“Record Deal Red Flags” by Byron Pascoe:
Mr. Pascoe is a Canadian Entertainment Lawyer with Edwards PC, Creative Law and can be reached at Byron.firstname.lastname@example.org
This week Blasko and Mike tackle the warning signs that you may see in a record deal. That first record deal can seem very rewarding on the surface, but in reality it might just be a total nightmare. Entertainment attorney Byron Pascoe’s article “Record Deal Red Flags” is the basis for this week’s episode. Follow along as Blasko and Mike break down the following points from the article:
It may be on purpose, or not, but just because the A&R gal at the label told you one thing, doesn’t mean the record deal you’re asked to sign is completely consistent. An obvious example is if you’re told you’re getting an advance of $5K, but the agreement doesn’t provide for an advance.
A record label doesn’t need publishing rights to distribute your music. As such, if you are being asked to provide publishing rights to the label, then you’re being asked to provide more rights than are needed to accomplish the label’s main function – distributing your music digitally and physically.
Unless you’re being appropriately compensated for the publishing rights, and the label is the right fit to be both your distributor and your publisher, then the requirement to grant publishing rights to your label is likely excessive.
Labels generally ask for the option to extend their rights. The label may promise you an upfront cash advance (against future sales) if they decide to extend their rights – which is referred to as exercising their option(s), but are you automatically entitled to get an advance? The label may have written the agreement in such a way that based on prior sales, they can access those additional rights by paying you a lower advance than the number in the agreement, or no advance at all.
The formula used to determine how much money you make from music sales from the label might be gross revenue less the label’s expenses multiplied by a percentage. However, without any limitation on the label’s expenses, you may never get paid anything.
What do you want the label to do? Spend some money on marketing and promotion? If they aren’t willing to put their verbal commitment in writing, maybe the label isn’t going to do what they verbally promised.
The label is responsible to pay you. As such, they should also have an obligation to give you details about how they calculated your payment. Also, you should have the ability to make sure the numbers are accurate by having the right to take a look at the label’s records (referred to as an audit).
If there isn’t a clear way for you to get out of the contract, you will wish you had a way out, including if the label isn’t paying you what you are entitled to receive, but are still selling your music.
Also, if you’re told a label agreement is take it or leave it, and the label won’t answer your questions about the agreement, they may not be the most trusted partner.
On a brighter note, if you read a record label agreement before signing, get some assistance from fellow musicians and/or a music lawyer, and the label is willing to discuss and reasonably negotiate the agreement, it may be the start of a beautiful relationship…
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