Being presented with a contract in the music industry, whether a big deal or small, can be both exciting and anxiety inducing.
There are many different types of deals you might see throughout your career in the music business, such as management, recording, distribution, publishing, etc. These contracts can be long, complex, and filled with annoyingly dense legalese. However, when presented with a music contract, take a deep breath, and start by asking yourself the following 5 questions, which will help you assess the contract at the early stages (although not a replacement to having a music lawyer review in detail!).
Contract Term – How long are you going to be married to your music partner?
Although the "term" of a contract doesn't sound very exciting, it is a critically important part of most contracts in the music business and is often negotiated. For example, a publishing or recording agreement might contemplate an "initial period", with the publisher or record label getting 1 or more "options" to extend the term for further successive periods. A management agreement might be structured the same or might simply be set at a fixed period (e.g., 2 – 3+ years). In the music world, an "initial period" plus 2-3 options, for example, can easily run 4-6 years. In short, always understand how long you are bound to your contract, which is often exclusive (remember, if the deal is "exclusive", you are married and cannot work with other partners that cover the same contract scope).
Delivery Requirement – How much music are you required to deliver during the term?
A music contract will typically state that you need to deliver something to the counterparty, and you need to understand what that is. For example, in a publishing deal, how many songs/compositions are you required to deliver to the publisher and when? If you need to deliver 10 songs, for example, what if you only wrote 50% of each song? In that context, "delivery" might actually mean 10 songs at 100% ownership by you, or 20 songs at 50%. In recording agreements, for example, there is a big difference between an album needing to be a minimum of 12 songs and not less than 40 minutes of playing time, versus a minimum of 8-10 songs and no less than 25-30 minutes of playing time. Do singles and/or EPs count towards your delivery requirement?
Copyright – What rights are you granting to the other party?
Every artist and creative on the planet needs to understand the difference between a copyright license versus an assignment of copyright. If you are assigning your copyrights to another party (your songs or sound recordings, for example), you are transferring ownership. That is, you no longer own your songs or masters. A license, on the other hand, is permission to use your copyrights, where the licensor (i.e. you) continues to maintain ownership. A 10-year licensing deal with a record company means that the record company has permission to use your sound recordings for 10 years only. An assignment of copyright in perpetuity to a record company, on the other hand, means that you are giving up ownership to the sound recordings forever. This distinction is also important in the beat-making world, where artists who "buy" beats sometimes don't appreciate that they only have a limited license to use the beat, and do not own copyright to the beat. A separate but related question to the above is: "whether you assign copyright or license it, under what conditions might you get control of your copyrights back, if ever?"
Money – Is the proposed investment in you and your project proportionate to the rights you are giving up?
Money is a tricky topic in music deals. Where little to no advance is being provided, but where the music partner attempts to secure significant rights to your copyrights and/or bind you to a long-term deal, this could speak to the fairness of the deal. Practically speaking, bargaining power is everything, and if you don't have such power or leverage to exert during a deal negotiation, it may be difficult to get the movement you want to see. Although money and upfront investment by your music partner can be hugely important, money isn't everything. Any investment or advance payable to you is more than likely "recoupable", which means that the music partner "recoups" or is "paid back" that investment/advance (from your share) prior to you earning royalties from the deal. As such, it's more than reasonable to fight for a fair upfront investment from your music partner, but be self-aware and maintain perspective on this piece.
Relationship – Is this music partner a good fit?
When I chat with clients or give presentations on the music industry, this is one of my favorite points to drive home. Clients pay music lawyers good money to review and draft pieces of paper, which is absolutely critical to ensuring your deals are fair and you fully understand the deal in front of you. However, even the best and most brilliantly negotiated piece of paper won't amount to much if you don't have a music partner and they are not a good fit. Before signing any deal, consider your goals, needs and your plan for thriving in the everchanging music business. You also want to consider how the music partner will help you achieve those goals, needs, and execute on those plans. Speak openly and candidly with the potential partner before a contract is even presented.
As always, reach out anytime with questions or comments.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
