Don't Be a Starving Artist
When you are being courted by a record label and have dreams of being signed and hearing your voice on the radio, it is tempting to accept the first contract offer that is presented. But, there is a reason the phrase “Starving Artist” was coined. Contracts are often drafted and negotiated in an advantageous position for the recording company. As the artist, your talent and creativity are what fuels the fire behind these contracts. You should not be afraid to negotiate certain terms to make the contract equally beneficial for you and the company. With this in mind, you should be aware of certain considerations when negotiating a record label contract.
Royalties are the amounts you will be paid in terms of a percentage of each sale of your album sold. The typical rate is 12-15% of the amount of the net sale of each album. This rate is strictly set by the record label. If it is not your first album with the company, you should not be afraid to negotiate an increase in this rate.
Mechanical royalties are payments made each time a song is reproduced, either to download or copied onto a CD or other manufactured format for distribution. This rate is set through United States statute, and it is currently set at 9.1 cents per song. Typically the record label gets a discount on the amount it must pay the artist per song for mechanical royalties. The industry standard is the record label gets a discount to make the mechanical royalty 75% of the 9.1 cents per song. In other words, the artist will get 0.068 cents per song.
Every recording label contract is going to contain an exclusivity clause that requires you to only provide services as a recording artist for that company, and you may not engage or negotiate in providing services to any other company for the duration of the contract. This means you must be certain you are signing with the right company for you before entering into this agreement. Lunches or discussions with other record labels will place you in breach of contract and make you liable for civil penalties.
The term of most record label contracts is twelve months to create an album with at least twelve songs. But often times, the contract will contain Option clauses that give the record label or you the option to extend the contract for more time to enter into distribution contracts to sell the album.
Assignment of Rights and Copyright
The most shocking clauses in a record label contract are that you will not own the songs you produce. The record label will have a copyright over each song and will have the right to assign its rights to distribution companies or others to sell the album.
Investment in You
The record label in a sense acts like a credit card company and fronts all of the costs associated with producing an album. Costs to promote your image, your name, packaging for the album, promotional materials, studio time, background vocalists, art, and promotional travel expenses are all paid by the record label. But these advanced costs must be paid back. The record label will recoup these advanced costs out of the royalties before the royalties are paid to the artist.
Each recording artist contract is filled with jargon unique to this industry. It can be confusing and difficult to navigate. To enter in an agreement you are happy with and to avoid ending up a starving artist, it is important to discuss the contract with and attorney before signing to protect your rights and promote your interests.