Camille Royes - There are many aspiring entertainers and musicians who all hope to become recognised recording artistes with Top Ten hits.
The journey to that destination is often difficult. The first step for many
is having one's talents recognised by an influential producer or music industry
executive and when this happens the journey is just beginning.
Music industry practices vary across the world, depending on the level of development
and sophistication of the business.
There are certain principles, however, that aspiring entertainers must be
mindful of, regardless of where they are located and especially in instances
where one is being courted by an international record company based, for example,
in New York or London.
Ideally, before artistes start recording in a studio for any label or record
company, they must have in place a fair and reasonable recording contract. The
consequences of improper or shoddy negotiations cannot be overemphasised and
must only be undertaken with the assistance and guidance of a knowledgeable
and experienced professional who has one's best interests in mind, for example,
an agent, manager or entertainment lawyer. Not all representatives were created
equally and great caution should be exercised when choosing this professional.
It's always a good rule of thumb to go with your gut instincts and look at the
representatives' past achievements (or lack thereof) before you go ahead.
The key points to note in a standard recording contract are duration, artiste
royalties, recording costs, publishing rights and obligations of the artiste
under the contract.
Duration
The duration of many recording contracts is based on the artiste exclusively
delivering to the record company a specified number of commercially satisfactory
recordings (in the form of albums) over a specified period of time. If the artiste
fails to produce any or all of the agreed recordings, time under the contract
can cease to run, and though the actual duration of time has expired the artiste
would still have undischarged obligations under the contract which must be satisfied.
In fact, some record companies frame the duration of a contract in terms of
the satisfactory delivery of albums and not in years. Many young artistes are
naturally wary of signing a prolonged contract but must realise that record
companies have no intention of investing money in recording, marketing and promotion
costs on an artiste who will only move on after a short period of time, possibly
allowing a competing record label to reap the rewards of its investment. A satisfactory
balance therefore will have to be achieved between these two competing interests.
Artiste royalties
Artiste royalties are a specified percentage of the revenue earned from the
sale of recordings. Artistes should always ensure that this clause is in keeping
with industry standards. The percentage of revenue paid to an artiste as royalties
varies depending on the track record of that particular artiste.
Established artistes may command in excess of a 12 per cent royalty rate while
a new artiste is usually able to command a 9-12 per cent royalty rate. As a
new artiste, one could also negotiate for a clause to be contained in the contract,
which increases the royalty rate after a certain level of sales of recordings
are achieved, for example, platinum sales (1 million units). Sales of singles
usually command a lower rate of royalty. Artistes must know what costs will
be deducted from their royalty payments. These may include promotional costs,
recording costs and producer's royalties, inter alia. An informed representative
should be able to advise the artiste which costs he/she should not have to be
responsible for.
Recording costs
A recording company will recover its costs for recording an album or single
before the artiste is paid any royalties. Most contracts allow the company to
recover all of its recording costs for all the artiste's records before any
royalties are paid.
The result of this is that if two albums for a particular artiste are released
and one is a hit and the other a flop, the revenue from the hit album could
be used to pay for the costs of the other album if that album did not make enough
to cover its own costs.
Publishing rights
The right to reproduce and issue/distribute the work of the artiste constitutes
publishing rights. Many record companies for obvious reasons want to acquire
a publishing interest in the compositions written by the artiste (who must have
copyright over his material) and recorded under the contract.
Established artistes know that publishing rights are the bread and butter
of the music industry, because every use of a song for commercial or other purpose
will result in some publishing income. Some artistes set up their own publishing
companies and are not likely to assign their publishing rights to an affiliate
of the record company. Most large record companies have publishing affiliates.
Some artistes enter into co-publishing agreements with the publishing affiliate
of the recording company as a compromise because they feel the record company
will better promote their album if they have a stake in the income from publishing.
Artistes who adopt this method must ensure that they get their publishing income
free and clear of all expenses or costs that the record company incurred in
the production of records, which is the purpose of the artiste royalties as
some companies will try to dip into this income as well.
Obligations of artistes
The standard recording contract sets out the number of technically and commercially
satisfactory recordings required to be delivered to the record company by the
artiste during each year of the contract. There is not usually a commensurate
obligation included in the contract for the company to release, produce or even
promote each recording delivered, and many companies reserve the right to withhold
release of any recording it does not feel will be a success, even though the
artiste's views may differ.
These are just a few considerations of many to be taken into account when an
artiste is signing up with a record company, and are not exhaustive. It is wise
to surround oneself with well-meaning and positive influences established in
the music industry from whom you can learn the basics. Always remember to read
the fine print and obtain proper legal or other advice before placing your signature
on the dotted line. Good luck!
Camille Royes is an attorney-at-law specialising in entertainment law.
This article is by no means exhaustive and should only be used for the limited
purpose for which it was prepared ie. to provide a overview of certain aspects
of the standard recording contract.
