Musicians have myriad reasons for why they begin creating original music.  The driving force may be a love for a particular musical genre or instrument, the innate need for creative outlet, or a simple desire to become a rock star with its riches and fame.  At some point, however, you may have a go at making a life and living through music. If so, you need to understand basic musicians rights and how record deals work.

The suggested conventional route to popular success may involve countless hours crafting songs, long periods practicing the craft, late nights spent playing at clubs, and the banality of endless promoting.  A record label, after all the time and effort, will hopefully then take notice.

The fun begins when a company rep offers you a record deal or check.  They agree to produce, promote, and pay for your musical ideas in exchange for exclusive rights to that music.  This bargain typically authorizes the record company to sell your music in stores, but also to seek profit from many different avenues.

These avenues mean your music can end up on a best of compilation, as the soundtrack to the Starbucks experience, or synched to promote Samuel Adams beer.  Sure, you receive royalties from these sales (9.1 cents per song sold at the record store), not to mention the money from your record deal, but the vast majority of profit goes to the record label.  The more popular a work, the more a record company profits.

To understand how this happens, you need to understand your inherent rights as an artist to the music you create.  Broadly speaking, these copyrights can be categorized into four groups:

  1. Master Use rights – This is the artist’s authority over the finished product that is a song or album.  It covers all the studio work that may be involved in bringing a song from its initial draft to the music sold in stores.  Think musicians brought in to play instruments, vocalists providing backing harmonies, and a large soundboard to mix and produce the recordings.
  2. Mechanical rights – This is the artist’s authority to sell their albums and songs through personal purchases of buyers.
  3. Performance rights – This is the artist’s authority to perform their music and includes plays over the radio or internet.  An artist, or record label, will license their material to a Performance Rights Organization (PRO).  The PRO, in turn, collects royalty fees whenever an artist’s music is performed publicly.
  4. Synchronization rights – This is the artist’s authority to permit another party to synch their music to a visual performance (e.g. music video, television, movie, or commercial).

It’s important to also understand that you own these rights exclusively.  Legally, no one else can use your work to profit without your permission.

However, in a rush to secure a record deal, artists commonly grant all these rights to the record label.  As record labels are in the business of making money, it makes sense that they’re not going to support your musical career to be a good Samaritan.  Your transferred rights, and the vast majority of future profits, are their cheese.

Negotiating a different deal with the record label, even if you’re fully informed, isn’t easy though.  Very few artists have significant leverage when trying to bargain with a large record company.  Producing music is not cheap and most artists are unable to finance their musical careers in the beginning.

The complex language in these record contracts also makes it difficult to know what the exact terms are.  A record company, knowing that the playing field is uneven, probably is not keen on hearing suggestions to altering their standard contract.  This doesn’t mean it’s impossible, though.

Keeping in mind the tenuous nature of these contract negotiations, here are some ways that you can limit how much you give to the record company:

  • Limit the term to your grant of rights:  Even if it’s for some or one of your rights, down the road, this means rights (and all the profits) revert back to you.
  • Limit what rights you grant:  While hoping to withhold one of the broad category of rights mentioned above might be shooting for the moon, you can try to focus on a subset of those rights.  For example, you could request to retain your synch rights to TV commercials.
  • Set terms to buy back certain rights:  It makes sense to set these terms before your music explodes and the record label is less likely to negotiate favorable terms, or terms at all.
  • Hire someone to represent you: Not many artists have the expertise to negotiate a record deal.  Hiring an expert in the field can help level the playing field when bargaining, as well intelligently handling complex contract language.

In the end, have faith that you’re going to be success and try to strike a deal that reflects that belief.

Guest Post: Ari Good, JD LLM, a tax, aviation and entertainment lawyer, is the Shareholder of Good Attorneys At Law, P.A.  Ari Mr. Good received his BA, With Distinction, from the University of Michigan in 1993.  He graduated from the DePaul University College of Law in 1997 and received his LL.M. in Taxation from the University of Florida.  Ari represents DJs, live musicians, fashion models and other entertainers in copyright, licensing and contract matters.

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