A record deal isn’t always the best thing but if you’re really certain you want one, read this first. Getting signed is easy these days, but it might not be what you expect.
Years ago few people got signed, but the number of labels and publishers keeps growing, and the Internet now has many “deals”. Signing isn’t trivial. It can tie up your songs, your recordings and your band (or you) for years if you get it wrong.
If you have copyrights you can always find someone to take them off you, but that doesn’t mean you’ll get a career in showbiz.
The big indies and Major labels only run about 1,000 acts world-wide. You’re more likely to work with online distribution, library or catalogue music, small or medium indies, and publishing. You might not be asked to sign a contract—some deals are done on a handshake, but check the small print.
A label or publisher might sign you on a development deal, or you might sign a production deal:
You’ll also find single album and profit-sharing arrangements, sometimes with an advance but more often without. People will ask you to work for free or even worse, to pay for the privilege.
Then there’s the new Major label web incubators. They sign artists up provisionally, give them web pages, and invest almost nothing. If they strike it lucky they exercise their bargain basement options. No awkward hold-outs, no bidding war, easy money (for them).
Then there are the middle men: independent A&Rs, promotion services, media marketing experts and the rest. All eager to get your money or your signature on a contract that pays them whatever happens.
You need to decide what you want—nobody can do that for you. Then you’ll be in a position to judge whether those deals are right for you, or not. And you need to learn the jargon. Before you sign anything you must consult a lawyer to check your understanding.
If you think this all looks rather ghastly (and it can be), you might decide to do it yourself after all. If so, start with Getting started, Get signed, get singed and Do it yourself, otherwise read on.
Whenever contracts come up people tend to say “I’m not a lawyer”, but you only need a lawyer for legal work. You shouldn’t need a lawyer to read you the contract, unless your Mum still reads you Winnie The Pooh. It’s your business, and you must know what you’re signing. These aren’t abstract questions of legal detail—they’re things any artist should understand clearly before signing.
Lawyers are human (really) and they make mistakes. When they do, you pay.
When you sign with a partnership, a band, a manager, a label, a publisher or a download site you commit to the contract. You must understand it. Your lawyer doesn’t sign the contract, you do. Your lawyer doesn’t sit at home for 7 years while a bad contract runs out, you do. Your lawyer doesn’t work for nothing if he gets it wrong, you do.
Only the contract matters. Verbal promises mean nothing. Fine words on the web site mean nothing. Clarification emails mean nothing. It’s possible a judge might take them into account, but you don’t want to end up in court.
Don’t trust any promises made outside a signed and dated contract unless you have proof:
If a contract can be changed informally (e.g. by email or verbally) it will say how such changes should be made and recorded. It probably won’t include botching a web page and crossing your fingers. It’s amazing how often blanket terms and conditions (T&Cs) are changed on a web site, even by big corporations.
(Legal negotiations aren’t always clean—stealth editing is common. When terms in the contract change the lawyers must re-check everything to ensure other changes haven’t been undone. Before signing, they must check the copy hasn’t been switched. I’ve seen both happen. You really can’t trust anyone—changing a web site is the easiest thing on Earth.)
So the words in the contract outrank any glowing promises made online or down the Camden Falcon. Any agreement you make over the phone must be confirmed contractually.
When the contract isn’t clear, or contradicts itself, you might be lucky. Sometimes sloppy wording can be struck out by a court, but don’t rely on it. This is how lawyers earn their money, and it’s usually the artist who pays.
Record labels, publishers and web sites frequently go bust or get snapped up by bigger fish. You might not always deal with the people you signed with—they might leave the label. And whether you like the new boss or not, you’re still committed to that contract. You don’t sign with the person, you sign with the company.
Finally, be aware that record labels rarely read their contracts. Organisations have their own culture and that is how employees know what to do. Contracts are filed away after signing and only come out when it’s option time. So, the accounts department probably won’t pay the right amount (no audit has ever found artists have been overpaid). And when the contract runs out they often don’t notice. EMI carried on selling King Crimson albums in Europe long after the rights were regained by Robert Fripp. And when one company buys another they will simply assume they own everything, even though many contracts today lapse if the company is sold (a wise precaution). So make sure you keep a copy of your contract and check it.
Managers are traditionally seen as the enemy of the artist. Too many high profile crooks and fools have made music biz history. But the manager’s interests should be the same as the artist’s, and most managers are straight. Problems only arise if the manager is stupid or never questioned. Just like contracts, you need to know what your manager is doing.
You should get a manager before negotiating contracts—they’ll have to work with them afterwards. They have experience (never ask a friend or relative to be your manager) and they’ll know what to look for. If they don’t know, don’t hire them. It’s their job to help with deals. It might be your first time, but it won’t be theirs. Otherwise there’s little point having one.
A manager will take care of business, but you must direct them and know what they’re up to. Here’s what you need to know about contracts as a minimum.
| Music biz jargon | |
|---|---|
| Terminology | What it means |
| Deal | Label or publishing royalties (points) paid to signed artists |
| Points | Percentage points, sometimes called a royalty (any kind) |
| Advance | Advance payment (usually a non-returnable loan) against future earnings |
| Recoupment | Recovery of advances and other costs before further earnings are paid |
| Cross-recoupment | Recovery of advances, costs or losses from other projects |
| Cross-collateralisation | Same as Cross-recoupment |
| Assignment | Temporary or permanent transfer of rights to another party (Copyright) |
| Reversion | Transfer of rights back to the original owner (Copyright) |
| Term | Duration of a contractual arrangement |
| Territory | Place(s), normally countries, covered by a contract |
| Exclusive | Right(s) that may not be exploited by anyone else |
| Option | Normally a renewal option, often not really optional for the artist |
| Termination | The conditions under which the contract can be ended |
Be aware that every music biz contract contains definitions, conditions and exclusions. You need to read these in conjunctions with every individual clause.
Exclusivity means some things (recordings, songs, etc.) can only be used by some people.
If your recordings are assigned exclusively to a label it means you can’t put them on your own web site, unless it’s owned by the label. If your image and logos are assigned exclusively to a label, they are the only ones who can use them commercially.
In a music biz contract various things can be exclusive:
And that isn’t a complete list.
Exclusivity and ownership are different things—exclusivity only refers to commercial exploitation. Assets are normally licensed exclusively to a commercial user by the owner, sometimes through a third party.
How long a label or publisher has exclusive rights depends on the contract. Bear in mind copyrights, assignment, ownership and contracts may overlap. The copyright period is normally longer than the assignment period, and ownership can change.
Exclusivity is bad for the artist unless the deal is the best possible in every way until the deal ends.
The territory is the geography covered by the contract, or parts of it.
If the deal is good, a world-wide contract might be good, but some territories may be treated differently (you might get a lower rate in some places). If the deal is long and poor you might want to leave some territories for later when you have more clout.
Publishing rules and copyright law are also different in other countries. For example, the USA has: compulsory compositions, first use, three-quarter rate and fair use terms which are different in the UK. In practice “the world” is limited to countries that sign international agreements on trade and intellectual property rights. The contract will never be enforceable everywhere on Earth.
Even though China is a member of WIPO most records on sale there are unlicensed.
Any contract that stipulates a territory larger than the Earth (The Solar System, The Galaxy, The Universe, etc.) is just stupid; like the unfeasibly long addresses you used to write on your exercise books at school. Contracts don’t need to include Outer Space for satellite transmission. European contracts cover the use of satellite (TV, radio, distribution, Internet, etc.) without extending the territory.
The term is the duration of the contract, or parts of it.
Typical terms these days are 7 years or less for a recording contract, and less than that for publishing. The Musicians’ Union recommend recording deals should be limited if there is no release, and publishing deals should be a maximum of 3 years. An established artist or writer with a good deal can agree longer terms. Long terms are fine if the deal is good, otherwise you’ll want to limit your commitments while your bargaining power is low.
Some labels hold onto recording rights after they drop their artists, so don’t assume your rights will revert to you when the term is complete.
The term will have renewal options. Don’t assume the options are yours. Most often options allow a label to drop you, otherwise the contract is renewed. You don’t always have an option, and renewals may be automatic at the label’s discretion.
Record label terms may be expressed in albums, or album cycles, rather than years. So, the length depends not only on making the albums, but also how long the label takes to release them, and whether they accept the albums you deliver.
Publishing deals are usually expressed in years, although a minimum number of compositions may be specified if you get an advance.
Your publishing renewal options are useful to ensure compositions get used. Some publishers just collect on copyrights and do as little as possible for their money. You should have an early reversion on compositions, especially if you’re a songwriter or if the publisher is taking a larger cut on the promise of getting covers. But remember to check the options are yours.
Exclusivity, territories and length of term are your assets—you should only give them up if you’re getting something back. Once you’ve traded 5 albums exclusively world-wide, you don’t have much left to bargain with.
Contracts are about rights. Labels exploit recording rights and publishers exploit composition rights.
In the UK your work is copyright as soon as it’s written or recorded. To protect copyrights you need to prove the work is yours and when you did it. It helps if you state your copyright on copies (although it’s still copyright anyway).
The recommended proof of ownership is a sealed, dated master held by a third party. A cheaper option is to post yourself a copy and keep it sealed (with a clear postmark date). Remember to make a note of the track information on the outside.
Copyright statements look like this: © your name, year, all rights reserved (a P in a circle is used for recordings). Copyright Control means the composition hasn’t been assigned to a publisher. Separate copyrights cover:
Musical arrangements, song titles and band names can’t be copyright. Songwriter copyright runs for 70 years after the death of the writer (or first publication if later). Recording copyright runs for 50 years from the release (first publication).
These copyrights are what labels and publishers earn money from.
“Public domain” means the work is out of copyright. This only happens if the author specifically says it is, or when copyright expires. Don’t worry, your work is never in the public domain just because you made it available free (but think carefully before you use a Creative Commons license).
Publishing royalties are collected for commercial duplication of recordings (by MCPS) and performance of your songs (by PRS) and paid to members. Writers and publishers can be members. Further publishing income may come from sheet music, sync licenses, etc.
Traditionally there’s a publisher’s share (50% or 6/12) and a writer’s share (50% or 6/12). The twelfths are historic and you can ignore them. If the writer isn’t a member, MCPS and PRS pay 100% to the publisher. The writer can be a self-publisher.
Publisher’s and writer’s shares have nothing to do with the royalty split or points. Unless you’re writing library or catalogue music the publisher always pays part of “their” share to the writer, so the writer ends up with more than 50%.
There are two extremes in publishing: simple royalty collection, or royalty collection plus commercial promotion of the songs. Royalty collection on its own is sometimes called administration.
A songwriter would get (roughly) 80% to 90% from an administration deal or 60% to 80% from publishing with promotion. Promotion can generate additional royalties and takes effort, hence the lower rate (although the MMF considers 60% “dubious”). Publishing points are normally calculated “at source”, which means on the full amount paid by MCPS and PRS (who deduct a commission to cover their expenses before sending the royalties on).
(Bear in mind MCPS and PRS may not be the only collection societies involved. Each country has their own arrangements. Publishers collect sub-publishing from abroad, otherwise foreign royalties are collected through MCPS and PRS.)
Where there’s more than one songwriter, any split can be agreed. There are no rules but equal shares are recommended.
Publishing royalties (or points) are completely separate from the artist royalty paid by the label and recording royalties collected by PPL and paid to labels and performers.
Where a publisher wants exclusive rights to a writer they may pay them an advance against royalties. New writers won’t get a publishing advance unless they’re in demand.
The publisher should deduct expenses out of their cut. They shouldn’t take all the expenses off the top, take their cut and then give you what’s left. It’s easy to call your share 80% under those circumstances. I call it a rip-off.
You might be advised to join MCPS and PRS, but if you’re the writer don’t assume membership is necessary. If no one else is duplicating your recordings or performing your songs commercially you can be worse off. MCPS can charge you for collecting your own mechanicals and any PRS cheques might not cover your fees.
Your income from recordings is completely separate from publishing.
A record label is really a bank and PR agent rolled into one—it’s really nothing to do with recording. A record deal pays you for sales of CDs or downloads. It sounds simple, but the deal can be complicated.
The sums you read about (a £500,000 or £80 million deal) are artist’s advances. That money might be for one album, or for the whole deal assuming all renewal options are taken. Advances are a loan against sales of recordings. Sometimes merchandise or other licenses might be included.
Additional artist income, say 10% of the wholesale price, won’t be paid until the label has got its advance back. This is called recoupment.
If you lose money on one album they might transfer your “debt” to the next one. This is called cross-collateralisation or cross-recoupment.
Finally, you don’t get points (your 10%) on 100% of every sale. The label makes deductions for packaging, promotion (freebies, discounts, some advertising), territories, formats (SACD, DVD-A, download), time of year (Christmas), breakages (even if there are none), retail at less than full price, record club sales, etc. This is called gouging or chiselling.
The record label (or recording owner) gets royalties from PPL for performances of the records (e.g. radio, jukeboxes, pubs and clubs). About half of this royalty is shared with named performers.
Online record deals are similar but you won’t get an advance for downloads yet. Royalties vary widely, up to two thirds of the track price, and there are fewer deductions. Depending on the country, downloads should pay mechanicals (MCPS) and may also pay PROs (PRS).
Your manager must be independent of everyone else you deal with commercially. A development deal with a manager should never stray beyond management.
Increasingly, traditional labels like to make combined recording, merchandising and touring deals because record income is falling. Before you sign you should check they really can help with the extras they take a cut from.
It’s advisable to keep recording and publishing deals separate. Package deals are like mortgages from estate agents: easy to get but probably not what you want.
Online package deals can be particularly ugly. A download web site does two things: hosting and retail. Some online distributors act like labels and expect you to sign away your rights. There’s no reason why a retailer should own recordings or publishing, let alone artists. An online retailer is just a web server and a shop-front. You wouldn’t expect Amazon to sign up the authors of their books. It’s ludicrous to mix hosting with recordings or publishing. Hosting is dirt cheap, and online retail shouldn’t cost more than about 5%.
What are the chances a web host is going to be any good at music promotion? What are the chances an online retailer is going to be any good at music publishing?
Some small label packages don’t have the same problems. Profit-sharing and co-op deals can be fair and open. Expenses should be clearly understood and the label shouldn’t expect to get a separate profit on each of their roles (label, promoter, publisher, distributor, retailer, etc.).
Promotion scams have been around for years. Pay-to-play, charging for CD compilation tracks, or charging for sending promo CDs to radio stations and the press. A track on a compilation is not promotion. A CD in the post is not promotion. Genuine pluggers are worth their weight but the wannabes aren’t.
For example, Amazon.com does a lot of promotion advertising itself but they wouldn’t pretend this helps individual writers. So, when a music site says they offer promotion, it might not be helping you.
In The Jerk Steve Martin dashes down the street waving the phone book when he finds he’s got listed. We know it’s nothing to get excited about. Getting your MP3s on the web is the same, except you’re probably more visible in the phone book.
Promotion hasn’t changed because of the Internet. A download site is just a record shop—people have to find it and need a reason to spend time there. There were 250,000 artists with 1.5 million tracks on MP3.com before it folded. Pointless. Even on iTunes, 25% of the tracks (about 80,000) hadn’t been sold after 2 months.
A web site is not promotion.
An MP3 on a web site is not promotion.
Some download sites are playing a new trick. Now artists know the promotion promises were empty, sites are asking them to pay. But the artists were paying already, with their recording rights and publishing, and retail commission. This is just a new twist on pay-to-play, payola and vanity publishing. You should never pay a service supplier who’s getting a percentage downstream as well.
It’s the story of the recording industry over the past 100 years. Labels can’t make commitments to their artists, but the artists make exclusive commitments to the labels. Once the labels get the copyright money-hose working they trade artists, songs and recordings like tins of beans. Artists keep throwing themselves under the wheels of the gravy train in the hope a lucky bounce will hurl them into the first class carriage. It doesn’t usually come off.
Download retailers show every sign of being the new record labels. Be careful who you deal with.
If your deal involves a web site, don’t assume they get traffic. There are thousands of music web sites, and most of them are more unknown than you are.
Promotion can be woolly—it never has a predictable effect. You can measure it by budgets, frequency or media... but rarely by results. But that’s no excuse for sloppy thinking. Ask your web site the stupid questions.
CD Baby publishes figures like these (Autumn 2005):
They’re proud of their track record, and prepared to publish the numbers. Be suspicious of anyone who isn’t. You can check the visibility of any web site on Google, type:
www.websitename.com
...and see their Google connections (the “links” always miss some). That’s a good indication of the Internet buzz about the site and whether promotion is paying off.
For an ordinary record label you can ask where they advertise? how often? how prominently and what are the circulation figures? If they have a web site: how many unique real sessions do they get? how many pages do visitors look at? how many links have they got? what are their Google rankings on important phrases?
Have you ever seen their name anywhere? Anywhere good?
What do their own artists say about them? Email them and ask.
Get out your music biz directory and phone around. Check online. Who do you think should know about them? Do they? Check your mailing list. Have your contacts ever heard of them? Do they advertise anywhere your audience goes? If so, has your audience seen the ads?
Check the music press. Check other web sites. Ask on forums. Ask musicians.
Ask the stupid questions. Promotion isn’t smoke and mirrors, it’s a real thing with real results or it’s nothing. Many web sites and labels are completely invisible. Just like Navin R Johnson: “The new phone book’s here! Now I am somebody. Millions of people look at this book every day!”