The Two Copyrights: Understanding What You're Buying

Before you can successfully invest in music royalties, there's one question you must be able to answer: what are you actually buying?

In this foundational episode, host Josh Gilliland breaks down the most critical concept in the entire asset class: the two distinct copyrights that exist for every recorded song. Using his original masterpiece, "Squeegee the Fat Squirrel," as a guide, Josh makes these complex legal ideas simple, tangible, and memorable. This is the essential knowledge you need to become a smart, informed investor.

In this episode, you will learn:

• The difference between the Musical Composition (the "blueprint") and the Sound Recording (the "master").

• Why a single song can have multiple, separately owned recordings (like the famous Dolly Parton / Whitney Houston example).

• The crucial role of an investor as a "silent financial partner" who buys the income stream, not the creative control.

Resources Mentioned:

Ready to start analyzing deals? Download your free Advanced Investment Calculator that Josh uses to model potential returns: https://www.jgsoundofmoney.com/calculator

Transcript:

Josh Gilliland: [00:00:00] Hello and welcome to the Sound of Money, the podcast that demystifies music, royalty investing, and shows you how to build a durable, passive income stream from the music you love. I'm your host, Josh Gilland, ~and uh, ~this is episode two. So episode one from last week, I spent time talking about my personal why, why I got into music royalty investing.

I talked a little bit about my investing journey to get to music royalty investing, some of the failed experiments that I had over time, and how I used that knowledge to go head first into music, royal investing. So if you haven't had a chance to listen to that episode, go back and give it a listen. I think it's a grand total of 11 minutes, so not a big time commitment, but it will kind of help you understand my story and where it is that I'm coming from.

In this [00:01:00] episode, we're going to get a little bit more into the details of music Royalty investing. It's like the foundation foundational what of music, royalty investing. ~Uh, ~we're going to answer some of the questions of when you invest in music royalties, what are you actually buying, right? What, what does this even mean?

And so we're gonna tease that apart in this episode. ~Um, ~it can seem technical, it can seem kind of dry. ~Uh, ~a little bit of legalese in here as well, but this really is the superpower for all investors. To really understand what it is that you are investing in. And I have a little, ~uh, ~story that I'm going to share along the way.

A little, a little example of a big fat squirrel, and I'm gonna use this big fat squirrel to help explain all of this, all these concepts. So this will be a lot of fun. So let's jump [00:02:00] in. Okay. To make this as tangible as possible, we're going to use a song I wrote called Squeegee the Fat Squirrel as Our Guide.

This is a real song about a really fat squirrel that lives in my backyard and wrecks havoc on my bird feeders. But don't worry about squeegee. He's got his own little feeding area with corn cobs and his own little bowl of nuts. So he is well taken care of, which this is the reason why he's a fat squirrel, I guess.

But I need to do those things. So he leaves my bird feeder alone. But I was in my office one day looking ~at, ~at squeegee the fat squirrel, and I decided to write a song about squeegee the fat squirrel. So it's a legitimate song, but we'll use that as an example. Through this episode. Every single piece of recorded music has two distinct copyrights attached to it.[00:03:00] 

Think of them like two pieces of property that can be owned and sold independently of each other. The first of these copyrights. ~Uh, ~and it's the most foundational copyright is the music musical composition itself. So this copyright protects the song itself, the intellectual property of the song. It's the melody that you hum in the song.

It's the chord progression throughout. It's the rhythm inside of the song. It's the lyrics that you sing in your shower or in the car, not very well. And the easiest way to think about the composition of a song is like a blueprint. A blueprint for a building. So it's what's written down what is captured.

For the design of what you want to eventually build. [00:04:00] And so that's really what the composition of the song is. So the music, musical composition, copyright, ~uh, ~is, is what that is all contained. So for, you know, for example, for squeegee, the Fat Squirrel, the composition is the specific melody I wrote for that song.

And the hilarious lyrics, of course, hilarious. ~Uh, ~about the bird feeder heist of this fat squirrel. So that's the blueprint. That is what makes up the musical composition. So that is one of the areas of a song that can be sold to investors. The second copyright is called, is the Sound recording. ~Uh, ~sometimes it's called the, you'll hear it called the master.

So this protects the specific recorded version of that music composition. It's the actual performance that was [00:05:00] captured in the studio or on the stage or wherever. ~Uh, ~it was. It's the actual, just the recording. What you actually hear when you're listening to, to the song. ~Uh, ~if you look at this as like an example with the blueprint, the sound recording would be the finished building, so it would be the actual building that was built from that blueprint for squeegee the fat squirrel.

As I go into my studio and actually create that song, it is the actual file that is created of squeegee the Fat Squirrel. And that song it, so that that song, that recording is the master or the finish building, if you will. Now, here's where it gets a little bit interesting, ~uh, ~and this distinction is very, very critical.

So a single composition, a single blueprint can have many [00:06:00] different sound recordings or masters. So think of a single blueprint used to build multiple similar buildings. So the great example of this in music is the song I Will Always Love You. So Dolly Parton, you may or may not know. Actually wrote the composition for that song.

The Blueprint, her recorded version of that song is One Master, so she recorded the song, she wrote the song, she then recorded the song. Her recording of that song ~is, ~is a master. Now, years later, Whitney Houston recorded a version of that song. And it is an iconic version. It's an iconic cover version of that song that I'm sure most of you ~have ~have heard.

That's a completely separate master of the same [00:07:00] underlying song, so the composition is still the same. So Whitney Houston's version of the song, the composition is still Dolly Parton's because she owns that blueprint for the song. But that master is Whitney Houston's. She's the one that actually recorded that version of it.

So those are the two distinct copyrights that exist in the world ~of, ~of music. So the similar, let's take Squeegee, the Fat Squirrel. So obviously this song is going to be a huge hit. We all know, ~uh, ~what if there was this heavy metal band that was out there? And they hear my version of squeegee the Fat Squirrel, and they say, you know what?

This would make a really good thresh metal song. So they take it and they turn it into their version, which is a thrash metal song with a lot of death growls. That is a separate master [00:08:00] from my recording of squeegee the fat squirrel. Now for the metal band's version of Squeegee the Fat Squirrel, I still own the composition.

As the one who wrote it, I own the composition for that song, so I would still earn royalties off of that song. For the composition side, they would earn the royalties from the master side of the recording side for that version of the song. So hopefully ~that, ~that helps make sense, ~uh, of, of ~how the composition and the master fit together, ~you know, ~in ~that, ~that example.

So it's different. Building made from the same blueprint, ~um, ~if you will. Now, here's the most important point for you as an investor to understand. You are typically buying the right to the income stream only, not the underlying copyright or any creative control for the song. So view your role [00:09:00] as one of a silent financial partner.

So ~if, ~if you were to invest, you wouldn't be buying the right to decide. If that famous artist can record the heavy metal version of squeegee the fat squirrel, you would just be buying a piece of the income that my original master or their new version generates. Or if you were investing into the composition itself, then you would just earn the right to the income stream for the royalties from that composition.

So it's, it sometimes can be a little confusing, but hopefully this helps ~make, ~make some sense ~in, ~in this, ~uh, ~for you as the investor. And that's really the bedrock, you know, the two copyrights, the blueprint and the building, if you will. And now that you know what it is that you're buying with a music royalty investment, the next question is, how do [00:10:00] these assets actually generate income?

And that's what we're gonna cover next week when we explore the four core royalty streams. So stick around for that. ~Uh, ~don't forget to download your free advanced investment calculator by visiting. JG sound of money.com/calculator. Again, that's JG sound of money.com/calculator. Thank you for tuning in to the Sound of Money.

Please subscribe, leave us a review and we'll see you next week.