FAS 50 sets forth accounting and reporting standards for the recording and music industry. In this industry, business is transacted through license agreements, contractual arrangements entered into by an owner (licensor) of a music master or copyright. License agreements are modifications of the compulsory provisions of the copyright law. The licensor grants the licensee the right to sell or distribute recordings or sheet music for a fixed fee paid to the licensor or for a fee based on sales. This section presents the proper accounting by both the licensor and the licensee for license agreements in the recording and music industry.
The industry is currently attempting to adapt its business models for copyright protection, product distribution, and artist compensation to new electronic distribution channels. The new business models that inevitably evolve may require additional accounting guidance.