Honorary Music Alliance member Juan David Lopez and Avenant Law, is a London England based legal consultancy advising bands, solo artists, composers, managers, promoters, distributors and producers with making informed decisions in the music industry. Over 1,000 music companies, including established labels, publishers, music colleges, recording studios and artists have used Avenant contracts since 2010. Their contribution to Music Alliance is one of the most complete and up to date collections of music and entertainment law templates on the internet.
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Recording-Contract NonExcl (US_v5)
Sample-Clearance-with-Record-Label_w-breakdown_US_v4
Sample-Clearance-with-Publisher_w_breakdown_US_v5
Sample clearance agreement with Record Label_US_v4
Sample clearance agreement with Publisher_US_v5
Recording Contract_Non Exclusive_w breakdown_US_v5
Joint Recording And Publishing Contract_Non-Exclusive_w_breakdown_US_v5
Recording Agreement Explained
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.
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.
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) The artist will be bound to the label for a specified period to produce an album (or single or EP.) as well as be forbidden from working with other labels.
(b) The label will exclusively own the copyright to those songs for the duration of copyright (or an agreed shorter period –often called ‘Rights Period’). Label will also prevent artist from rerecording those songs for a certain time.
(c) The label will also have the ‘sole and exclusive’ right to exploit that product in any media, to grant licenses for compilations, synchronisation 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 in which you looked ‘fat’ and you want them to ask you before publishing it.
You can ask to change certain clauses to require your permission for use; this should be clearly outlined in the contract 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!”).
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 have a say in regards to what they may do to the Masters in the future, thereby maintaining some control.
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.
The Time Thing: Time periods and deadlines are crucial when addressing the commitments from both the artist and label. It is a two-way street and some key points are as follows:
(a) The Release Commitment: This outlines how the label has to exploit and make public the recording commitment produced by the musician(s) within a certain time periods. This is laid out to prevent the label from simply shelving the recordings. The territory specifications are important here, the label may only be required to promote in a particular territory (UK, USA, Australia, etc) in which case you should be able to have another label releasing your music in other territories not covered by the agreement.
(b) The Recording commitment: This will specify how and when the songs need to be presented to the label, e.g. 6 months from the date of the agreement. It will usually also state how many songs, the quality of the recording expected 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 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 12 months that artist is committed to the label which may include the time needed to deliver the recording commitment plus a certain period of time from the release for promotion what-have-you.
It all seems straight forward up until now, but what about this ‘Option to Extend’ thing?
An Option is a contractual legal term that gives the label the irrevocable right but not the obligation to extend the recording contract for successive periods usually with a new recording commitment imposed on artist. 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 is exercised then a new requirement of say an album of 14 songs with a playing time of a minimum of 45 minutes to be made within this a certain period, for example 6 month period after the exercise of the option.
It is important to note then that:
– If the record company decides to exercise them under the contract, artist is bound to abide by the new terms. If label doesn’t think a subsequent album artist make will have enough success to guarantee the investment, guest what, artist is dropped. It may seem harsh, but the label needs to be able to better guarantee their return from their commitment the artist.
– There is usually more than one option period outlined in the contract, such as ‘First Option Period’ then ‘Second Option Period’ usually up until 4-5 Option periods; each with an additional recording commitment.
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.
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 either Net Receipts from the exploitation of the recordings or a percentage of the price the records are sold to dealers (i.e. distributors). Now, the amounts the label and the artist will receive will vary according to the way in which the recordings have been exploited to make a profit and the percentages agreed between parties. On a Net receipts type of deal, the label and artist will usually get a fairly even split regarding the actual sale of the albums or EP, usually 50/50. For other ventures, such as synchronisation licenses and printed sheets of music, the proportion of profits will usually be higher for bands, around 70% of the Net Receipts.
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 synchronisation deals rely more heavily on the talent of the artist themselves and final product, which impresses the third party licensee.
As mentioned, another way of account royalties in respect to record sales whereby a label offers the artist a percentage of the dealer price for every record sold (PPD – Published Price to Dealers). For this type of royalty accounting a label will customarily pay for promotional costs from his share of income as opposed to ‘Net Receipts’ type of deals where all costs are recouped from income before applying the 50/50 split. As guideline, a basis royalty of more than 18% of the dealer price calculated on 100% of records sold with deductions for packaging of no more than 20% would be considered OK.
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.
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 imposed overly harsh or are unreasonably restrictive on an artist and their musical aspirations. ‘I am in an exclusive recording contract and I just got a call from Kanye West and he wants 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.
There are also limitations on how long and the nature of the commitment a record company can tie an artist 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. In California, the Labor Code Section 2855, forbids the enforcement of personal services contract against employees beyond 7 years from the commencement of services under it. The courts in the US have applied this provision to the music industry but note that contracts lasting over 7 years are not actually ‘illegal’ but just ‘unenforceable’ beyond the 7 year limit.
Now, don’t rely on the fact that if the contract is unreasonable you will sign it and then go to court to get out of it. BAD MOVE (yes, I am talking about you Gareth Evans -former Stone Roses Manager). While the court procedure takes place you may still 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 win at the end!
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!
Oh, and why the Stone Roses? Because they rock people and what happened to them SUCKED!
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.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.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 yours and the label’s responsibilities.Be aware of your rights, when the label must get approval, when your royalties are due etc.
