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Timestamp: 2020-02-25 17:36:30
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Music Law:
Contract Basics - Part 1 of 5
A contract is an agreement between two or more parties in which an offer is made, negotiated, and accepted, and each party benefits. Among other things, the parties must be above a certain age, and the contract must be binding and enforceable in a court of law or in arbitration – so it cannot be for an illegal activity.
A contract can be written or oral, and as formal or as simple as the parties want. Some contracts have been known to have been written on bar napkins and upheld as valid – though it is not recommended because the napkin is not a secure document, it can be easily lost or the writing blurred due to spilled drinks, which can lead to questions as to what the contract actually covered.
Deborah Gonzalez, Esq. -- dgartlaw@att.net www.dgonzalezesq.com -- @DG_IPLAW (c) 2015
Music Law: Contract Basics - Part 2 of 5
What issues get covered in a contract?
A contract’s purpose is to lay out in a clear and concise manner what each party has agreed to perform or supply. It can cover a variety of topics and issues, including timelines, length of contract, expectations for each party, and recourses for nonperformance. While not complete, this list shows the most common topics and issues included in a music business contract:
Exclusivity of the artist to a recording label or publisher;
Length of the exclusivity;
Recording requirements;
Release requirements;
Artists’ royalty streams;
Recording costs and funds;
Publishing rights;
Video/Digital/Technology rights;
Copyright ownership and use of masters;
Compensation and timing of payments;
Live-performance parameters; incidentals/riders;
Music Business Basics:
Misconceptions About the Business - Part 1 of 3
What are the biggest misconceptions for those getting into the music business?
In my entertainment law practice I meet many people with varying levels of experience in the music business and equally varying ideas about how to navigate it. False impressions and mistaken beliefs abound. It is not just the new artist who has misconceptions about the state of the industry.
The experienced artists who have done well in the past believe they can follow the same roadmap that brought them prior successes. Both levels of artist wonder why they can’t make any headway in the current environment. It is then up to me to explain.
The two largest misconceptions are about the needed commitment, and chasing the record deal.
Jelani Miller -- www.themillerlawgroup.com/
Excerpted from the book "Navigating the New Music Business as a DIY & Indie: Coming Clean With the Down and Dirty"
Misconceptions About the Business - Part 2 of 3
Biggest misconception #2: Commitment
The level of commitment needed to have a lasting career in this business is huge. Many new artists, particularly younger ones, do not understand the time and energy required. Many operate under the mistaken notion that it’s simply a matter of having talent, a few fans, a little luck and, in a couple of weeks or so, they will be the next big thing.
It rarely, if ever, works that way.
More often than not, it’s more about an artist putting in enough consistent effort to not only get noticed by the right person, but also being able to identify and take advantage of the right opportunity at the right time.
For clients with the talent and ability to do it, I advise diversifying offerings to broaden opportunities. As examples, if you’re a singer, are you also putting in work as a writer and/or session singer? If you’re a band, have you thought about seeking placements in advertising?
The point is that in today’s music business there are many avenues to success. The meaning of success is also something many who come into my office for a consultation cannot quite articulate.
While I appreciate that each person will have a different definition of success, I am surprised how many don’t delve deep enough into the concept and what it means to them.
Also, having an ultimate goal is good, but having a strategy for achieving Plan A and its acceptable deviations (Plans B, C, and maybe D) enables advisors such as your manager, attorney, and other team members to better help you reach those goals.
Music Law: Contract Basics - Part 3 of 5
What kinds of contracts are used in the music business?
The music industry makes use of an array of contracts depending on the parties and the specific issue involved. Some examples include:
Management Contracts, such as Agent/Manager or Producer/Artist Agreements;
Copyright Assignments and Ownership, such as a “Split Sheet;”
Membership Agreements to Performance Rights Organizations;
Performance/Concert/Touring Contracts;
Songwriter Contracts & Royalties;
Licensing Contracts for Recordings for TV/Film, Video Games, etc.;
Foreign Distribution Agreements;
Misconceptions About the Business - Part 3 of 3
Biggest misconception #1: Chasing the Deals
However, the biggest misconception I hear over and over is that an artist should be concentrating on getting a record deal. That is not to say that getting a major deal is not an appropriate goal, because there are still good deals to be had.
But changes in the record industry are well documented – there are too many to go into detail here – and getting a deal today is nothing like it was 10 to 15 years ago. That brings us to the second misconception.
There are a number of significant considerations many artists fail to take into account when seeking a record deal.
Let’s take artist development.
If a new artist is working on a demo, then I’d have to say they’re about seven years too late.
The traditional A&R model of the past is virtually non-existent today. Artist development is largely left up to the artist. Most record deals are for projects that are nearly complete. Record companies want viable projects and seasoned artists that can be scaled up for immediate profits, instead of spending a lot of money developing talent in the hopes of a distant payoff.
Good news: Because of technology available to many, the reach of the record labels, though still vast, is not that much superior to an independent’s.
An independent artist can market/promote, develop, distribute, license, etc., almost as well as a label. More important to many artists, the money involved is not the same. DIY/Indies get a far greater slice of the profits.
In 2014, Taylor Swift’s 1989 sold over 1.2 million copies in the first week. It was the largest sales week for a record since Eminem’s The Eminem Show in 2002.
More tellingly, 1989 represented roughly 20% of all album sales in the U.S. for 2014 when it was released in the fourth quarter (October) of that year.
Bloomberg magazine stated that the RIAA’s reported sales of CDs for the first half of 2014 were down 19% from 2013, to 56 million.
Compare that to 2002 total album sales in the U.S., which were 681 million (down from 763 million in 2001).
After The Eminem Show and the 8 Mile soundtrack, the 10 top-selling albums of 2002 included Nellyville (4.9 million albums), Avril Lavigne’s Let Go (4.1 million), and the Dixie Chicks’ Home (3.7 million).
Before Swift’s 1989, the leading selling album in 2014 was Coldplay’s Ghost Story, which sold 383,000 copies in its first week and a total of 737,000 copies after its release in May, or roughly a third of Swift’s first-week sales.
Mid-level deals that once garnered low-six-figure advances 10 years ago might get you $50,000 today. Whether that is a product of the steady decline in album sales, industry consolidation, or low royalty rates from streaming services, the point is still made: Deals are not the same as they once were.
To take it even further, since the mid-2000s the rise of the “360 deal” has enabled the hard-hit record companies to take a greater percentage of most, if not all, other revenue streams of an artist. So if you think you’ll make up for the lower advance and declining sales by hitting the road or doing some acting on the side, think again.
That said, record label deals can still be important, and probably will be for a long time.
So while artists are independent, they should use all the tools available to develop and market themselves and find other revenue sources such as direct-to-fan sales and more until such time that scaling up is necessary and can only be done in a way that a well-established label or other investor can bankroll and coordinate.
By the time the labels come knocking – if they ever do – you will have learned a lot about the industry, will know what to expect, and can be in a stronger position to negotiate the best deal possible.
Contract Basics - Part 4 of 5
Clauses are the individual sections within a contract containing the details on specific rights the musician has (ex. copyrights in a musical composition) and the specific rights he is giving up or assigning to another party – whether that be a publisher, a furnishing company (a smaller label who will invest the resources, including time and money, to develop a musician and then shop them to one of the big labels), a record label, or other.
Contract Basics - Part 5 of 5
What are 360 Rights?
360 Rights are ancillary, or additional, rights to the recording agreement usually involving passive participation on the part of the record label or furnishing company. In other words, the labels and/or publisher will advance the argument that because they supported your artistry and got eyes on you, they will want to receive – with no extra work on their part – anywhere from 20-30% of the money you are earning from selling merchandise, acting in movies or on television, speaking engagements, endorsing products or just about anything else.
The genre of the music and the location of the music deal are two factors that affect the ultimate value of a music deal – a country singer/songwriter in Nashville may receive a low amount in advance in a bidding war while a hip/hop pop artist in Atlanta may receive a contract for for a larger amount to help offset all recording costs.
While each clause may look like a standalone item, often language is included that influences other clauses, so a thorough understanding of each clause and the overall effect on the contract is a must.
A contract is a balancing act based on the current state and goals of the musician (where he is in his career, size and engagement of his fan base, genre of music, and so on) and the record label or furnishing company (their financial goals, how much they are willing to upfront costs, and more).
Legal Eagles Speak