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Record contracts


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Record contracts

  1. 1. Artists Recording Contracts
  2. 2. Unions <ul><li>Recording controlled by negotiated contracts, AFTRA, AFM </li></ul><ul><li>American Federation of Television & Radio Artists </li></ul><ul><li>Singers (featured & background), soloists, choirs </li></ul>
  3. 3. AFTRA <ul><li>“ Contractor” usually a singer who: hires singers, prerehearses & coaches, arranges for rehearsals, completes union documents </li></ul><ul><li>“ Tracking” is overdubbing, contractor logs for extra pay because it puts singers out of work </li></ul><ul><li>Sound Recordings Sessions Report: producer ’s name, hours of recording, names of singers, wages </li></ul>
  4. 4. Scale <ul><li>“ scale” refers to standard payments for various services </li></ul><ul><li>Different scale for: Soloists/Duos, group singers, soloistrs who step out, original cast albums, classical choral singers </li></ul><ul><li>Royalty artists negotiate rate, also get scale (work-made-for-hire) </li></ul>
  5. 5. Scale <ul><li>“ Contingent” scale payments, are minimum royalty payments </li></ul><ul><li>Album sales exceeding 157,500 nonroyalty singers get additional 50%, 15 plateaus = 1,065% of scale </li></ul><ul><li>Single sides 500,000, singers get 33%, 6 plateaus=200% of scale </li></ul><ul><li>Original cast, 320,000 40%, </li></ul><ul><li>Payments last for 10 years </li></ul>
  6. 6. Scale cont. <ul><li>Payments for Permanent & non-permanent Digital Downloads, Ringtones, Music Video Downloads </li></ul>
  7. 7. AFTRA <ul><li>Health & Retirement Fund contributions, 11.5% of “gross compensation” including unrecouped royalties </li></ul><ul><li>“ Acquired Masters” (label gets master from a 3rd party), producer must honor AFTRA payments </li></ul>
  8. 8. AFTRA <ul><li>“ New Use” when recorded for one medium & transferred to another </li></ul><ul><li>AFTRA get full scale for the new use </li></ul><ul><li>Self-produced CDs later licensed to big label, original producer must honor AFTRA payments </li></ul>
  9. 9. AFM <ul><li>American Federation of Musicians represents instrumentalists, arrangers, orchestrators, conductors, copyists </li></ul><ul><li>Labels also contribute to Health & Welfare Fund and 10% to Employers Pension Fund </li></ul>
  10. 10. AFM <ul><li>Leaders Fee=double scale </li></ul><ul><li>“ Doubling”, playing more than one instrument. 1st “double” 20%, each additional 15% </li></ul><ul><li>“ Cartage” for big instruments </li></ul>
  11. 11. AFM <ul><li>Royalty artists also receive scale (work-made-for-hire) </li></ul><ul><li>Acquired masters must also meet union payments </li></ul>
  12. 12. AFM <ul><li>“ Sound Recording Special Payments Fund,” based on sales, lasts 10 years </li></ul><ul><li>Payments made to musicians based on number of recordings made within 5 -year period </li></ul>
  13. 13. AFM <ul><li>“ Music Performance Trust Fund” recording puts musicians out of work, fund used for live performances </li></ul><ul><li>“ Spec” and “Demo” scales </li></ul>
  14. 14. Recording Contracts: Deals <ul><li>Major Label produces in-house </li></ul><ul><li>Label has artist under contract, has independent producer deliver master. Production budget, up-front fee, 2-6% royalty (recoupable from artist) </li></ul>
  15. 15. Deals <ul><li>Independent producer signs artist, sells master to major label. Label pays producer who pays artists </li></ul><ul><li>Master Lease, producer or artist pays all costs & leases master to label, retains ownership </li></ul><ul><li>Artist forms production company </li></ul>
  16. 16. Contract Issues: Term <ul><li>Typical Deal: 1 year, 3-5 options. Usually based on delivery of masters plus evaluation time. 1st fails options are dropped </li></ul><ul><li>Better deal: Three-album deal, albums get recorded even if 1st fails to sell </li></ul>
  17. 17. Terms <ul><li>Most deals try to get 7 albums </li></ul><ul><li>Contracts try to regulate master delivery date & release date. Nov & Dec. usually excluded </li></ul>
  18. 18. Exclusive Services <ul><li>Label wants to prevent artist from recording for others during term </li></ul><ul><li>Artist should be allowed to work as session musician or sideman. “Courtesy of ______ records” usually required </li></ul>
  19. 19. Royalties <ul><li>10-15% of retail, maybe producer “points” (percentage points) </li></ul><ul><li>Big stars 18-22% possible </li></ul><ul><li>Escalating rate as sales increase, Initial rate higher on second album </li></ul><ul><li>“ Advance” money due at signing, recoupable from royalties; “reserve” against returns </li></ul>
  20. 20. Production Budget <ul><li>Estimated cost of production </li></ul><ul><li>Depends on size of label </li></ul><ul><li>If under budget won ’t get remaining money unless a “recording fund” established, portion paid up front, remainder upon “delivery” </li></ul>
  21. 21. Creative Control <ul><li>Stars get it </li></ul><ul><li>Others, creative decisions by “mutual consent” </li></ul><ul><li>New artists expected to work with established producer </li></ul>
  22. 22. Commitment to Promote <ul><li>Contract language difficult </li></ul><ul><li>Should ask for: tour support, press coverage, interviews, independent promoters, trade & consumer publication ads </li></ul><ul><li>How much should be recouped? 50% reasonable </li></ul>
  23. 23. Chargebacks/Recoupment <ul><li>Artists get only the advance until recoupment. </li></ul><ul><li>Studio rentals, tape costs, union wages, arranging & copying are charged back to the label </li></ul><ul><li>Fewer than 15% recoup </li></ul><ul><li>Albums are cross-collateralized </li></ul>
  24. 24. Ownership of Masters <ul><li>Rare to get ownership of masters </li></ul><ul><li>Established artists have value in reissues and back catalog </li></ul><ul><li>Might be possible to get unreleased masters after some repayment </li></ul>
  25. 25. Publishing <ul><li>Label affiliated publisher might be part of deal, will attempt to cross-collaterize </li></ul><ul><li>Might get additional royalties </li></ul><ul><li>With outside publisher probably “controlled Composition” clause added. 75% of Compulsory Mechanical (10x75%) </li></ul>
  26. 26. Videos <ul><li>Labels will want to recoup expenses. Will want 100% from video account but might limit to 50% recoupment from audio account </li></ul><ul><li>Contract should define promotional vs commercial videos, usually length </li></ul>
  27. 27. Videos <ul><li>Artist expected to waive mechanicals & Sync for promotional videos </li></ul><ul><li>Non-promotional should get mech & sync </li></ul><ul><li>Artist should seek approval of directOr, budget, storyline </li></ul><ul><li>Artist may try to have right to produce their own video </li></ul>
  28. 28. Right to Audit <ul><li>Royalties paid semi-annually </li></ul><ul><li>Audit requires written notice to label </li></ul><ul><li>Should have no time limit </li></ul><ul><li>Label should pay for audit if artist is owed 10% more than originally paid. Label should limit to percentable of what is owed. </li></ul>
  29. 29. Default <ul><li>Standard written notification, 30 days to cure </li></ul><ul><li>Label can suspend “term” timeline if artist is unable to deliver master </li></ul><ul><li>Disputes handled through arbitration </li></ul>
  30. 30. Royalty Discounts <ul><li>Breakage, still want 10% reduction </li></ul><ul><li>Packaging discount 25% of retail for CD & tape packaging </li></ul><ul><li>Free goods, 15% </li></ul><ul><li>Record Club sales pay reduced rate </li></ul><ul><li>Label might want to have right to merchandise, Artist should retain right </li></ul>
  31. 31. New Use <ul><li>Take into account formats which are not yet invented </li></ul><ul><li>Labels want to reduce royalty to 75% for digital downloads </li></ul>