In the Foxhole: Before You Sign That Recording Contract

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By Ayomide Oluwafemi

Music is a universal language, everyone speaks it. Although the definition of music vary wildly throughout the world, every known culture partakes in it, thus, music is considered a ‘cultural universal’1

Over the years, music has evolved, from invention of music attributed to the ‘Muses’ in ancient Greek mythology to what is obtainable today, music in every culture has grown in leaps and bound and with such growth came rules and guiding principles for its performance, output, as well as the figures behind its production.

In Christian myths, the first known musician was Jubal the son of Lamech who was described as ‘the father of all who play stringed instruments’2. Of course, Jubal was not consigned to a record deal and had no obligation to fulfill a contract, but that is not the case today as even though music has a universal appeal, practitioners of it are guided by something called a recording contract.

A recording contract (commonly called a record contract or record deal) is a legal agreement between a record label and a recording artist (or group), where the artist makes a record (or series of records) for the label to sell and promote3.  In 1904, one of the earliest record deals ever recorded came courtesy of ‘Victor Talking-Machine Company’ which produced among other things, record players. The deal gave one artist $4000 (Four Thousand Dollars) per song, plus 40 Cents or 26 to 40% per sale. This deal resulted in the United States of America’s first platinum selling album, a ‘78rpm Opera Piece’4. Soon after this, the United States congress passed the Copyright Act of 1909, opening doors to record deals.

With history and definitions out of the way, it is important to jump straight to the topic, and that is the foxhole of badly negotiated recording contracts and the after effect.

It is known today that many music artists are victims of terrible recording contracts, thanks in no small part to the desperation attached to a young music artist’s quest for success. Many of the music giants today have one time or another been victims of a bad recording deal. And before we go ahead to blame the record labels for offering a bad deal to young upcoming music artists, we must also remember that it is within a music artist’s choice to either reject or accept a contract and when such choice is taken away, the contract is invalid.

The glamour that comes with being a known musicians cannot be overstated, however not all that glitters is gold especially when it comes to contracts in the entertainment industry. Many musicians or musical groups have enjoyed massive fame that has not necessarily translated to financial fortune, mostly due to badly negotiated contracts. For example, when American super-group ‘Salt-N-Pepa’ signed their first deal with Next Plateau Records in 1985, the women unknowingly agreed to be paid half the going cent per album rate with no option to renegotiate their contracts no matter how successful they become in future. By the time they released their third album (all three albums reached platinum status), the group members were making about $100,000 a year while their management was makings millions5.

Back home in Nigeria, the issue of artists and record labels are a common occurrence in the music industry. Out of desperation for success and fame, many known musicians in the music industry have been victims of bad contracts. After a few years, these musicians have risen to prominence and become seriously discontented with the terms of their contract. They demand for renegotiation of their contracts which sometimes the record labels grants but most times refuse. Top musicians like ‘Kizz Daniel’, ‘Runtown’, ‘Vector’ and ‘Asa’ have all had public breakdown of relationship with their record labels due to bad contracts signed by these musicians.

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RECORDING CONTRACT NEGOTIATIONS, HOW TO GO ABOUT  IT.

The right record deal can determine your path to music industry success. Knowing how to sell your music can be as important as knowing how to create music. Negotiation is a vital element in achieving the best music recording contract.

The most important step to getting a good record deal is getting a lawyer. This step cannot be overstated. It must also be noted that it is not just getting any lawyer to handle your record deal, but a lawyer with deep knowledge on the subject matter as there are several key areas to be negotiated on in a recording contract. Areas like:

(1). Obligations– Obligations are duties carried out by both parties to a record deal. It is important that the obligations on the part of the music artist as well as the record label are clearly spelt out. For example, a well-negotiated agreement will put the obligation of talent growth, provision of voice training coaches, promotion of the music artist’s album, provision of basic amenities to keep up a good image, among other things on the record label. Likewise, it is the duty of the music artist to put in voice, talent, attitude, soul and image. Furthermore, a music artist must before signing a record deal consider how invested the record label is in him. This is very important in the sense that a record label can sign an artist and not see much future in the music artist, it is this sort of feeling that lead to crappy record deals that some young artist sign out of the desperation for survival and fame.

(2). Duration of the Record Contract– one of the crucial points to negotiate in a recording contract is its duration. The length of a recording contract refers to the period in which the music artist is locked in for. The length of a contract can be determined by a music artist who has a good lawyer negotiating his record deal for him. Music contracts generally are between one to five years, but it is always better to negotiate a record deal to span a year. This is very important because signing a contract that covers a longer period may result in a record label controlling your creative work and even the music artist’s personal life for far too long. It is much better to enter into negotiation every 12 months as this can give rise to the music artist demanding for better contract terms especially where the music artist has wholly fulfilled his end of the bargain. However, it must be noted that in a situation where the music artist signs a one year deal with the record label and fails to fulfill his end of the bargain, he can be held to the contract beyond the 12 months stipulated until the music artist fulfills his end of the deal.

(3). Words and Terms– Record labels have a reputation for imputing terms that completely protect them and can be injurious to the music artist. Artists who negotiate their deals without competent lawyers have always fallen victim of certain words and terms in recording contracts. Beware of wordings such as ‘commercially acceptable’, such term may mean that you have to re-record a song over and over again until the record label is satisfied of its hit potential. Terms like this are bound to drag an artist into a foxhole of overrun contract. A music artist who commits to a contract that contain such terms may be held down even if the length of his contract is for a year. Interpretation of terms and phrases is very important and who better to do that for you than a lawyer.

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(4). Agreement on Royalties– Royalties is perhaps the most important part of the recording contract to a music artist, at least it should be. A music royalty is usually a percentage of the sales and income obtained. The rate is either fixed or varied according to the contract terms and volume of income. The music artist can receive two types of payment, one is royalties proportional to the number of record sales (the sharing percentage of record sale should be carefully negotiated in a way for the music artist not to be reduced to getting crumbs) and a lump sum which most times is the practice of record label to give to their newly signed artists. One major disadvantage of getting this lump sum or advance fee is that music artists get to sign over their ‘Masters’ or underlying rights to a song over to the record label. It will be difficult to convince a up and coming musician not to take the juicy amount the record label is laying before him in exchange for his ‘masters’, however, it must be noted that this aspect of the contract must be carefully negotiated because whoever owns the ‘masters’ in a recording owns everything including future financial gains accruing to it.

Who should own Masters? This question brings a lot of complications as the traditional music industry structure record deals in a way to sign over the masters to the record label and not the artist.

What difference does it make who owns the masters? It should be noted that it makes all the difference in the world. Where an artist does not own his own master recordings, the label can do whatever it wants with it without consulting the music artist. That means, the label can use the recordings in places and works that the music artist would have otherwise not approved of. It is therefore important that artists no matter how desperate they are have a lawyer negotiating the terms of their master recordings with the label, because at the end of the day, artists find it very difficult getting back their master recordings from the labels they signed it over to. Several examples abound of artists trying to get back their master recordings from the record labels they signed it over to, leading to very messy situation and a lengthy time in court. Late American singer ‘Prince’ had such situation when he battled his former record label ‘Warner Music Group’ even though as at that time, the artist already reached legendary status.6

Artists and their teams should always look out for certain red flags in the recording contracts. Examples are:

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(a). A long rights period, that is the period the record label owns the recording. Some music artists sign over their master recording over to a record label forever for an advance fee, this has never been a good move.

(b). Options over future recordings, that is a record label can automatically get rights over future recordings in return for cash advance.

(c). An exclusive recording agreement, that is the recording created during the terms of the agreement is owned by the recording company.

How can a music artist own his own master recording? Especially in the face of desperation and quest for success, a music artist can realistically negotiate a record deal that will give him certain control over his master recordings and give the record label a percentage of control for a limited period of time before it fully reverts back to the music artist. While this can appear difficult, it can be successfully negotiated with a lawyer at the music artist’s side.

(5). Set Termination Clauses– This is another very important point to negotiate in a recording contract. Many music artists have fallen victim of contracts that looks like they have no end, thereby creating a situation where the artist cannot terminate the contract and is not developing well as an artist and also cannot sign for another record label that sees the potentials for success in the music artist. Good lawyers can on behalf of music artists negotiate a contract termination in advance. Termination clauses must as a matter of fact be in writing and terms must be negotiated to include a period before renewal (if the artist is interested in renewing the deal with the record label). Beware of the trap of automatic renewals. Many recording contracts contain clauses for which the contract is auto-renewed.

(6). Negotiate any form of limitations for the music artist- Record labels are known to place heavy restrictions on their artists and this is usually contained in the recording contracts signed by the music artist. Some restrictions prevent artists from appearing in other artist’s recordings or even prevent them on going on tours. These forms of limitations should be known before the music artist signs the recording deal. The knowledge of such restrictions can help the music artist negotiate better terms that could at the end of the day help the music artist’s growth.

Furthermore, it is common practice for music labels to sign their artists on a 360 deal, that is, the label controls every aspect of the music artists’ career. From touring, to collaborations, merchandise sales and even endorsements. This also can be negotiated as improving a 360 deal may well be done where a music artist is on a short term contract with the record label.

Before you sign that recording deal, understand that above all things, you need a competent lawyer to carefully go through and negotiate your contract for you, that way, you will be getting a deal that sits well with the recording label as well as you, otherwise, you will be signed into a slave contract that may take years and several messy battles to break away from.

Ayomide is a Lagos based lawyer with focus on Entertainment Law, Tech Law, Intellectual Property. He can be reached on +234 9123554535. Or ayoilerioluwa@gmail.com

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