Negotiating a Record Deal

In spite of all of the technological changes in music recording and delivery in recent decades, in many ways, the recording contract of today is much as it was twenty years ago, even in the era of streaming.

In most cases, a record deal, or recording contract, transfers ownership of the music copyright in the master recordings from the original creator to a record company. The goal of the record company is to own the copyright to the must in perpetuity, i.e., forever. This is how record companies build the catalogs of music they own. They can then proceed to make money from licensing and assigning the music copyright to others who want to make various uses of it.

They also build their value and make themselves attractive targets for purchase by others who want to buy media companies and the rights they own in the future.

Another main goal of the record company is to establish an exclusive right to the musician’s exclusive services for a period of time. It could be for a period of years or for whatever period of time it requires for the musical artist to produce a number of singles or albums that have to be delivered to the record company to fulfill the contract. Production of the required number of singles or albums would be a contractual obligation of the artist.

Of course, the musical artist is primarily interested in receiving compensation in return for turning over rights to their musical productions.

How Are Initial Contacts and Approaches Made?

Email is quick and convenient. And then it is much easier to talk than to type and easier to decipher reactions through verbal contact, making the phone a very efficient tool. More importantly, email, like other written communication, deprives the recipient of nonverbal cues and the immediacy of actual human interaction. Reportedly, experts believe that as much as 90 percent of face-to-face communication is conveyed through body language and vocal cues; relying heavily on email can be a bad idea. Without direct contact, contacts can be weak, which makes it tempting to take uncooperative positions.

How Is a Record Deal Negotiated?

Of course, the negotiation of each record deal is likely to be unique, but the following steps may be common to most negotiations:

• Plan: A person should enter a negotiation with an understanding of what their goal is and how they plan to achieve it. They want to be able to recognize that they have reached their goal when they get to it;
• Value: The artist should know the value of what they produce and of its potential uses so it can accurately assess the royalties and other remuneration that a company offers;
• Balance of Commitments: The musical artist should always try to maintain a balance of commitments on the part of both parties. Every time the artist is to do something, they must ask their prospect to do something of equal or even greater value toward making that commitment to working with the artist. This is the way in which both parties build equity in the deal and loyalty within the relationship;
• Never Claim Uncertainty: A person involved in a negotiation should not claim to be uncertain about anything. Rather, they should use language to the effect that they need to check on information or circumstances before making a commitment;
• End with a Writing: Never make or accept guarantees that are not in writing. Always end with an agreement in writing rather than a verbal agreement. A verbal agreement can be quickly forgotten and would be difficult, if not impossible, to enforce in a court of law if a dispute should develop.

What Factors Should I Consider in Negotiating a Record Deal?

The following factors are among some of the specific issues that an artist wants to consider before starting a negotiation. These issues should probably be addressed in the final contract:

• Compensation: The compensation that an artist can expect from record companies that have larger budgets is naturally much greater than the compensation offered from companies with more limited revenue. Much would also depend on the artist’s status, whether they are completely new to the industry or already established;
• Artist’s Value: This is why it is important for musical artists to monitor and track their own statistics and other measures of their value in the marketplace for musical acts. They need to bring evidence of their potential to generate revenue to the table as part of contract negotiations;
• Rehearsals: Musicians generally look for a budget that compensates them for rehearsals in preparation for recording sessions, single live performances, and extended tours. Again, the amount that an artist can command varies among companies and artists, depending on the status of the act at the time of negotiations;
• Equipment: Musical equipment is another important factor to consider when arranging a deal with a record company. Instruments and protective travel cases may be provided via the company’s recording and/or tour budgets;
• Equipment Endorsements: A record company may not cover the cost of the expenses of touring and rehearsing. In that case, an artist may obtain sponsorship from a variety of equipment manufacturers if their band or orchestra is already successful or quickly gaining exposure from streaming and sales;
• Equipment Techs: The care and maintenance of the artist’s musical equipment is critical, both in the recording studio and on tour. Because of this, they may want an understanding as to how the company would contribute to this effort;
• Travel and Lodging: A record company generally covers a musician’s travel costs and lodging when the artist is on tour; the quality of service is usually uncertain. Wealthier companies that are more prosperous may take more care in providing the best possible travel and hotel accommodations. An artist may want a provision that addresses this issue in the contract;
• Costumes: If specific clothing that is not standard streetwear is required for performances, the record company may cover the cost of the artist’s costuming. The services of a prop master, make-up artist, and others may also be required, and their compensation could be addressed in the contract;
• Retainers: In times between recording sessions or during breaks in a tour schedule, the company may provide the artist with additional benefits such as a “retainer.” A retainer enables the artist to maintain an income while their services are on hold;
• Excessive Demand for Production: An artist wants to avoid a recording commitment that is too long, one that requires the production of too many records, or that takes too many years to complete. Again, an artist wants to make sure that they agree to a production schedule that is realistic;
• Loss of Creative Control. An artist wants to be careful not to agree to a contract that allows too much interference from the record company in the creative content of the product. It might dilute the artist’s vision for their artistic output;
• Royalty Rates: This is the percentage of sales that is paid to the artist;
• Deductions from Royalties: A company may want a contract provision that permits the company to make deductions for packaging, foreign territory sales, and free goods when calculating the artist’s royalties;
• Number of Recordings to Be Delivered: Again, the contract should state how many single or album recordings are to be delivered by the artist to the company. An artist wants to give serious thought to this issue and only agree to production that is realistic;
• Video: The contract may address the issue of whether the record company pays for the production of a video;
• Social Media Marketing Campaign: Again, the issue of whether the amount of money the record company is to spend on social media campaigns for marketing;
• Distribution of Income from Other Sources: Aside from sales of recordings of the music, a contract should address whether the record company also receives a share of the money earned from the sales of related merchandise and live performances.

Do I Need the Help of a Lawyer in Negotiating a Record Deal?

You can negotiate a record deal on your own. However, it is advisable to consult an entertainment lawyer who has practiced skills in negotiation and understands the recording industry.

Your lawyer can ensure you get the best possible record deal and the best possible return for your talents. LegalMatch.com can quickly connect you to an entertainment lawyer who has the experience and skills you need to get the best result from your deal.