Like it or not, contracts are the life blood of the music industry, and understanding how they work and why they’re necessary is key to avoiding disaster for you and your music career.
Contracts in the music industry are like daily bread. What is more, with a contract you enter long term contractual commitments that you can’t necessarily change once signed.
There are numerous examples of court cases with musicians fighting to be released from a contract. This is crazy, many young and inexperienced musicians or bands feel pressured to sign bad contracts. Sometimes because they believe it’s their only chance to make it in the music business. Perhaps sometimes for the feeling of being a ‘signed artist’.
A term that stems from the old times of music business with few options to work your music yourself. Being signed to a record label was one of the only ways of getting your music heard.
Important to realise, the modern music industry has made it possible for an artist to go down the so-called DIY-route. This means the musicians market their music on their own. Only temporarily working together with a distributor in order to push the music to Spotify and co.
Nonetheless, even if you ‘only’ work with a distributor, you still need to sign a contract with them!
Here’s the kicker: you can’t really avoid contracts, and actually you shouldn’t. The important thing is to be aware what contracts there are and how you can make them work for you!
(Disclaimer: I’m not a lawyer (surprise). Before you sign any deal, make sure to contact a professional music industry lawyer!)
Important contracts in the music industry
The first contract you should ever sign is actually with your bandmates. This is crazy, so many bands don’t do that.
With fatal consequences. Surely, as long as everything works fine you can always talk about things. However, before you think twice you have a dispute and your bandmate pisses off with the tour van.
What is worst, before you think twice he/she/their uses the old band name! Now a contract could come in handy where you’ve already laid down the procedure of a split.
Also, who gets what percentage on what song? It’s always better to talk about those things beforehand when everything is fine than when the damage is already done. Bands are a bit like a marriage. You better sign a pre-nuptial agreement, otherwise, the divorce can get expensive!
Collecting societies contract:
In case you want your composer or lyricist royalties to be collected by a collecting society you also need to enter an agreement with them. Important to realise, most countries have their own collecting society.
However, they work together globally, that means that even if you part of the german GEMA, they will also collect your royalties internationally. It is important to really check out the agreement you will enter.
For the GEMA for example, you can only sign an all in agreement. That means they will take care of the total body of art. You can’t select a track that they should care for and leave others out.
Also, GEMA has a monopoly on collecting royalties for composers and lyricist in Germany defined by law (§§ 9 und 34 VGG).
The record deal is one of the traditional contracts in the music industry
Record label contract:
If you get signed with a record label you have to make a contract with them. It is crucial you have a proper and honest talk about your goals with the record label. Basically, what they will do is manufacture and market your music release. No matter if it is a full-blown album or just an EP.
Also, how much budget does the record label have for marketing? What is more, the percentage you will receive out of the contract is important to known. Is it after costs have been deducted?
Also, how long will the contract run and is there a renewal clause? A more modern problem a lot of bands have is social media support from the label. If you want your label to support you in running your social media platform you explicitly talk with them about this and write it down in your contract.
Another big trouble maker is the advance. This can be a sum of money the record label will give you in advance of first income from the sales coming in. Mostly used in order to keep your life going before there is income.
However, super important to get right, the advance is no charity money. That means, the record label recoups the advance paid to you with the first money coming in.
You only receive your royalty share after the advance is recouped! Hence, taking an advance can be a tricky thing. Make sure you understand the situation fully before taking on a big advance.
Publisher contracts in the music industry:
This is the hidden cousin to the record label contract. However, with your publishing right you don’t sign the actual record or product. Rather you cashing in your songwriter credits.
Of course, for this, you need to write your own songs to start with. Publishing is a very lucrative corner of the music industry. You can earn money when your music is in advertising or movies, for example.
Just one reason why record labels are keen on signing your publishing rights as well. Be smart and really have a think if you get the best out of such an agreement.
Make sure to always check in with a music publisher for another quote. Also, you don’t really need a record deal, however, a good publishing contract can be a great start for a music career!
You need a distribution contract in order to get your music into Spotify and co.
You only need your own distribution contract if you don’t have a record label contract. Record labels have their own distribution set up. That is one reason they are attractive to musicians.
You simply don’t need to do so much background work. However, if you feel that you don’t really need a record label you can also make a distribution deal yourself.
You need a distributor in order to get your music to the shops, no matter if digital or physical. Really make your research and find a distributor who is transparent and helpful.
There you have it, the most important contracts. Of course, there are many more like managing contracts. However, it is always important to tailor-make all contracts for needs specific. Never just copy and paste from the internet! Also, have proper contract management in place to make the most out of your contracts.