Three Crucial Clauses In A Recording Contract

The language of a record contract varies greatly, but a number of key clauses appear in most of them.

The language of a record contract varies greatly, but a number of key clauses appear in most of them.The wording of the components of a record contract can lead to undesirable deals for artists who overlook the small details.

The contractual provisions of each record deal require special attention, because, if not, the deal could end up being onerous for recording artists who didn’t read the fine print. Putting pen to paper can certainly be an exciting time for an artist landing his or her first big recording contract, which might make it easier to overlook certain key details and get stuck with a less than optimum deal.

Following are the three most important things to look for when signing a recording contract:

The terms of the contract

Contract terms are more often measured in years than albums – record labels like to make sure contracts can be terminated to protect themselves in case the first record doesn’t sell well. Contracts generally run for one year, with a series of option periods, and may also include a minimum or maximum number of albums. Requesting a clause that sets a maximum number of master recordings to be completed, rather than a minimum, can help artists avoid getting caught in open-ended relationships with labels.

Use of an artist’s name and likeness

An artist should not give the record company unrestricted access to use his or her brand to boost business ventures in which he or she has no part, i.e., the label should only be allowed to use a musician’s name and likeness in connection with sales of that musician’s recordings and merchandise. This can be an easy aspect of a contract to overlook, because it is often seen as standard provision, but should not be discounted. Different agreements include varying terms on musicians’ names and likenesses, therefore it should not be assumed that this is a boilerplate clause in record deals.

The royalty rates

Recording contracts normally contain clauses setting the royalty rates for merchandise sold. The rates can be based on retail or wholesale pricing, though retail is typically the better option and makes calculations easier. However, there is a good chance that a royalty clause will include plenty of deductions for recording and video production costs, packaging charges, payment on less than 100 percent of the records sold and more. To get the most out of royalties, it is wise for musicians to request that their rates increase over the length of the contract. This portion of a recording contract can contain a number of interesting quirks and wrinkles, and should be approached with plenty of caution and attention to detail to ensure a fair deal.

The above are just a few of the contract clauses that recording artists should read thoroughly to make sure they are signing beneficial agreements. It can be easy for an artist to miss certain details and end up in an undesirable, open-ended and financially draining contract, but a careful review of clauses such as those listed above can help musicians avoid such deals. An attorney may also prove helpful when trying to understand exactly what each portion of a contract is saying.

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Anthony R. Caruso is a business transactional attorney in New York and New Jersey with experience in structuring, negotiation and completion of legal deals involving business, entrepreneurs, athletes and performers.

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