Importance of Negotiation in the Music Business

If you represent musical artists or their rights and do not understand negotiating in the music business, record labels and producers may take advantage of your clients for years to come. Imagine that you have already earned a Master of Music in Music Business and Entertainment Industries (MBEI) degree, and now your client is signing his or her first contract with a record label. Note the following benefits of good negotiation.

Secure the Royalties

It is not uncommon to hear performers say that they have never been paid royalties for a hit song because the record company claims that it has still not recouped its investment in the recording. This is less likely to happen if you request that the recoupment of the record company’s recording costs come from both the royalties of the sale of the recording, as well as the royalties paid to the artist as the songwriter. It is also important when negotiating in the music business to ensure that your client is not responsible for any other costs, such as marketing and promotion.

Own the Masters

For years, it was practically unheard of for the recording artist to own the master recording — typically record companies retained ownership. However, today a smart negotiator can introduce a clause in the contract that gives the artist ownership of his or her master recordings. The terms of this ownership may stipulate time periods or amounts of money or a combination of the two, but one day owning the masters will give your clients a better chance of securing additional income and maintaining control over their careers.

Expand Your Territory

The record company will probably want the right to sell your client’s recordings anywhere in the world, but if you feel that foreign labels will do a better job of handling your client’s music outside of the U.S., you can negotiate to sell the American label only domestic rights, then you will be free to negotiate a completely different recording contract with one or more foreign labels.

Go in With an Exit Strategy

Some recording artists would like to change record labels, but their contract obligates them to record a certain number of albums for their current labels, so it becomes doubtful that they will ever be able to leave. A long-term contract works mainly to the advantage of the record company, not your client. Suppose your client has a deal for five albums. If the first album does not sell well, the record company has the right to drop your client without recording the remaining four albums. But suppose the first album sells well, and your client is unhappy with the way the record label treats them. Your client is still obligated to record four more albums for a record label that they no longer like. Good negotiators will ensure that their clients are not tied to their record labels for an unreasonable period of time.

Try Not to Be Exclusive

It is completely understandable that a record label will want exclusive rights to record your client — if your client turns into a superstar, the record label will have no interest in sharing its good fortune with a rival record company. However, the more creative your clients, the more restless they are likely to be. They may want to record different types of music or perform as special guests on other artists’ albums. You can keep your clients creatively satisfied by making sure that you negotiate clauses in the recording contracts that allow them to occasionally work off-label.

No one enjoys hearing stories about the recording artists of yesteryear who entered into nightmarish contracts that left them financially and creatively bankrupt. Negotiating a fair contract requires experience and foreknowledge, especially when negotiating in the music business.

Learn about the Frost School of Music’s online MBEI program.


Legally Speaking: Recording Contracts: The Basic Concepts

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