If music is your passion, whether as a singer, songwriter, or musician or all three, then signing your first recording deal is a cause for celebration. Getting paid for what you love to do is a dream come true for anyone, but like any other contractual arrangement, there are those who will exploit the opportunity for their own financial gain and will have little sympathy if you get a raw deal.
The entertainment industry is rife with examples of recording artists, cartoonists, actors, and others who lost out on royalties or who were tied to unfair and exploitative contracts for years. Even if you do not rise to the pinnacle of your profession, you can still make a decent living as an entertainer so long as you take the time to carefully review the recording deal that you have dreamed about.
Here are some worthwhile tips to follow before you sign on the dotted line:
Length, or term of the contract
Avoid any contract that is longer than one year. This is standard for a recording agreement and it will typically have options for renewal. You can always reject the option if you want to go with another company or feel that you are entitled to more favourable terms.
Your recording agreement should have a release commitment so that if the recording company fails to record the album as promised, you can be released from further obligations. Many musicians include a marketing provision whereby the recording company is required to spend a certain amount to market the album so as to give it the incentive to record it.
Copyright your work
Even though what you create is automatically copyrighted, you get important benefits by copyrighting it with the U.S. Copyright Office or South African Copyright Office. There are separate copyrights for the song and for the recording. Your first step is to file a Form PA for your collection of songs before you record. Then, file a separate PA after the music gets recorded. This gives you a measure of protection in case some other group sings or records your songs without your permission. By filing, you may be able to claim statutory damages for copyright infringement and you get attorney’s fees if successful, which is incentive enough for a copyright attorney to take your case.
Also, you will want to formally copyright your group’s name and logos.
So, this is the big one if your song or album hits the charts. As a songwriter, you get paid every time your songs get played on the radio or gets downloaded on iTunes or gets streamed on Spotify, Amazon and other platforms. Royalties are collected by the distributor on behalf of the record labels, which then pays them to you. The concept of royalties is complex and you should educate yourself on how it works. For instance, there are master and publishing-related royalties. If you write the music and the lyrics, you get both. There are also YouTube and neighbouring rights that your attorney can explain to you.
But the main consideration is the royalty rate. For newcomers, it is standard to receive a rate of 5% to 10%. Those with notoriety command rates of up to 18%. If you are offered a large up-front or advance payment, you may see a low royalty rate of under 5%, which is not standard. While it is tempting to take the advance money, you are giving away significant compensation if you have any degree of success. There are also ways companies can skim off your royalties by including deductions that can be substantial. Though the company is entitled to expenses for recording, video production, and packaging, do not allow provisions that would give them other so-called standard deductions like transportation, hotels, meals, and company staff salaries that can be astronomical. You can include your own provision that allows you to hire someone to audit the company books to ensure you are getting your fair share.
- Your fellow musicians and artists
Many solo artists have musicians as part of their group or they may be recording songs that a band member wrote. You have to decide about the role of each member in the recording process and how they are to be compensated before you sign the recording deal. For instance, fellow songwriters are entitled to royalty payments. For other musicians, most artists will have a “work for hire” agreement so that the musician or sound engineer will not have an interest in your copyright. Such agreements allow you to commission musicians and others assisting in the recording while you remain the author of the work. But you will want a separate agreement with your bandmates that addresses copyright, ownership, and control issues that your entertainment lawyer can draft.
Understand licensing and releases
Your contract may have a great amount of boilerplate or standard language in it that you should not ignore and is usually there to protect the recording company from being sued. Some of the languages may involve licensing and talent releases. If you are going to sing a cover song, for example, you need a mechanical license for the sound recording. If you plan to use someone’s image or name on your album cover, you need permission to do so. A music video that has other people in it will require a talent release from them.
Always consult your attorney before proceeding in any creative venture linked to your deal so as to avoid legal entanglements that can cost you. It also pays to have an experienced entertainment lawyer review your recording agreement with you so that you are fully informed about its terms and conditions and about your own rights.