, and everyone enjoyed the process (including me). It also made an enormous difference in the artist's self-confidence about his or her business life, and allowed him or her to make valuable contributions to the process. Because the results of these brief learning sessions were so positive, several clients asked if we could explore the subjects more deeply. Thus the conception of this book. It's designed to give you a general overview of the entire music industry as it currently exists. You can read it as casually or intensely as suits your personal style, interest level, and attention span. It's not written for lawyers or technicians, so it doesn't include the jargon or minutia you'll find in a textbook for professionals. Instead, it gives a broad overview of each segment of the industry, and goes into enough detail for you to understand the major issues you're likely to confront in your professional life.


When I was in high school, a policeman named Officer Sparks spoke at an assembly. Mr. Sparks hyped us on the life of a crime fighter, certain that we all secretly wanted to be cops. While the man didn't sway me off the path of my destiny, he did show me something I'll never forget.

Officer Sparks ran a film in which the camera moved down a street. It was a grainy black-and-white movie, only about thirty seconds long, and consisted of a camera bobbing along a sidewalk. When it was finished, he asked if we'd seen anything unusual. No one had. Apart from a couple of people bouncing in and out of the doorways, it looked pretty much like pictures taken by a camera moving along a row of shops. Mr. Sparks then said that a "trained observer" who watched the film could spot six crimes being committed. He showed the film again and pointed out each of the incidents (there was a quiet exchange of drugs, a pickpocket, etc.). This time, the crimes were obvious. And I felt like a doofus for missing them.

Any time we learn a new skill, we go through a similar process. At first, things look either ordinary and deceptively simple, or else like a bewildering blur of chaos. But as you learn what to look for, you see a whole world you never knew was there. To work your way through the process, and become a "trained observer," you need a guide to the basics -- a framework in which to organize the bits and pieces. And that is the purpose of this book -- to give you a map through the jungle, and show you where the crimes are.


There is no way one book (even one filling several volumes) could poke into every nook and cranny of a business as complicated as the music business. Accordingly, the purpose here is to give you the big picture, not all the details. (Besides, for some of those details, I charge serious money.) Also, even if I tried to lay out all the little pieces, as fast as everything moves in this biz, it would be obsolete within a few months. Thus, this book is designed to give you a broad overview (which doesn't change nearly as quickly), so you'll have a bare tree on which to hang the leaves of your own experience. Oddly, it's easier to pick up details (from trade publications, gossip at cocktail parties, etc.) than it is to learn the structural overview, because few people have the time and patience to sit down and give it to you. In fact, giving you the overall view turned out to be a much bigger job than I thought when I started. But you're worth it.


Since this is the fourth edition, I now have feedback from experiments using this book on actual human subjects. Of all the responses I got, I thought you'd enjoy hearing about two in particular. First, I received an irate call from a music lawyer, who was upset because he charged thousands of dollars to give clients the advice I had put in the book. Second, I received an equally irate call from a manager, who said that all the artists he'd approached lately had been pushing my book in his face.

Way to go! Keep shoving!


When you go through this book, forget everything you learned as a kid about taking good care of books, treating them as sacred works of art, etc. Read this book with a pencil or highlighter in your hand. Circle or star passages you think you'll need, fold over pages, stick paper clips on them -- whatever helps. This is an action book -- a set of directions on how to jog through the music biz without getting mugged. So treat it like a comfortable old pair of shoes that you don't mind getting dirty. It doesn't matter what they look like, as long as they get you where you're going.


When my sons David, Josh, and Jordan were little, their favorite books were from a series called Choose Your Own Adventure. They work like this: You start reading the book on page 1 and, after a few pages, the author gives you a choice. For example, if you want Pinocchio to go down the alley, you turn to page 14, but if you want him to go to school, you turn to page 19 (my boys never picked school). From there, every few pages you have more choices, and there are several different endings to the book. (The boys liked the ending where everyone gets killed, but that's another story.) These books are not meant to be read straight through; if you tried, you'd find yourself crashing into various endings, twists, and turns of different plots and stories. Instead, you're supposed to skip around, following a new path each time. This concept gave me the idea of how to organize this book. As noted below, you have a choice of reading for a broad overview, or reading in depth. The book tells you where to skip ahead if you want to do this. However, unlike the Choose Your Own Adventure books, you can read straight through with little or no damage to the central nervous system.

Here's how it's organized (there's no particular magic to the order, except that you need some concepts before you can understand others):

Part I deals with how to put together a team to guide your career, consisting of a personal manager, business manager, agent, and attorney.

Part II looks at record deals, including the concepts of royalties, advances, and other major deal points.

Part III talks about songwriting and publishing, including copyrights and the structure of the publishing industry.

Part IV explores special things you'll need to know if you're a group.

Part V deals with concerts and touring, including agreements for personal appearances, and the role of your various team members in the process.

Part VI, on merchandising, tells you how to profit from plastering your face on posters, T-shirts, and other junk.

Parts VII through IX explore classical music, music in cyberspace, and motion pictures. They're the last sections because you need to understand the other concepts before we can tackle them.

Now to choosing your adventure. You have four ways to go through this book:


If you really want a quick trip, then:
(a) Read Part I, on how to pick a team of advisors
(b) Get people who know what they're doing
(c) Let them do it
(d) Put this book on your shelf to impress your friends; and
(e) Say "Hi" to me backstage at one of your concerts.


Short of this radical approach, if you want a broad-strokes overview of the business, without much detail, skip ahead each time you see the FAST TRACK directions.


If you want a more in-depth look, but less than the full shot, then follow the ADVANCED OVERVIEW directions. This will give you a solid overview, plus some detail on each topic.
For you high achievers who want an in-depth discussion, simply read straight through.

You should, of course, feel free to mix and match any of these tracks. If a particular topic grabs your interest, keep reading and check out the details. (Amazingly, the topics that grab your interest tend to be things currently happening in your life.) If another topic is a yawn, Fast Track through it. So let's get going. Everybody starts with Part I. Copyright © 1991, 1994, 1997, 2000 by Donald S.Passman

Table of Contents

Chapter 1: First Steps ..... 22
Chapter 2: How to Pick a Team ..... 31
Chapter 3: Personal Managers ..... 47
Chapter 4: Business Managers ..... 60
Chapter 5: Attorneys ..... 67
Chapter 6: Agents ..... 74
Chapter 7: Broad-Strokes Overview of the Record Business ..... 81
Chapter 8: Advances and Recoupment ..... 100
Chapter 9: Real-Life Numbers ..... 106
Chapter 10: Other Major Deal Points ..... 116
Chapter 11: Producer Deals ..... 134
Chapter 12: Advanced Record Deal Points ..... 146
Chapter 13: Advanced Royalty Computations ..... 167
Chapter 14: Loan-out, Independent Production, Label, and Distribution Deals ..... 189
Chapter 15: Copyright Basics ..... 207
Chapter 16: Publishing Companies and Major Income Sources ..... 215
Chapter 17: Secondary Publishing Income ..... 239
Chapter 18: Songwriter Deals ..... 255
Chapter 19: Copublishing and Administration Deals ..... 274
Chapter 20: Advanced Copyright Concepts ..... 286
Chapter 21: Even More Advanced Copyright Concepts ..... 297
Chapter 22: Groups ..... 311
Chapter 23: Personal Appearances - Touring ..... 329
Chapter 24: Tour Merchandising ..... 347
Chapter 25: Retail Merchandising ..... 357
Chapter 26: Overview of Motion Picture Music ..... 363
Chapter 27: Performer Deals ..... 366
Chapter 28: Film Songwriter Deals ..... 375
Chapter 29: Composer Agreements ..... 379
Chapter 30: Licensing Existing Recordings and Existing Songs for Motion Pictures ..... 389
Chapter 31: Music Supervisors ..... 395
Chapter 32: Soundtrack Album Deals ..... 398
Conclusion ..... 403
Index ..... 405
About the Author ..... 416

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All You Need to Know about the Music Business 4.7 out of 5 based on 0 ratings. 13 reviews.
KingICEman More than 1 year ago
If you are serious about the music business you must get this book. This May be the most important book about the business. Producer, Rapper, Singer, Songwriter, Manager, whoever, if you plan on people taking you serious, you MUST take your business serious. Get this book or get a job. End of story.
Guest More than 1 year ago
My sis and I started our own independent label and alot of our information was gathered from this book. He points out all the info you NEED to know, and now that I am in the business, I see all that the book has referenced coming to pass...I take it with me everywhere (it's in my bag now), and every business transaction I undertake I use this book as reference from copyrighting, to management team, to recording and manufacturing...You name it! He wrote it!
Guest More than 1 year ago
My colleagues and I recently launched an independent record label. The knowledge I gained from Mr. Passman's book is remarkable! I refer to his book frequently and use it as a textual guide for running the company.
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Guest More than 1 year ago
I read the 5th ed. Gonna get the 6th ed. This book is very informative bout the music business. The only thing on the 5th ed. it didn't explain enough bout independant record labels. But this is the best book I have ever read about the music business. A MUST HAVE!!!
Guest More than 1 year ago
Essential for aspiring artists or anyone who wants to get involved in the industry. Passman covers all bases.
Guest More than 1 year ago
Content notwithstanding, this is the most beautifully illustrated book on the music business that I've ever seen.
Guest More than 1 year ago
well if your not currently in the buisness then you will be better off reading this book only thing is i wasnt experienced before reading this book so i dont know if there is way,way more to learn than whats pin pointed in this book which will pretty much guide you to make perfessional decisions in your career i would highly recommend this book to the 'simple street artist' BOTTOM LINE READ ALL YOU CAN!!