September 17, 2021
The internet has completely changed the music game forever.
The change from traditional means of distribution to digital distribution alone have completely upended the “old school” model of conducting business in the music industry, putting the same kind of stress and pressure on the music world that online capabilities have put on pretty much every other industry on the planet.
The New Rules of conducting business in the world of music are still being written today, with pioneers continuing to innovate and continuing to shake things up on an almost daily basis. Recording contracts have had to change, adapt, and of all from the Stone Age of doing business – but some are moving a lot slower compared to the realities of this industry.
As a new artist, the potential of signing a record contract is always going to be equal parts excitement and anticipation as well as fear, nervousness, and anxiety.
Everyone that picks up an instrument, stepped in front of a microphone, or wants to produce music or write songs dreams about getting picked up and signing that big deal – but all of them understand that the business has changed so much and so rapidly in just the last 10 or 15 years that a lot of people are kind of making things up as they go along.
To learn how to protect yourself from signing the wrong record deal moving forward, and to give yourself an edge and advantage when you are offered that first contract, we’ve put together this quick guide.
Below you’ll find tips and tricks, tactics and strategies shared by legendary music attorney Mark Quail – a professional that’s been focused specifically on musical law ever since 1990 (nearly 30 years and running).
In a lot of ways, a recording contract today is a lot like it always used to be – acting as the bedrock foundation where an individual music artist hands over the ownership of musical copyright (almost always for master recordings) to a recording company, with the record company always looking to maintain these copyrights indefinitely.
This is how record companies in the past used to build up their catalogs and their libraries, how they used to make themselves attractive in the event of an almost always inevitable buyout, and why they continue to look for this kind of leverage still today.
Musical artists are always pushing back against this kind of wholesale transfer, but record companies are still looking to buy out the exclusive services of a particular artist for a specific chunk of time or a specific number of albums/assets – and in that way the contract hasn’t changed all that much.
Not as much as they used to in the past.
In the “old days” – about a decade or two ago – a new artist would be more willing to sign over the rights to their songs, their music, and their master recordings to a record company because that company would be willing to invest hundreds of thousands, if not millions of dollars into the marketing and advertising of that artist.
Today, thanks in large part to the power of social media and the online sphere in general, a lot of new artists are learning that they can cut out the middleman completely (the middleman being the record company) and instead handle the heavy lifting of marketing and promotion themselves in a way that just wasn’t possible in the past.
On top of that, record companies used to be able to offer many hundreds of thousands of dollars if not millions of dollars invested in quality recording equipment, studios, and producers that individual artists couldn’t take advantage of otherwise.
New technology has made almost all of that entirely obsolete, and at the very least has cut down significantly on the need for those kinds of fully fleshed out studios. A popular musical production software called Fruity Loops (now FL Studio) completely replicates the most fully fleshed out studio in a software application that can be loaded on phones and laptops that only cost a few hundred dollars.
The playing field has been leveled significantly.
Obviously, record companies still have a lot of leverage when it comes to their industry connections, their ability to promote new talent, and their ability to essentially crown new stars through brute force and bottomless budgets that your everyday individual artist might not have.
With a world of talents, a lot of luck, and plenty of sweat equity amazing artists can still break through all on their own, but plenty of new artists are choosing to sign that record contract even with the advantages the online world offers simply because they’re looking to streamline and speed up their pathway to success.
As we highlighted above, traditional record contracts are still looking to do one thing and one thing only above all else – and that’s acquiring and then holding copyrights for as long as the record company can get away with.
What has changed, significantly we might add, is how the overall distribution of music is handled – particularly because of the power of the internet, the mobile web, applications that allow for instant and on-demand streaming and a whole lot of new technological advances that didn’t exist until just a (relatively) short while ago.
Today, streaming is the most important thing in the world of music distribution. But it really wasn’t all that long ago that digital downloads in the form of MP3 files were all the rage, and before that CDs, tapes, and records were the dominant force in the world of music distribution.
Streaming feels like it’s the end of the line as far as music distribution is concerned right now – but all of those legacy distribution channels felt like they were the last word in music distribution for their time as well. It’s impossible to know what the future of music distribution might be, so record companies are now looking to lock up rights to distribute music via “any means now known or discovered later on”.
From a general standpoint, any contractual terms that are going to heavily benefit one side more than another will cause a lot of bitterness, a lot of anger, and a lot of resentment in the short or long-term and should be avoided at all costs.
Initially strong-arming an artist (or strong-arming a record company, for that matter) into a contract that they aren’t happy with all will inevitably poison the well of the relationship between both parties. That’s going to immediately drive a wedge between all involved, separate forces that should be working together towards mutual success, and really put your odds of hitting it big much lower than they could have been otherwise.
Bad contracts can be avoided by hiring agents and lawyers that understand both sides need to feel good about the kind of deal that is being cooked up and signed. Both sides are going to have to give, both sides are going to have to get, and both the recording company and the artist are going to have to feel like they are working together rather than trying to get one over on the other.
Any contract that stifles creativity, locks artists or companies into extremely long terms, forces someone to give up creative control, or that cannibalize his sales and shifts money from one side to the other will inevitably be seen as a bad idea.
Obviously there are a lot of other things that can spoil a recording contract, but those are the ones you want to stay on the lookout for right out of the gates.
Essentially the opposite of what we just touched on.
The best record deals are going to feel like win-win situations on both sides, not like 50/50 compromises but like everyone is coming out of this deal with the best possible odds of success – whatever that might mean for each individual party.
For obvious reasons, brand-new artists are going to struggle to have the kind of leverage that more experienced, more popular, and (honestly) more powerful artists are going to bring to the table. Initial contracts are inevitably going to be a little bit “worse” than follow-up contracts for successful artists, but that doesn’t mean that the first contract you sign as an artist has to be a pile of garbage, either.
You’re going to want to focus on things like:
Your overall royalty rates that you’ll receive
The amount of music (albums and singles) you will have to deliver to fulfill your contract
How much money the recording company is investing in you as far as marketing, distribution, and overall promotion are concerns
How much money the record company is looking for when it comes to music publishing, merchandising, and live performances
… And next just the tip of the iceberg.
You’ll also want to look for contracts that are written very clearly, very concisely, and using as much plain language as possible. Any ambiguity and poorly written phrases will leave a lot to be decided over later, inevitably causing all kinds of headaches and hassle that could have been avoided otherwise.
Recording companies are always going to be interested in trying to lock down the copyrights and artist’s songs and master recordings for just as long as humanly possible, and particularly new artists might be willing to stretch the length of their first contract just to get into the industry and have a chance to make it big.
But in today’s quickly evolving musical business landscape it may be worth giving up a little bit of long-term security in favor of having more flexibility and control over your music, your artistry, and your creativity.
Short-term contracts give artists a lot of flexibility when it comes time to jump from one company to another, particularly if they have had a lot of early success. This leverage can result in a lot more money flowing towards the artist, but it also opens up a little bit of risk in case they didn’t have the kind of success they had anticipated and other record companies are little reticent at doing business with them.
In the best case scenario, an artist is able to build up a lot of popularity in the market over maybe two or three different albums – right around when their first contract expires. From there they’ll have a ton of leverage to do a little bit of shopping around, and as long as they can negotiate a rock solid follow-up contract they’ll be in a pretty happy place moving forward in an industry that changes and evolves on an almost daily basis.