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Who Owns the Beat? Splits, Points & Generational Wealth · Clone Wars: The Spinoff

• 0:00
  Welcome to Clone Wars: The Spinoff.
• 0:02
  Today is the advanced class on who owns the beat.
• 0:06
  We already did composition versus master in an earlier episode,
• 0:10
  so we're skipping definitions and going straight to the plumbing: where the
• 0:14
  paperwork breaks and who gets hurt when it does.
• 0:17
  One thing before we start.
• 0:18
  Everything today is educational and strategic commentary.
• 0:22
  It is not formal legal, tax, or financial advice.
• 0:26
  Before you sign or move anything, sit down with a licensed entertainment attorney
• 0:31
  and a CPA in your state.
• 0:33
  I'll start with Knowledge, the first number.
• 0:36
  Know what you own.
• 0:38
  Every record is two copyrights, the sound recording and the composition,
• 0:42
  and they pay through different pipes.
• 0:45
  Knowing your ISRC, your ISWC, and your IPI number is knowledge of self in business
• 0:52
  form.
• 0:52
  If you can't name your numbers, somebody else is collecting on them.
• 0:56
  Producers get paid from five separate streams.
• 0:59
  One, the upfront fee.
• 1:01
  Two, master points.
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  Three, publishing.
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  Four, SoundExchange.
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  Five, sync.
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  On a major label deal, points run 3 to 7, carved out of the artist's all in rate,
• 1:14
  which is typically around 16 to 17 percent.
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  So a 4 point producer on a 16 percent deal takes 25 percent of the artist's master
• 1:23
  earnings.
• 1:24
  On indie records, producers negotiate 15 to 25 percent of net master royalties,
• 1:30
  or a fifty fifty net split if no fee was paid.
• 1:34
  But points are a backend royalty.
• 1:36
  They are never co-ownership of the sound recording copyright.
• 1:40
  And in hip hop, custom says the beatmaker claims 50 percent of the composition,
• 1:46
  registered as Words and Music even if he never wrote a bar.
• 1:50
  Hold on, as the MC, fifty percent for a beat with no lyrics?
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  That's my Equality question.
• 1:55
  It's custom, not law, and it's negotiable.
• 1:59
  That's the point of Equality, the fifth number.
• 2:02
  Balance the split between beatmaker and lyricist while everybody's in the room,
• 2:07
  so there's no discord later when the record pops.
• 2:10
  Now the stream that bites hardest.
• 2:12
  SoundExchange splits digital performance money 50 percent to the copyright owner,
• 2:18
  45 percent to the featured artist, and 5 percent to non featured musicians.
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  There is no producer share.
• 2:25
  A producer only gets paid when the featured artist signs a Letter of Direction
• 2:30
  sending a piece of that 45 percent to him, with a repertoire chart listing ISRCs.
• 2:36
  That's Section 114(g)(5) of the Music Modernization Act.
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  Your production contract can promise four points for life and SoundExchange never
• 2:46
  hears about it.
• 2:47
  There is a fallback for records fixed before November 1, 1995.
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  The AMP Act allows a 2 percent default allocation if the artist can't be reached
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  after 120 days of good faith effort and nobody objects.
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  For anything newer, no LOD, no money.
• 3:04
  And royalties unclaimed after roughly three years get redistributed to other
• 3:08
  registered rightsholders.
• 3:10
  The 2026 rates make it sharper.
• 3:12
  Under the Web VI settlement, the non subscription commercial broadcaster rate rose
• 3:16
  from $0.0025 per performance in 2025 to $0.0028 in
• 3:22
  2026.
• 3:23
  Under Phonorecords IV, the streaming mechanical headline rate is 15.3 percent in
• 3:28
  2026, going to 15.35 percent in 2027, and the physical and download rate is
• 3:35
  13.1 cents per track.
• 3:37
  Composition splits collected through the MLC are worth more every year,
• 3:41
  if they're registered right.
• 3:43
  Let me bring it to the road, because I promise I'm gone eat it all.
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  Promoter contracts carry warranties and indemnity clauses.
• 3:51
  You're promising the material you perform and market is unencumbered.
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  Now picture a producer with nothing signed who files a DMCA takedown on your single
• 4:01
  the week the tour drops.
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  Promoters can hold escrowed deposit balances or cancel dates.
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  And merch is exposed too.
• 4:10
  Song titles, lyrics, and album artwork on a shirt need session releases and clean
• 4:15
  chain of title for the graphics.
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  No paper, no rollout.
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  That's Wisdom, the second number.
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  Wisdom is Knowledge made manifest.
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  You execute the split sheet and the LOD before the stems leave the studio.
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  Same day.
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  One page: names, percentages, PRO, IPI, and a line saying an LOD follows.
• 4:36
  And Understanding, the third number, is knowing the pipes.
• 4:39
  PROs, the MLC, SoundExchange, your distributor's split payouts.
• 4:44
  Overseas it's another door.
• 4:46
  PPL in the UK, Re:Sound in Canada, GVL in Germany collect neighboring rights.
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  The United States isn't a signatory to the Rome Convention,
• 4:55
  so that money doesn't just route to US creators without specialized international
• 4:59
  administration.
• 5:00
  Now turn paper into generational wealth.
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  Under 17 U.S.C.
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  section 302(a), copyright lasts for the author's life plus 70 years.
• 5:10
  Die without a plan and state intestacy statutes, like New York's EPTL 4-1.1,
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  split the catalog among heirs.
• 5:18
  Fractional co ownership can mean paralysis, because licensing deals often demand
• 5:23
  unanimous consent.
• 5:25
  A will goes through public probate, which exposes assets to appraisal,
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  estate taxes, creditors, and royalty freezes that can run for years.
• 5:33
  And a will dictates inheritance, but it doesn't redirect your accounts at the PROs,
• 5:37
  the MLC, or your distributor.
• 5:40
  That's Born, the ninth number, bringing legacy into existence.
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  Seventy years past my last breath, the art should still be feeding my grandkids.
• 5:48
  That's Culture and Power.
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  Music as generational capital, not a disposable advance.
• 5:54
  The architecture to discuss with your attorney: an operating LLC holds the
• 5:58
  copyrights, publishing entity, master files, and trademarks.
• 6:02
  The LLC membership is owned by a revocable living trust or a dedicated IP trust.
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  You serve as trustee while you're alive, and you name a successor trustee or an
• 6:12
  Artistic Executor who understands licensing.
• 6:14
  Here's what I need explained.
• 6:16
  Who gets paid to run it?
• 6:18
  That's the commission trap.
• 6:19
  In New York, statutory trustee commissions under SCPA section 2309 are based on
• 6:26
  annual asset valuations.
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  For a catalog, that forces burdensome appraisals every year.
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  Well drafted IP trusts can instead set a commission tied to actual cash earnings,
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  for example 15 percent of annual gross revenues, similar to management or agent
• 6:44
  standards.
• 6:45
  Rules differ by state, so that's a drafting conversation with counsel.
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  And protect the keys.
• 6:51
  Under RUFADAA, your estate documents need explicit authority over digital accounts.
• 6:56
  Passwords, stem backups, and DAW sessions go in an encrypted password manager,
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  never written into a public will.
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  Also, authors and statutory heirs hold non waivable rights to terminate copyright
• 7:09
  transfers 35 to 40 years after the grant, under 17 U.S.C.
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  section 203.
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  So even a bad old deal can come back around for your heirs.
• 7:20
  Build and Destroy, the eighth number.
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  Build the LLC and the trust.
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  Destroy the handshake deal.
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  Allah, the seventh, is absolute self determination over your work.
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  And the Cipher is the full circle: session, split sheet, LOD,
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  registration, collection, tour, estate, with no leaks.
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  Takeaways.
• 7:40
  Sign the split sheet the day the song is done.
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  File the LOD with the production agreement.
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  Register with the MLC and your PRO.
• 7:49
  Hold the catalog in an LLC inside a trust.
• 7:53
  And again, this is education and strategy, not legal, tax, or financial advice.
• 7:57
  Get your professionals, then get your paper right.
• 8:00
  That's Clone Wars: The Spinoff.