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THE MOST IMPORTANT contracts in the music business

Updated: Dec 9, 2022

The authors and performers believe that the basis of business is mainly in the promotion of their works, but legally important agreements, drawn up in the form of contracts, are an integral part of the profession of every musician. Unfortunately, artists still often do not know or do not want to take into account that certain contracts must be concluded, or do not read them carefully enough, which can lead to serious consequences in the future for the professional life of the artist. In this article, we will tell you about the most important contracts that you should know about in the music industry in order to protect your career and guide you on the path to success.

1. Contract with a music group

  • Between: individual band members

  • Duration: by mutual agreement

Whether you've known each other for months or your whole life, it's very important to sign a contract with your bandmates. In fact, this should be the first thing you do when you create a group with someone.

The group contract is used to regulate financial and legal issues within the group, such as the distribution of income and work responsibilities, ownership of tools/equipment and voting rights in the group. It also becomes incredibly convenient in case of any difficult situation or legal dispute related to the name of the group, the departure of the members from the group, the division of the group or any other serious issue. In fact, having a contract with the group allows you to avoid situations that can be very expensive, time-consuming and energy-consuming.

2. Transfer of shares of rights to performers

  • Between: solo artist and guest musicians

  • Duration: minimum year or project duration

If you are pursuing a career as a solo artist and decide to hire musicians and co-performers, you need to sign a contract that defines the shares of related rights and regulates the distribution of money between you and co-performers.for specific works. Specific works may appear in this contract, payments may vary depending on the conditions: different shares may be assigned for fees in different territories and for different ways of use. The main thing is the contract.

If you have already signed a contract with a producer, make sure that you manage the related rights yourself, and do not transfer them to the producer. The contract should clearly state which compensation claims can be reimbursed. Generally speaking, the more specific and detailed the distribution is described, the better.

3. Contracts with copyright societies and/or publishers

  • Between: the author and the publisher or the collection society

  • Duration: at least 1 year or more.

If you work as a composer or write texts, you should contact the copyright society or an independent publisher from the very beginning and conclude a so-called "contract of assignment". It is better to choose those who know how to collect royalties for copyrights around the world. This means that your fees will also be collected internationally. If you have co–authors, sign a contract between you distributing copyright shares. The contract can be a service in which you can register the copyright object and fix the shares of co-authors, and which does not allow you to change the size of these shares without the consent of all co-authors. Such services also act as publishers or transmit information about shares to copyright societies.

Since payment collection companies can provide various offers, it is important to carefully consider the agreement that you are going to conclude and read it carefully. Some copyright societies offer contracts for comprehensive support of the author, which means that the agreement will apply to the entire scope of your work and you cannot choose which works you want to work with this copyright society, and which not.

It is acceptable that the authors of music and the authors of texts can also transfer part of their copyrights to the publisher if they are satisfied with the proposed conditions – for example, sell for a fixed amount. At the same time, there are agreements on a single right or agreements on exclusive authorship, under which the corresponding advance is paid. The most important elements of these contracts are the duration of the contract, the territory, the scope of rights, the obligations of the publisher and the author, and the rights to synchronization. It is recommended to review the sample contracts and carefully check what rights you would like to transfer and under what conditions.

4. Contract with a record label

  • Between: an artist and a record company.

  • Duration: The initial duration is at least one year. Unscrupulous labels can offer contracts even for 5 or 10 years.

By signing a contract with a record label, you transfer the "recording rights" to a label interested in your tracks. It is very important to know that a classical recording contract is a complex document, and therefore it can be difficult for musicians to master it. It includes all the conditions for the production, distribution and marketing of your releases and concerns a large number of things: from what advance you will work with, to what percentage you will receive under the contract, whether the label will take care of your social networks or PR. Other things regulated by recording contracts are production volume, format, exclusivity, duration, sublicense rights, synchronization, and sales rights.

The initial duration of a recording contract is usually one year, which is usually followed by several option periods. Therefore, before entering into a contract with a record company, it is absolutely necessary to clarify your goals with the label and make sure that you fully understand every aspect of the contract. The things you should definitely pay attention to when signing a record company contract are reasonable royalty rates, hidden royalty deductions, or whether the release obligation is included. A year is a long time for a contract, which may be completely unprofitable for you, so read the contract carefully and delve into the details.

5. Distribution contracts

  • Between: label/independent artist and distributor

  • Duration: from 1 to 5 years

Distribution contracts are usually signed between record companies and distributors. Perhaps this is one of the reasons why record companies seem attractive to musicians — they take on extensive background work, but, as a rule, at the expense of obtaining a significant share of property rights. If you decide to make an independent release without the participation of the label, then you can conclude a direct contract with the aggregators yourself. Thus, you usually do not transfer any rights to your recordings, but only the (exclusive) right to distribute your content on the relevant sites or stores with which the distributor works, both digitally and physically.

In the case of a physical release, there are also combined contracts that include not only the distribution of your product, but also its production. The distribution contract regulates the following points: distribution area, records covered by the contract, release, costs and payment, transactions with collection companies, protection rights and inventory management.

6. Tour contracts

  • Between: promoter and manager/artist's bunker

  • Duration: for the duration of the performance

At concerts and performances, a guest performance contract must be signed between the promoter and you or your manager. Depending on the size of the event and the size of the artist, these contracts can be very long and full of special requests, extensive provisions and expectations. Nevertheless, they are absolutely necessary because they help prevent any misunderstandings and disagreements. A contract for a tour performance can be initiated either by the performing artist or by the organization that hired the performer. This ensures that the musician will show up for the performance as promised, and at the same time ensures that the organizer will pay the performer.

The main points of the contract for a tour performance include the place and duration of the performance, fee and type of payment, duties of the artist and promoter, technical riders, expenses, transport and logistics, cancellation agreement and related fees, insurance, social security. , and collecting contributions from the society. More specific and lengthy performance contracts may include additional information and requests regarding backstage privileges, merchandise sales, guest lists, or permission to record a performance.

7. Production contract and remix contract

  • Between: artist/record labels and producers/production companies/music engineers.

  • Duration: may vary, but it is advisable to agree on an initial period of 12-18 months.

Music production contracts are usually signed between production companies and their sound producers and record labels that represent the interests of their artists. Producers are responsible for the production process, recordings and recording style in the studio, and the production contract regulates their responsibility and related compensation. Such compensation is usually provided in the form of a one-time payment and/or a share of the profit in the form of royalties. In the case of signing a production contract between producers and artists, producers often take on the role of investors who believe in a certain act and seek to give the artist to the recording company after the production of successful recordings.

It is also highly recommended to sign a contract if you involve a producer to create a remix of a song that you have the rights to. This agreement mainly regulates the one-time commission payment (advance payment) and possible royalty shares or a combination thereof. In addition, the copyrights to the original and the master remix are either reserved for the artist, or the contract regulates the transfer of rights and adaptation rights (a share of copyrights) to the producer.

8. Artist management and agency contracts

  • Between: artist and manager/booking agencies

  • Duration: the initial period is 1 year, then it can be extended

Managers and booking agencies act as separate firms that work on your behalf and support your activities after signing a contract with you. Most often they need a special legal permission. Managers function best as the managing and coordinating link between people who create music and their business partners, such as record companies, distributors, publishers and press organizations. The decision to hire a manager is a serious one and certainly deserves attention. The more time you, as an artist, spend negotiating, creating and organizing strategies related to your career, the less time and energy you have left to work and the less money you can earn later. The artist management contract should set out the relationship between the two parties and specify management responsibilities and compensation. Moreover, the document should also emphasize what the artist cannot do without violating the contract and agreement.

Booking agencies help artists find and receive more bookings for live concerts and performances. Then the agency agreement defines the terms of cooperation between the agent and the artist and specifies the amount of the agent's remuneration.

9. Music licensing contracts

  • Between: the owner of the rights to the track (artist/record label) and a second party who seeks to use the owner's musical work.

  • Duration: May vary depending on the agreement, but the artist must request a fairly short period.

Any use of a musical work, phonogram by anyone, whether it is public use, processing, digital distribution or production of ringtones is regulated by a license contract. The license contract may also determine how the distributor can distribute your music in certain territories or provide the opportunity to create cover versions.

A licensing contract, such as a synchronization contract, is a legal agreement between copyright holders and parties who seek to use musical works. In the case of synchronization, the licensee (the party receiving the license) gets the right to use the musical work as part of audiovisual content, such as a movie, TV series or commercial, in a video recording and video game, as well as in non-visual works, such as theatrical performances and productions or radio advertising.

The license contract must specify how the work will be used, in which territories, the time and number of uses, the duration of the fragment used, the conditions of monetary compensation for artists – royalties from each use or a fixed payment can be specified. The validity period of the license contract may be tied to the release date of the composition in a certain territory or the first appearance on the air.

Contracts that regulate the distribution of shares of copyright and related rights, license contracts, you can conclude electronically on our MediaRights Revolution - IP & Royalty management cloud platform. Fixing the shares of rights to a musical work will allow you to automate the calculation of shares even for the most difficult conditions, such as a minimum guarantee, or the presence of a multi-level payment distribution scheme, with deductions of shares to producers, labels and other players who bring your work to the top of the musical Olympus.

Payments are calculated based on the terms of contracts and their data of royalty reports. The use of the platform is justified when you have a large number of license contracts, a variety of reports from sites and you have to distribute shares between participants.

In conclusion, I would like to wish all musicians, authors and performers to defend their point of view, and carefully read the terms of contracts.

If you have any doubts about any wording, it is better to contact a copyright lawyer, who will save you time and a significant amount of money that you might not receive.

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