Major Clauses of a Record Deal
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Major Clauses of a Record Deal

This article covers the major clauses of a record deal. The recording contract and its components.

Recording contracts are legally binding arrangements between the artists and a record label. Recording contracts can be as long as 100 pages or more. You, as the artist, will need a music attorney in order to properly decide if the contract is suitable for your needs. Your attorney should have a strong track-record for negotiating these kinds of agreements.

The following are key elements for your consideration:

DISTRIBUTION is crucial to you as an artist. Some questions you need to ask:

  • Does the label have national/international distribution?
  • Is the label willing to support your music throughout its distribution channels?
  • How many artists are already supported by the labels distribution network? Too many artists can equal little or no product/tour support.
  • Does the distribution cover both brick and mortar (in store) and online support?
  • What regions will your product be available? If you know this you know where you need the most support.

TOUR SUPPORT is fundamental; it can mean the difference between playing the town pub and touring entire regions supporting a well know act.

  • During the tour in support of your music and merchandise will you be financially covered?
  • Will you have proper transportation?
  • If the money for tour support comes from an advance, is the advance recoup-able by touring?
  • Will there be proper marketing and advertising? Without this, no one will even know you’re playing.
  • Most important, are you ready as a group/individual to make the commitment. Touring is an all or nothing motivation.

A MERCHANDISE DEAL is frequently a secondary contract with your label. It is a licensing agreement for your likeness to appear on t-shirts and other items as well as anything outside of your recording contract. Make sure you, as the artist, acquire part of the merchandise revenue. This is crucial. Most of your income will not come from touring or even units sold but from merchandise.

  • Make sure you have some say in the type of merchandise that is to be considered for promotional/marketing purposes.
  • Be clear on what points/percentage you get from sales of merchandise. Remember, this will be your bread and butter in the beginning stages of your career as an artist.
  • It is imperative to understand who foots the bill for promotional material e.g. CD’s, t-shirts, swag etc. If these items come from your advance, you need to include a cap on how much is spent and where it is utilized within your merchandise agreement.

EXCLUSIVITY is the provision that states the term, or limit, of the agreement between you and the record label. The exclusivity clause in your contract signifies that you may only record for this particular record label during the term of your relationship as outlined in your contract.

If you sign a deal as WORK MADE FOR HIRE (the record label owns your work outright for a specified period of time, sometimes forever) make sure there is a reasonable SUNSET CLAUSE that allows you to retain the rights to your material within a reasonable amount of time after the contract has ended.

PERCENTAGE or POINTS refers to the amount of money you receive for each record sold.

Typically, for a first album, you should receive between 8-15% of the suggested list price of a recording.

ROYALTIES are the dues paid for your earned sales. These come after your recording costs, advances, videos and other promotional materials. Stay on top of these expenditures or you could find yourself thousands (if not millions) of dollars in the red.

YOU HAVE THE RIGHT TO AUDIT YOUR RECORD LABLE.

ACCOUNTING CLAUSE refers to the label’s responsibility to report income and expenditures - usually every six months.

TERMINATION CLAUSE specifies the material you may not be allowed to record for a set time after the ending of the contract.

Remember to stay true to your form and treat your music and your business like you own it. I hope I’ve helped in some small way.

Peace –Kenny Figuly

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