What is the right to prepare derivative works?

The copyright owner holds the exclusive right to make derivative works (adaptations) based on his own protected work. For example, the author of a book holds the exclusive right to make a movie based on that book. As such, if you make a derivative work without having the permission of the owner of the copyright for the underlying work, you are committing copyright infringement. With regard to sound recordings, a work is only a derivative work if it uses the actual sound recorded on that sound recording (although it may be a derivative work of the underlying musical work regardless of this fact).