WHAT ARE THE MAIN DIFFERENCES BETWEEN A “LABEL FRIENDLY” RECORDING CONTRACT AND AN “ARTIST FRIENDLY” RECORDING CONTRACT?

Whether you are a label or an artist, there are some key terms in a recording contract that will definitely favor one party over the other. Knowing what terms to negotiate can make the contract easier to live with for both parties.

One of the first clauses I always look for is the Guaranteed Release Clause. Without one, a label has no obligation to manufacture and release a recording. An artist does not want to spend months in the studio only to have the record shelved indefinitely. If you are an artist and can’t get the label to insert this clause, ask for a Buy Back Clause. This will allow you to purchase the master recording from the label if it does not release it within a specified period after delivery; it should say the label has an obligation to negotiate a purchase price in good faith.

Next is the number of options the label has over the artist – this is the number of times the label can extend the contract for another term after the initial term expires. A label will generally want to have something high, around four options. As an artist, you want to keep it to around two options. The artist will usually be required to record one record during each term. As a label, you will want the contract to say the option is deemed automatically picked up by the label, unless the label gives written notice to the contrary. That way, no action is required by the label in order to pick up the artist’s option. As an artist, the contract should say the label has to pick up your option by providing written notice to you. That way, if the label forgets to give you written notice, you have an out on your contract and this will allow you to negotiate a new contract if you want to re-sign with the label.

The label may want to select the producer the artist will record with, or use its own in-house producer. As an artist, negotiate for a producer of your choosing. At the very least, have the contract say the label and artist have to mutually agree on a producer. The same goes for the photographer and graphic designer doing the album art.

The label will also want to have approval of the masters as commercially and technically satisfactory – this is usually not negotiable. After all, the label has no interest in releasing a noise record void of any singles that can be pushed to radio. The contract may say the label has the right to terminate the recording process if it does not like what it hears in the studio. The artist can try and insert a clause that says label representatives are prohibited from attending recording sessions, but if the label is paying for studio time, this most likely will not fly.

Like most recording contracts, the label will own all rights in the master recording, and this includes the right to sell those rights to an outside party. An artist can curb this with a clause saying if the label is going to sell the master rights, it has to first offer them for sale to the artist at fair market value (this is similar to the Buy Back Clause above). Also, as a label, you will most likely want at least 10 new studio tracks per record; this means no live tracks or songs previously recorded by the artist. An artist may be able to include a live track as an 11th song or hidden track.

Although artist royalty rates are generally standard, especially for first time deals, what the percentage is based upon can make a difference. The label contract will base the royalty on a percentage of the wholesale selling price. If the artist negotiates, it can be based upon the retail selling price and it will result in a slightly higher amount because retail price is always more than wholesale price. Lastly, labels may want to keep up to 50 percent of an artist’s merchandising income and apply it toward its recoupment account. A struggling artist should always keep 100 percent of their merchandising income. Income from the merch table is often what keeps a band afloat on the road.

The label or artist may not get every contract term negotiated in their favor, but a little give and take will prevent a one-sided agreement.

The information in this column is for general information purposes only. It is not intended to provide advice regarding a specific legal situation. Legal advice can only be obtained after consultation with a specific attorney.

Email your questions to galen@riftmagazine.com