Recording Contracts: A Quick Guide to Record Contracts

Quick guide to record contracts.

The following is intended to be an introduction to the main points to be aware of with recording contracts, but we would always advise you to have a solicitor with experience in this area to help you negotiate your contract.

A record contract is an 'exclusive' agreement.

A record contract is an exclusive agreement, this means that you agree not to make recording for anyone other than the record company for the term of the contract. The record company decides if the music is released

You should note that a recording contract is not a guarantee to release, whether the music is released or not will depends on whether the company believes it is commercial viable.

If your contract is for a number of albums, this is the number of albums that you are tied to the company for. For example, if you have a five album contract, and your first album is a failure the company can drop you. If on the other hand, the band is a commercial success, the band must remain with the company. Since the record company has already invested in the band, they want to ensure a suitable return on their investment if the band is successful.

Royalties.

The terms and conditions covering royalties will form a major part of the contract. Royalties can be based on either the wholesale price, or the standard retail selling price, and as a rule your royalty percentage is also reduced for sales where the product is discounted. You may also find that the costs of production, manufacture and packaging are also deducted from the royalty figure.

If you have a good solicitor representing you, he will probably be able to provide you with calculations to determine how much (or little) you are likely to receive.

Typically, record companies will pay for studio time and promotion, and may give the band an advance. The money for all of this is a loan which the band pays back out of their royalties. Once you sell enough to pay back the record label, you will receive royalties on future record sales. This means, that unless the band is successful enough for the royalties to cover cost and the advance, they will not receive any money, likewise the record company will stand to loose the money they invested in costs and/or advances if the sales do not cover these costs.

Copyright.

You should always retain copyright to the musical work itself, though in the contract you will licence certain rights to the record company, to enable them to manufacture, distribute and sell your work on your behalf.

For musical works copyright can exist separately in a sound recording (phonographic right), and in some instances, copyright to the master recordings may also be owned by the company. Other types of contract

Besides the standard record production deal, there are also licensing contracts, where the you fund the majority of the costs independently and simply grant the company the rights to manufacture, distribute and sell agreed recordings. This gives the band more control and the royalty rate should be higher, but there is unlikely to be a major budget to promote the album. Some of the smaller independent labels also offer profit split the profits, after any expenditure with the artist.

Recommended Resources:

  • UKCS Music copyright factsheet
  • Recording contract page at vocalist.org.uk
  • The Anti Spam Campaign
  • Copyright