Understanding The Most Common Music Contracts
Navigating the intricate world of music contracts is a crucial skill for artists, songwriters, and industry professionals. These legally binding agreements will make or break your bank account and your future. Terms of recording deals, publishing rights, live performance guarantees, and more have been used in the past to manipulate artists. In order to safeguard your creative works (and your pockets), you will need to learn the nuances of music contracts. Fortunately, this is a new era for you; the internet has made it possible to see through any connivance and set you up for success before you hit any snags. Let’s go over and get to know some of the most important contracts in your career so you can guard yourself from being taken advantage of.
Rights Transfer
First, why would you want to transfer your music rights? When you sign with a label, that label needs to be able to negotiate licensing and publishing deals without running to the artist for approval. It’s more efficient. Companies do not discuss someone’s account unless they have their permission every single time; that encompasses all phone calls, emails; all communication. That label would have to get the artist on the phone every time they needed to work out financials without a rights transfer. There are other reasons as well.
Sometimes there are buyouts of a musical work or sound recording for commercial projects, like movie soundtracks, video games or TV shows/advertising. Producers need to acquire rights to use that work. This is different from synchronization.
This contract grants a third party the right to use your music commercially. This should be detailed in the agreement and applies to how the music will be distributed, copied, and in some cases, even altered.
Work For Hire
This is a contract typically stating who owns the rights of a sound recording when an employer hires outside musicians to create and collaborate. The employer can be a music artist, a label, etc. It states that whoever commissions the work owns the work. It dictates who gets the royalties for the song. It outlines any necessary confidentiality agreements before or after work is released. This type of contract is normally used when an artist is paid a flat fee for a performance on someone else’s music; session hires are not commonly paid royalties after the job is done.
Collection Society contracts
Collection societies, primarily CMOs and PROs, collect and distribute payments for royalties, licenses, performances, and media to copyright holders or creators. Songwriters and composers join these organizations to get paid their royalties. Contracts for each society vary, and rules are different from country to country. It’s vital to pay attention to how these contracts are worded.
Band contracts
Not everybody does it, but it’s always a good idea to sign a contract between bandmates. This is an area where you can get into a lot of trouble. A lot of people form bands with their friends, and that can open up the possibility of terrible misunderstandings and disrespect if members don’t understand each other down to the detail in regards to future goals, ideas, how things will be negotiated outside of the practice room, etc. Especially now, with the ease of internet communication and live feeds. There’s an abundance of areas where something can go wrong here, so make sure everyone is always on the same page with a contract.
If you’re a serious musician, you will probably be spending just as much (or more) time with your bandmates as your personal relationship at home. Marriage is a contract, so why wouldn’t it be logical to ensure alignment with your band members, too? A contract between band members doesn’t mean you distrust your friends. It means every person on board understands life’s idiosyncrasies and the need for business structure.
In a band contract, you should include things like how the financials of the band will be run, how problems are handled, and the level of ownership of the band by each member. Responsibilities of each person, royalty payments, and specific member roles should be outlined and very clear. Who gets songwriting credit? Who owns the band name? What happens if you’re out on tour and someone quits?
Record Labels
This is the contract everyone thinks of first when building a career in music. These can get really detailed, so we’ll go over just a few heavy parts of it:
The most important part of record label contracts are the term, or length of the agreement. It can be calculated in the number of releases, or in years. Generally, artists want a shorter one and labels want a longer one. This is because your label will want to have more time and a better chance at recouping their investment with you, while as an artist, you want the freedom to move and try different things if you find it’s not working out to your satisfaction. These contracts can be pretty intimidating.
Next, you’ll want to make sure the money is benefiting you. You’ve generally got record advances and royalty payments. Also, if you’re writing your own songs, pay attention to publishing income from songwriting credits, and how that’s been detailed in the contract.
Normally, royalties will not be paid out to artists until the label has made back its investment on the release (or other project).
Understand outlined deductions. These are expenses taken off the top to pay for a music project.
One more important thing to take a look at is Creative Control. Who gets to decide when, and how the work is advertised/sold? Who gets the final say on things like cover artwork or music videos?
Producer/Remixer agreements
There might be a point where someone is going to want to get permission from you to remix your song and put it up on YouTube, Spotify, etc. They are not allowed to do this without a contract with you. Never give your consent without one. You don’t know who’s going to be the next viral Tik Toker making bank off your music through social media monetization.
Determine which or how many tracks are being remixed. Are they being exported and delivered as stem files, digital streams, or instrumental versions?
How is this remix being credited, and are there any brand images being used in that credit?
How is this person planning on earning money from the remix?
Who gets rights of approval over the remix; who can delete it, what are the restrictions, etc.?
Who’s going to own the copyright for this new remix? Every distribution of a song is unique, and has its own distribution number. A remix is technically a different song, according to law, and requires a new title, ISMN identification, copyright, etc.
Music Licensing
A sync licensing contract should describe how your music will be handled, the duration of the song segment, the hook, or what musically sticks out, and how much you’re going to get paid.
These agreements are used to authorize the synchronization of copyrighted music with other types of content, like films, television shows/advertisements, video recordings, and video games, and even non-visual works such as theater performances and radio ads.
Artist Management
Artist management contracts have several important talking points: the duration of the contract, compensation for the management, who has rights to manage people who leave the band, and the scope of their management services.
Guest Performance
This is the contract you’ll sign when you play live at a venue of any kind (if the venue is pro and cares about what they’re doing, anyway). It might also be called an artist contract, booking contract, or concert agreement/contract. You will run into snags; for instance, this will not always work out in time with smaller venues. This is basically an agreement with an event organizer. It’s especially important for less popular or newer artists who cannot yet command a large fee or overnight accommodations. If you can’t get it down in writing, you can always record a phone conversation and then have the event organizer sign off on it when you get to the venue. Disputes happen in live and real time situations, and you need to be able to prove things like expectations, premeditated understandings, affiliations, etc. You won’t get far if something goes wrong with hearsay, or someone’s “word”.
Distribution
Always pay attention to your distribution contracts. We all have a tendency to overlook or fly through online contracts with companies that are easily accessible; Distrokid, Symphonic, etc. Unfortunately, it’s become a habit to dismiss the act of reading over terms and conditions. Don’t get lazy and ignore these.
Music labels used to have the monopoly on where and how your music got distributed. Now anyone can distribute their own work through services online like Distrokid. In addition to the cost and pricing structure (usually the only thing people pay attention to), you’ll want to look at the grant of rights, the revenue split between your royalties and their services, and their delivery obligations, which should line out how fast your music is distributed across platforms. You need to know the timing in order to market and announce your work effectively.
The Future of Your Name
There are a lot of things to pay attention to as you push your music out there. Ignoring these things in the beginning will cause headaches as time progresses, and the reputation of your name or brand can be affected. You are dealing with an industrial machine of money-focused music companies who generally assume artists don’t pay attention and can be taken advantage of. Go in strong, and that won’t happen to you.
