The Ins and Outs of Recording Industry Contracts
One of the most exciting moments in an artist’s career is when he or she receives his first recording contract. This can represent your “big break” and an opportunity to market your music and gain more fans, followers and ultimately sales. The smart artist carefully reviews his contract before committing to any music marketing company, recording industry contract, or other agreement. This is extremely important. Committing yourself to the wrong contract can limit your artistic freedom, obligate you to produce a nearly impossible amount of music in a short period of time, and restrict you from working with your favorite musicians or producers. Here is a list for some common things to look out for:
Your minimum recording commitment
In summary, your minimum recording commitment (or “MRC”) spells out how much music you have to produce for the marketing company or record label in exchange for their services. The MRC can be phrased in terms of the number of singles or number of albums, or sometimes both. Have a good idea based on your experience of how long it takes you to produce a song or album. You will need to have enough time to create a quality product without sacrificing your artistic integrity, which is what brought you the contract in the first place. The timeframe for meeting your MRC can often be pretty tight, which brings us to our next point:
The Recording Industry Contract Term
Rather than being for a year or for a certain number of albums, many recording industry contracts create several back-to-back terms that obligate you to meet your MRC within each term. These can be as short as six months. The contract typically gives the label or marketing company the option, but not the obligation, to cancel or renew the contract at the end of the each term while keeping the work you have produced thus far. This often a pretty one-sided deal. You may not have the same right to cancel if you’re unhappy with the relationship. Ideally you would want either one of you to have the option to cancel the relationship after each successive term or extend the whole term in the recording industry contract so there is more of a mutual commitment.
Getting a Win-Win Deal
You scratch my back I’ll scratch yours as they say. Many recording industry contracts are pretty thin on detail when it comes to what exactly the record label or marketing company will do for you. You should have a very clear idea of what you want out of the deal and how the company plans to give it to you. Are you looking for social media promotion? Bookings? Paying for your production and CD costs? Perfecting your listings on iTunes, submitting your material to Spotify and Pandora and registering you with the performing rights organizations? These are all critical parts of marketing your music. Keep in mind too that most of the money in the music industry is made in live performances and merchandising rather than unit sales. Be aware of smaller companies that claim to have hot “industry contacts”. Such companies often claim that they’ve worked with big artists and launched their careers. Obviously these claims may be true, and this might be a great relationship for you, just be aware of claims that are very hard to prove. Do your homework. What does their website look like? How long have they been in business? Exactly which artists having worked with and is their name on those artists websites or CDs, etc.
Music Industry Relationships and Leverage
Always know who has more bargaining power in any relationship. If you’re looking at a contract from Virgin Music or Sony, suffice it to say that there’s probably not a whole lot you can do in terms of negotiating terms, and you are probably lucky to have such an opportunity. If you’re dealing with a smaller company though, know that they might be hungry just as you are, and you may have more power negotiating terms if you already have an established fan base, merchandising relationships, and other things going for you that make you easier to market. It’s sort of like the joke about getting a loan – the only people who get them are those who don’t need them. The best contracts go to artists that have already done a lot for themselves and already have a following.
Getting the right advice in advance can make the difference between hitting it big and ending up with an impossible situation. Call me for consultation and contract review. A little good advice and perspective at the beginning can save you a lot of headaches down the road and open you up to win-win deals that will deliver what you’re really looking for.
Ari Good, Esq.