With more and more record labels being created each week and more artists are signing rights away to their creations, I thought it would be good to go over some key reg flags to look out for when reviewing your contract and before signing. Ideally, you should seek counsel with an attorney, especially one that focuses on the music industry, however, retainer fees are expensive and with some basic understanding of legalese, and what terms to avoid in the contract, you’ll be setup for success in the long run.
Red Flag 1 – Extended Length of Time for Licensing
In a recent contract I received, the label wanted to license the masters for 10 years, but would own them in perpetuity. This seemed like a clash. Also, 10 years is a very long time in the grand scheme. I’ve been producing music for 20 years, so if I had signed away the rights to music I created when I was 20, I’d just be getting the rights back. I simply asked the label if this was adjustable to a more reasonable timeline, such as 3 or 5 years. However, in the same section of the contract is a section regarding Master ownership and the 2nd red flag to look out for, which could potentially negate any fixes requested about the time.
Red Flag 2 – Perpetuity
If the record label contract contains the term “perpetuity”, and is usually referring to Master (the master music files) ownership. When I was growing up, one of the best mixtapes of the early 2000’s was Chamillionaire’s Mixtape Messiah 2. On the song “Hip Hop Warning”, he says a line: “You’re an idiot if you’re giving up your masters free” and that has stuck with me since I first heard it. When you’re getting no money up front, why would you just hand over the ownership of your music for life to someone else?
Contracts are meant to be negotiated. A lot of times record labels will buy pre-made contracts from “Record Label in a Box” type products that have this terrible language that zaps all rights away from you as an artist. If you have concerns about a contract, ask if it can be amended. If it cannot be amended, is that label really worth your time and energy working with? This will come down to your own personal beliefs and goals. Is the record label one of the biggest labels in the world and it will have astronomical growth trajectory for your career? That might be worth signing away your rights for a song or two forever but if it’s some small label why would you give away your ability to license your song to other labels in the future for release?
Red Flag 3 – Unfair Royalty Splits
Now that the first two big red flags that could limit your returns and financial freedom with your music when signing a record label contract are covered let’s dive into the next big thing that artists focus on when reviewing contracts, and that is royalty splits. Typical royalty splits should be 60% to the artist and 40% to the label, but a lot of times this can be more of a 50/50 split. Occasionally there will be a 40/60 spit with 40% to the artist and 60% to the label. These contracts should be avoided at all cost. Why should the record label receive more money after recuperating costs than you get?
The point regarding recuperating costs is a big one. Labels will have marketing budgets, and artwork considerations that all need to regained by the label via sales of your music until you’re able to get paid. For example, Record Label A. pays $500 for an Inflyte Promo mailer through a PR service, they pay $100 to make the cover artwork, and then $100 for Spotify playlist submissions. You as an artist wouldn’t see a dime untl that $700 has been repaid to the label via sales of your music, and unless you’re getting hundreds of thousands of streams on Spotify, on top of having every DJ on the planet buy your song on Beatport then you may never see a cent.
Negotiate
Don’t be afraid to negotiate with labels. Of course if you’re working with Warner Records or Toolroom, then the contracts are less likely to be negotiated and you don’t want to burn bridges, but please please know what you’re signing and what it means for you and your art. If the label has a marketing plan, and is going to invest time and money into your art for your growth and success, the above red flags are less red but still VERY important to understand. Contact an attorney, have them review your contract if you aren’t sure of what specific clauses mean. Working with a record label should be a two way street and not one way where the artist is doing all the work to get the music heard and the label just reaps all the benefits of that work.
If you’re interested in leveling up your music production skills, growing creatively as an artist, and want to strategize getting more tracks signed, let’s chat and discuss how we can work together, just shoot me an e-mail.