You've written and recorded your demo, you've played some great gigs, and you can now boast a multitude of Facebook friends, from Watford to Wichita and back again. A&R guys are falling over themselves to get to you and there's now a major-label record deal on the table. What do you do? Sign?
If this is the fortunate dilemma in which you find yourself, hold fire. Before you do anything, you'll need to know what's up for grabs. If you want fame and fortune and everything that goes with it, without the pain of disillusionment and legal hassles later, you'll first need to do a little homework.
Understanding The Jargon
Because of their legal complexity, recording contracts can be quite hard to decipher. They come in different shapes and sizes, and will often vary depending on the label, and the status of the artist involved. Even so, many of their commercial terms are similar. They certainly require closer inspection in an article of this scope.
Purpose
Recording contracts are legally binding agreements, enabling record companies to exploit an artist's performance in a sound recording, in return for royalty payments.
Exploitation is achieved through physical sales, such as CD, vinyl and cassette; the public performance and broadcasting of works; and the sale of digital products such as downloads and mobile ringtones. The contract will define a record to include audio-visual devices as well. So 'Dualdisc', DVD and other new technologies will be caught by this definition.
Exclusivity
The recording contract will usually require the artist to sign to the label exclusively. This means that they can't record for another label without permission, nor can they leave the contract if they're unhappy. The label, however, remains free to sign and promote as many artists as it wishes. Record labels invest huge sums of money in breaking an act and claim that they need this level of control in order to improve the chances of making a profit or, as is more often the case, to cut their losses. Occasionally the artist gets one over on the label. Mariah Carey described the termination of her long-term deal with EMI in 2002, as "the right decision for me". This, however, may have had something to do with the £19m EMI had to pay her to end the relationship!
If an artist wants to make a guest appearance on another artist's record, they'll need a 'sideman' provision to cover this. Chris Martin, of Coldplay fame, recently showed up on the Nelly Furtado track 'All Good Things', albeit with his plaintive vocal somewhat obscured in the mix. Likewise, DJs and producers will sign deals under a specific alias, leaving them free to contract with other labels under a different pseudonym. Dave Lee, AKA Joey Negro, Raven Maize and Jakkata, is a case in point.
Territory
Major labels will normally sign the artist to a worldwide deal. Companies such as Universal and Sony/BMG have offices in all the key markets, together with the vast distribution network capable of delivering their latest offerings to a supermarket near you. Split-territory deals are less likely with major record labels, but independents may be more willing to agree to such an arrangement.
Term
This relates to the duration of the contract. It is calculated by reference to an initial fixed period of maybe 12 months — when you'll make your first album — followed by further option periods, also usually of 12 months, allowing the record company to extend the contract if they wish. There will be a minimum commitment within each period, requiring you to deliver a certain number of tracks, to a releasable standard, with perhaps a total of five or six albums expected under the deal.
Try to avoid wording that masters must be 'commercially acceptable' — a euphemism for 'radio hit' — as delivery and acceptance requirements may have a knock-on effect on how long the artist is tied to the deal. Where a label is only willing to accept commercial recordings, as opposed to merely technically satisfactory ones, the artist may have to rework or re-record material before the label is finally satisfied of the record's chart potential. The option period in which the album is due could thus overrun by a good few months, before the label accepts it and commits to a release date. It will be a further 3-6 months before the label can determine the album's success, which in turn will delay the exercise of the next option, and so on. It is sensible therefore, to negotiate a 'long-stop' provision, so that the overall duration of your contract won't exceed six or seven years maximum.
Rights Granted
Under most exclusive recording contracts, the artist will assign copyright in the sound recordings to the record company. An assignment is a transfer of ownership for the full life of copyright. In the case of sound recordings this will be 50 years from release.
Two issues are of particular concern here. Firstly, even unreleased recordings remain the property of the label for the artist's entire career. And secondly, even once the artist has repaid all recording costs, the label will still own the masters. This was one of the reasons why Mick Hucknall decided to part company with Warner Music in early 2000, claiming that his deal was 'immoral'. Warner made approximately £192m from the relationship, and kept all the masters, whereas Mick earned a paltry £20m! Hucknall has since taken control of his destiny, along with a greater share of the profits, releasing music on his self-financed label, simplyred.com.
In rare instances, an artist will secure a reversion of copyright clause, allowing them the return of their masters at a future date. Robbie Williams' ground-breaking 2002 deal with EMI granted him such rights — but then again, how many Robbies are there?
Other rights the label will wish to acquire include rights in the album artwork and the right to use the artist's name and likeness in connection with the sale and promotion of the records.
Release Commitment
The artist should aim to secure a positive release commitment from the label (at least in the UK), coupled with a minimum marketing spend to support the release. Should the label fail to release your record, you should be able to terminate the deal, and/or buy back your recordings, so they can be licensed to another label, or perhaps self-released.
Written by Richard Salmon
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