By Lori Spencer
Recording contracts are legally binding agreements between an artist and the record label defining the rights, obligations and remedies for each party. A recording deal may just be for a single project, or on a “per album” basis, but most are long term commitments of three to seven years with periodic options to renew. As the record company is making a considerable financial investment in the costs of making and producing albums, they naturally expect a substantial return.
This tutorial covers many of the key points to negotiate in a record deal, but is not intended as legal advice. Always have an experienced entertainment law attorney review any record contracts before signing.
Negotiate the most important thing first: who retains creative control – artist or record company? Artists will of course try to retain as much control over their own work as possible, but most major record label contracts reserve the right for the company to veto the artist’s choice of studio, producer, songs, musicians, cover art and the like.
Discuss the length of the proposed contract. As record contracts generally sign artists for a certain number of records (not years), it could be a one-record deal or a six record deal. There is an option to renew after each album or period of time, usually at the record company’s option. “Options” are explained further in Reference 2.
Have your contract clearly define the extent of exclusivity. While every recording contract engages the exclusive services of the performer or group (meaning you can’t make records for any other companies during the contract term), some labels will try to push this exclusivity clause too far and unfairly bind artists from doing other projects.
Estimate a recording budget for each album under the recording contract and negotiate an appropriate advance. It’s important not to ask for too much upfront, because these advance monies are fully recoupable from the artist’s future royalties. Think of it like a loan, and never borrow more than you can realistically pay back in a reasonable amount of time (based on sales expectations).
Have your manager or attorney negotiate the best possible royalty rate they can get in the contract. Most new artists receive a royalty rate of between 9-14%. Many record contracts increase the artist’s royalty rate by degrees with each subsequent album based on performance and sales figures. Advances and production budgets generally will also increase with each album under the contract.
Hammer out the details of a song publishing arrangement if the artist writes their own material. Most record labels will want a piece of the publishing pie, as this generates a significant amount of revenue for the company. Sometimes the split is as much as 50/50 between the songwriter and record label.
Make certain your contract clearly defines both parties’ rights and obligations in regard to artist merchandising, publicity, marketing, promotion, public performances, touring, tour support, control/maintenance of artist’s official website, and other fine points involved in a standard recording contract.
As all things must eventually come to an end, make sure the recording contract sets a clear procedure for termination of the deal. It should also spell out the legal remedies available if one or the other party defaults. Labels sometimes go bankrupt or out of business and sell the artist’s contract to another record label; your contract needs to cover all of these “what if” scenarios that could happen down the road.
You may also want to insert a “key man” clause that states if your A&R rep, producer, or a key person within the record label or band should leave, the contract may be terminated.
A “sideman’s clause” is recommended if the artist wants to be free to do studio work with other artists, appear on benefit or compilation albums, movie soundtracks, etc. Even with such a clause the artist will still need permission from the record company before recording elsewhere, but without a sideman’s clause, the artist (or members of the band) would not be allowed to appear as a guest on any other albums.
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- Music Biz Academy: What’s A Record Deal All About? [http://www.musicbizacademy.com/knab/articles/recorddeal.htm]
- YouTube: What to Expect in a Recording Contract [http://www.youtube.com/watch?v=4v7GMpA5sVI&feature=related]
- YouTube: Record Deals and the Future of Music [http://www.youtube.com/watch?v=1eg5JKPwLqI&feature=related]
Lori Spencer has written professionally since 1986. She is the author of three nonfiction books, is writing her fourth and provides content for eHow and LIVESTRONG.COM. She also produces and hosts a weekly radio show. Her subjects of expertise include history, media, music, film and the performing arts.