What Does Exclusive Mean in a Record Contract

In the case of an exclusive license agreement, you risk outsourcing your hard work to a company that doesn`t offer you a single investment. P.S. This is not and should not be legal advice. All contracts/agreements/transactions, etc. should be discussed with a licensed lawyer. You`ve written and recorded your demo, you`ve played great concerts, and you can now brag about a variety of MySpace friends, from Watford to Wichita and vice versa. The A&R guys are rushing to reach you, and now a major label recording contract is on the table. What are you doing? Sign? To raise the profile of a publication, the artist must carry out national and international promotional work. In case you don`t follow in Sandi Thom`s footsteps by broadcasting your “tour” from the comfort of your living room, the record company will use an army of radio, press, and new media marketers to discuss your record. The significant costs that may result should not be reimbursed by artists` royalties.

After all, the record company always takes advantage of it when the record sells, and promotion is a reasonable burden on their business. And of course, with a likely profit rate of 3:1 in favor of the label, they will break much faster than any artist can recover. Recording contracts are legally binding agreements that allow record companies to exploit an artist`s performance in a sound recording for royalties. 3. BREAKING FEES “Break fees” are remnants of the vinyl era. When vinyl records were the primary recording format, some of them broke during shipping, so record companies paid royalties on only 90% of the records sold. (E.46) Although this deduction is increasingly rare, it is still used in some contracts and you should try to negotiate it. Tough polycarbonate CDs aren`t as likely to break as vinyl. (e.47) There are many examples of recording contracts available in music industry guides, legal texts and also online. [3] 1. AUDIT This section will most likely be called “Royalty Accounting” or “Royalty Payments”.

(e.86) The record company explains the conditions under which you can “audit” them. An audit occurs when an accountant reviews and examines the records and records of the record company that apply to accounting statements (usually with royalties from record sales or mechanical means) sent to the artist. (e.87) An advance is the amount of money provided to you by the record company that you must use for a number of expenses, including living expenses, recording fees, video production and tour support. (e.28) Although the amounts of the advances vary by record company and artist, a sample amount would be $500,000, of which $200,000 is provided to the artist for the production of the album and $300,000 for the promotion. (e.29) The full amount of the advance is “refunded” (i.e. refunded) from the royalty received at the record company. (Royalties are discussed in the next section, “Royalties and Deductions.”) If something strange happens and your album doesn`t come out or sell, you don`t have to pay off in advance. However, we`d like to assume that your album will come out and sell well, so it`s very important to understand a common repayment method called “cross-collateralization.” When an exclusive registration contract is proposed, certain key issues need to be addressed and negotiated to the extent possible.

As in all music-related chords, all provisions are negotiable, but largely depend on your influence. Here are the most important:(1) Term: “Term” is the time it takes for the recipient artist to perform a personal service contract. The artist should pay attention to “indeterminate” terms that allow record companies to define a “year” as “8 months after the delivery of the minimum recording obligation, whichever is later” or similar language. Artists should try to limit the initial duration to 12 (not 18) months. (2) Artist`s Recording Commitment: This is the determination that determines how long an artist must record exclusively for a particular record company. It forces the artist to record a number of masters and deliver them to the record company. If a substantial, long-term album is sought by the record company, the artist with sufficient influence should request “promotion” provisions such as guaranteed release, promotion budget, advertising, support, advertising, advertising, and/or video. The artist should also try to limit the delivery obligation to one or two albums per five-year period. If the artist cannot limit the recording obligation to a pleasant number, ask the record company for broad and favorable “suspension conditions”.

(3) Obligations of record companies: Artists should apply for a “guarantee” release clause that defines “recording” to include “release”. Artists should also avoid the language of “minimal engagement.” (4) Delivery: The “delivery” of a master recording at certain times is required by the recording artist by each recording contract. Failure to deliver the product on time may prevent the record company from making and selling records in a timely manner. This can affect the artist in several ways, including the renewal of option dates, expiration dates, and advance payments. (5) Suspension and extension: These clauses are usually triggered by a failure to register the artist or by the commission of an immoral act. In general, the artist must take care to avoid automatic “suspension clauses” in the event of non-delivery or delay of the product. Instead, ask that the suspension only apply if the non-delivery is the artist`s failure and/or that it be excused if the record company excludes the artist from the recording. (6) Injunction and fair redress: Record companies attempt to prevent the artist from violating a recording contract by preventing him from recording elsewhere.

To do this, they insert a clause stating that the artist`s personal services are “unique” and “special” and exclusive to the record company. Hosting agreements with this language entitle the record company to injunctions and other fair claims. The artist should limit this to ensure that the record company only has the right to “seek” an injunction or other fair remedy. (7) Royalties: The “basic licence rate” is the gross licence or entry fee for “regular sales at full price”. It is negotiable and varies from one artist to another. In general, it can vary from 5% to 10% for an unknown new artist, 15% for a hot new artist in a bidding war, or up to 18% for an experienced artist. The basic set of licenses is usually significantly reduced by various other license terms and definitions. The packaging smoke cabinet is another common goal. Record companies typically deduct “container fees,” a “packaging deduction,” or “handling fees.” This is the largest reduction in the basic royalty rate and is generally non-negotiable. An artist can also rarely avoid a “free merchandise” clause; This allows the record company to donate CDs and cassettes to radio and retailers for free for promotional purposes, which can result in a reduction in the basic fee of up to 15%. Royalties on CD sales are often charged by many record companies based on less than 100% of sales. For example, the license fee for CDs is usually calculated based on only 85% or even only 75% of sales.

Try to avoid this historical practice. There is really no justification for this reduction today, as the manufacturing price of CDs is negligible compared to other formats. Record club royalties are usually reduced by 50% and calculated on the basis of only 85% of sales. .