Okay, so the recording contract. The thing most musicians dream and strive for. So well done, you are now presented with one. It is important not to get carried away. First off, THE RECORD COMPANY IS NOT THE ENEMY, so approach with caution not angry scepticism. You need to take a deep breath and consider what all that legal jargon is trying to say. I mean, your music is your baby; you want it taken care of.
So what is a recording contract?
In simple terms, it is a legal agreement between the recording artist and recording label whereby the label is given the right to promote and sell the contracted record or records. What an artist needs to be aware of is the number of different, additional conditions attached to this arrangement.
Rights & Exclusivity:
This is the important one people. The term ‘sole and exclusive’ will pop up throughout the contract regarding the many rights to do with you and your music. The areas covered will include:
(a) During the process of recording, the artist will be bound to that label for the specified period to produce the album or EP and for a time following the recording for promotional purposes.
(b) The label will exclusively own the copyright in perpetuity to those Masters. They will also prevent you from rerecording those songs for a certain time.
(c) The record company will also have the ‘sole and exclusive’ right to exploit that product in any media, to grant licenses for compilations, synchronization and other profit making ventures.
So, what to look out for regarding all this stuff:
Firstly, some clauses may state they do not require your Prior Approval for certain ventures, such as the choice of promotional photos, or in issuing of licences for your recording. This can raise problems, as you may not want your song to feature on an ad for nuclear power due to moral/ethical reasons or that photo may make you look ‘fat’.
You can ask to change certain clauses to require your permission for use. This approval could be determined as a unanimous decision by the band or by majority, a consideration I recommend should be outlined in the contract clearly to prevent headaches in the future.
Secondly, the music exploitation section of the contract will often make reference to Moral Rights. These moral rights protect the musician(s) reputation by guaranteeing them:
(a) identification as the author of that music and
(b) the right to object to the derogatory treatment of that work, to preserves it’s integrity against alteration and distortion. (you know, when musicians cry “that’s not my song, what did you do to it!”). See Copyright, Designs and Patents Act 1988, Ch.VI, s.77.
There are parts of recording contracts which will say that you waive these rights. You can ask them to change this in the contract, so you can object to anything they may do to the Masters in the future, thereby maintaining some control.
The Time Thing:
Time periods and deadlines are crucial when addressing the commitments from both the artist and label regarding the music. It is a two-way street and some key examples are as follows:
(a) The Promotional Commitment: This outlines that the label needs to exploit and make public the recording commitment produced by the musician(s) within a certain time frame. This is to prevent the label from simply shelving the recordings. The territory specifications are important here, the label may only be required to promote in the UK.
(b) The Recording commitment: This will specify how and when the master needs to be presented to the label ie. 6 months from the date of the agreement. It will usually also state how many songs, the quality of the recording and the total playing time required to fulfil the commitment. An example being an EP of 3 to 8 songs equating to 23- 25 minutes playing time.
The artist needs to be VERY aware of the possible full length of time they will be bound to a label, especially at the prospect of it all not working out. The contract will usually specify an initial period of say around 12 months that you are committed to the label including the recording commitment plus a certain period of time from the release for promotion what-have-you. It all seems straight forward, but what of this ‘Option to Extend’ thing?
An Option is a contractual legal term, in this scenario it gives the label the irrevocable right but not the obligation to extend the recording contract for successive periods usually with a new recording commitment. For example, the Initial Period may have required an EP to be produced of a certain length with a certain amount of songs. If the option to extend the contract, often called a ‘First option Period’, is exercised then a new additional requirement of say an album of 14 songs with a playing time of a minimum of 45 minutes need to be made within this new 6 month period.
It is important to note then that:
- These options are usually consecutive and irrevocable. If the record company decides to exercise them under the contract, you are bound to abide by the new terms. It may seem harsh, but the label needs to be able to better guarantee their return from their commitment to you, the artist.
- There is usually more than one option period outlined in the contract, such as ‘First Option Period’ then ‘Second Option Period’, each with an additional recording commitment.
The Money Thing:
Yes, this is the thing that makes the world go around and you will be brimming with excitement at the prospect of all those royalty payments.
The Royalties will come from the Net Receipts from the exploitation of the recording commitment. Now the amounts the label and the artist will receive will vary according to the way in which the recordings have been used to make a profit. The label and artist will usually get a fairly even split regarding the actual sale of the albums or EP, usually a 50/50 split of Net Receipts. For other ventures the proportion of profits will usually be higher for bands, such as 75% of the Net Receipts. This includes licensing opportunities for use in adverts, movies etc.
The basis of this split, is that the label has invested their time and effort into making the recording itself, its production, distribution etc. The synchronization deals rely more heavily on the talent of the artist themselves, which impressed the third party licensee.
There are some catches as to when an artist will receive these royalties. If a band receives an Advance before the recording is made, you may be able to afford Tesco finest sausages but it ain’t free money. It’s an advance on future earnings! Additionally, and this is when reading the document is very important, Budgetary Expenses provided by the record company for promotion and other things may be due back to the label. In both instances, this money is effectively owed to the label and will need to be earned back through net receipts until paid in full at which time the artist will start to receive the royalties.
Sorry, killed your money buzz.
Power to the Artist:
Sometimes it may feel like ALL the power rests with the label in recording contracts. The artist is bound to the label for what seems like an indeterminate time and restricted in exercising their creative muscles. You have rights in the entertainment industry to practice your trade and there is a help in law, it is called the Restriction of Trade doctrine.
The recording contract can not specify requirements which are imposing overly harsh or unreasonably restrictive conditions on an artist and their musical aspirations. There are limitations on how long and with what commitment a record company can tie an artist(s) to the label. Courts in some instances have found it to be an unreasonable restraint to bind a band to a company for say 6 albums or 10 years.
‘But I am in an exclusive recording contract and I just got a call from Kanye West and he was to duet with me!’ Never fear dear artist, the law will usually look unfavourably on a label denying you this opportunity. Generally there is a clause in your contract which will allow you to do certain things with the label’s permission and acknowledgment.
Now, don’t rely on the fact that the contract looks unreasonable, you will sign it then go to court to get out of it. BAD MOVE (yes, I am talking about you former Stone Roses Manager Gareth Evans). You will need to go through the courts, be prevented from recording with anyone else until the matter is resolved. Before you know it, 3 years have passed, you are working at ASDA and you may not have won!
This is a tricky area of law and not straightforward. Just ask George Michael. Truthfully these issues are unlikely to arise, but it is important to know your rights!
So the checklist:
1. When you get it, do not, I repeat DO NOT sign it right then and there. It may seem basic, but you will surprised how many people would treat such an important contract like their basic mobile phone terms and conditions form. You need to read it from beginning to end. If you don’t understand something, ask. If you are not happy with the answer, ask someone else. Remember, this is important. You do not want a Stone Roses moment.
2. Be aware of the requirement for “Prior Written Notice”. You cannot just tell people at the label in these instances. You have to write to them to say ‘you have not released out album within the release commitment period’ or ‘we do not approve of the use of this recording in this advert’. The door swings both ways, they also have to write to you. Legal cases can fall apart simply due to a lack of a letter.
3. Be conscious of the time requirements. Specific dates are important, the last day to complete the recording etc. I recommend getting a wall year planner, outline all the dates clearly for all your’s and the label’s responsibilities.
4. Be aware of your rights, when the label must get approval, when your royalties are due etc.
Oh, and why the Stone Roses? Because they rock people and what happened to them SUCKED!
So what is a recording contract?
In simple terms, it is a legal agreement between the recording artist and recording label whereby the label is given the right to promote and sell the contracted record or records. What an artist needs to be aware of is the number of different, additional conditions attached to this arrangement.
Rights & Exclusivity:
This is the important one people. The term ‘sole and exclusive’ will pop up throughout the contract regarding the many rights to do with you and your music. The areas covered will include:
(a) During the process of recording, the artist will be bound to that label for the specified period to produce the album or EP and for a time following the recording for promotional purposes.
(b) The label will exclusively own the copyright in perpetuity to those Masters. They will also prevent you from rerecording those songs for a certain time.
(c) The record company will also have the ‘sole and exclusive’ right to exploit that product in any media, to grant licenses for compilations, synchronization and other profit making ventures.
So, what to look out for regarding all this stuff:
Firstly, some clauses may state they do not require your Prior Approval for certain ventures, such as the choice of promotional photos, or in issuing of licences for your recording. This can raise problems, as you may not want your song to feature on an ad for nuclear power due to moral/ethical reasons or that photo may make you look ‘fat’.
You can ask to change certain clauses to require your permission for use. This approval could be determined as a unanimous decision by the band or by majority, a consideration I recommend should be outlined in the contract clearly to prevent headaches in the future.
Secondly, the music exploitation section of the contract will often make reference to Moral Rights. These moral rights protect the musician(s) reputation by guaranteeing them:
(a) identification as the author of that music and
(b) the right to object to the derogatory treatment of that work, to preserves it’s integrity against alteration and distortion. (you know, when musicians cry “that’s not my song, what did you do to it!”). See Copyright, Designs and Patents Act 1988, Ch.VI, s.77.
There are parts of recording contracts which will say that you waive these rights. You can ask them to change this in the contract, so you can object to anything they may do to the Masters in the future, thereby maintaining some control.
The Time Thing:
Time periods and deadlines are crucial when addressing the commitments from both the artist and label regarding the music. It is a two-way street and some key examples are as follows:
(a) The Promotional Commitment: This outlines that the label needs to exploit and make public the recording commitment produced by the musician(s) within a certain time frame. This is to prevent the label from simply shelving the recordings. The territory specifications are important here, the label may only be required to promote in the UK.
(b) The Recording commitment: This will specify how and when the master needs to be presented to the label ie. 6 months from the date of the agreement. It will usually also state how many songs, the quality of the recording and the total playing time required to fulfil the commitment. An example being an EP of 3 to 8 songs equating to 23- 25 minutes playing time.
The artist needs to be VERY aware of the possible full length of time they will be bound to a label, especially at the prospect of it all not working out. The contract will usually specify an initial period of say around 12 months that you are committed to the label including the recording commitment plus a certain period of time from the release for promotion what-have-you. It all seems straight forward, but what of this ‘Option to Extend’ thing?
An Option is a contractual legal term, in this scenario it gives the label the irrevocable right but not the obligation to extend the recording contract for successive periods usually with a new recording commitment. For example, the Initial Period may have required an EP to be produced of a certain length with a certain amount of songs. If the option to extend the contract, often called a ‘First option Period’, is exercised then a new additional requirement of say an album of 14 songs with a playing time of a minimum of 45 minutes need to be made within this new 6 month period.
It is important to note then that:
- These options are usually consecutive and irrevocable. If the record company decides to exercise them under the contract, you are bound to abide by the new terms. It may seem harsh, but the label needs to be able to better guarantee their return from their commitment to you, the artist.
- There is usually more than one option period outlined in the contract, such as ‘First Option Period’ then ‘Second Option Period’, each with an additional recording commitment.
The Money Thing:
Yes, this is the thing that makes the world go around and you will be brimming with excitement at the prospect of all those royalty payments.
The Royalties will come from the Net Receipts from the exploitation of the recording commitment. Now the amounts the label and the artist will receive will vary according to the way in which the recordings have been used to make a profit. The label and artist will usually get a fairly even split regarding the actual sale of the albums or EP, usually a 50/50 split of Net Receipts. For other ventures the proportion of profits will usually be higher for bands, such as 75% of the Net Receipts. This includes licensing opportunities for use in adverts, movies etc.
The basis of this split, is that the label has invested their time and effort into making the recording itself, its production, distribution etc. The synchronization deals rely more heavily on the talent of the artist themselves, which impressed the third party licensee.
There are some catches as to when an artist will receive these royalties. If a band receives an Advance before the recording is made, you may be able to afford Tesco finest sausages but it ain’t free money. It’s an advance on future earnings! Additionally, and this is when reading the document is very important, Budgetary Expenses provided by the record company for promotion and other things may be due back to the label. In both instances, this money is effectively owed to the label and will need to be earned back through net receipts until paid in full at which time the artist will start to receive the royalties.
Sorry, killed your money buzz.
Power to the Artist:
Sometimes it may feel like ALL the power rests with the label in recording contracts. The artist is bound to the label for what seems like an indeterminate time and restricted in exercising their creative muscles. You have rights in the entertainment industry to practice your trade and there is a help in law, it is called the Restriction of Trade doctrine.
The recording contract can not specify requirements which are imposing overly harsh or unreasonably restrictive conditions on an artist and their musical aspirations. There are limitations on how long and with what commitment a record company can tie an artist(s) to the label. Courts in some instances have found it to be an unreasonable restraint to bind a band to a company for say 6 albums or 10 years.
‘But I am in an exclusive recording contract and I just got a call from Kanye West and he was to duet with me!’ Never fear dear artist, the law will usually look unfavourably on a label denying you this opportunity. Generally there is a clause in your contract which will allow you to do certain things with the label’s permission and acknowledgment.
Now, don’t rely on the fact that the contract looks unreasonable, you will sign it then go to court to get out of it. BAD MOVE (yes, I am talking about you former Stone Roses Manager Gareth Evans). You will need to go through the courts, be prevented from recording with anyone else until the matter is resolved. Before you know it, 3 years have passed, you are working at ASDA and you may not have won!
This is a tricky area of law and not straightforward. Just ask George Michael. Truthfully these issues are unlikely to arise, but it is important to know your rights!
So the checklist:
1. When you get it, do not, I repeat DO NOT sign it right then and there. It may seem basic, but you will surprised how many people would treat such an important contract like their basic mobile phone terms and conditions form. You need to read it from beginning to end. If you don’t understand something, ask. If you are not happy with the answer, ask someone else. Remember, this is important. You do not want a Stone Roses moment.
2. Be aware of the requirement for “Prior Written Notice”. You cannot just tell people at the label in these instances. You have to write to them to say ‘you have not released out album within the release commitment period’ or ‘we do not approve of the use of this recording in this advert’. The door swings both ways, they also have to write to you. Legal cases can fall apart simply due to a lack of a letter.
3. Be conscious of the time requirements. Specific dates are important, the last day to complete the recording etc. I recommend getting a wall year planner, outline all the dates clearly for all your’s and the label’s responsibilities.
4. Be aware of your rights, when the label must get approval, when your royalties are due etc.
Oh, and why the Stone Roses? Because they rock people and what happened to them SUCKED!
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