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Know Your Contract

Recording Contracts

Article from Making Music, February 1987

We ask a leading music lawyer what bands should know before signing.

Paul Colbert finds out what you should know before signing your name for the sake of some vinyl.

CONTRACTS will not bite, don't kill, and have never hidden in the air ducts of a space ship and eaten the crew. But they still give bands nightmares.

It's not the thought of wading through 16 pages of pin-sized type that wrinkles the brow. Of greater concern is the presence of phrases and sections which will have particular meanings and ramifications in law: meanings you and I are not likely to grasp. A Frenchman isn't trying to trick you when he gabbles in Gallic, he's just talking his own language. If it was important, you'd find a translator, wouldn't you?

So we looked for an interpreter and found one in the form of David Landsman of D. M. Landsman and Co, a disarmingly cheery and open alternative to the crusty solicitor archetype. Landsman and Co are one of London's major music business lawyers, and we asked him to guide us through the main questions a band should ask themselves when faced with that bundle of papers which may just change their lives.

Three main agreements will come the way of the rising band — Management (striking a deal with the man who will represent you), Publishing (who will buy my luvverly songs), and Recording. For this feature, we'll examine only the latter which you can expect to be the longest, most complex and (financially) rewarding.

To reach that happy state you'll probably need a manager. Record companies are very wary of dealing directly with bands. They may flatly refuse to do it — for very good reasons. "It's not right for the artist," explains David, "because a manager can have a blazing row with the promotions department, or the marketing department, and not ruin the band's relationship with the record company. That's what he's paid for. If the artist does that, then life becomes impossible." And were a record company to deal with six people in a band, it would invariably hear six different answers.

Less altruistically, the record company will want to cover its retreat by insisting on lawyers. The recent court battles, notably by Elton John and Gilbert O'Sullivan, have established case law on what is considered to be an 'unfair' contract. A record company will insist that an about-to-be-signed artist is independently represented by an expert in the music business. If the artist later claims the contract was unfair, the company can retort 'you were expertly advised at the time.'

On the surface it sounds like a recipe for disappointment, but David Landsman believes recording agreements are in fact growing more sympathetic and less heavy, largely due to the increase in case law. Yet there are still bands who will sign virtually any terms to get a record deal. Even against legal advice. "And", he grins, looking for a polite way of phrasing a healthy dose of cynicism, "A lot of artistic concerns tend to... er... evaporate if the money is high enough. That's a terrible thing to say, isn't it? I'm not quite sure I should put it like that, but, well, you known what I mean..."

When you sign that agreement, be sure. And talk to someone else who is even more sure. Contracts can be good, bad, indifferent or brilliant, but once your name's on the paper you have to live with it, either way...

A good manager ought to be able to cope with the technicalities of a recording contract (though he will need help), and they are very technical these days: "video provisions are probably the ones that give the most trouble of anything, now."

However, if you are managerless, or even if you are so equipped but think a specialist is needed, don't wait until the 70 page document lands on your desk before contacting a solicitor.

"It's worth getting advice as soon as the band has an indication of interest from a record company," considers David. The problem is that solicitors tend to be expensive and young bands probably find it difficult to pay the fees straight off. Don't build your hopes too high, but in many cases music business solicitors may be prepared to take a gamble on a new band when pricing their services. "We may act for 100 bands but only some will 'happen'," says David Landsman, adding with a wry grin, that this probably put him "on the same odds as an A&R man."

So we come to the famous tome itself, a copy of which will be given to every member of the band. You sign as individuals, and in the case of the band splitting, you'll be treated as such. The record company will have the right to pick up the solo services of any departing member.

"At least 90 per cent of a recording contract is what we call 'Boiler Plate'; the standard language of a contract — warranties, video provisions, CD provisions, nothing to do with the money or the product. We would wish to talk to the record company before the contract was drafted, but it is sometimes difficult for us because solicitors have to be careful not to tread on the manager's toes.

"The band will be asked to sign an exclusive agreement — they cannot record for anyone else, and it's surprising how many bands do not realise just what that means." You can expect the deal to have options at the end of each year when the record company will decide whether they want to keep you on.

"Typically you may be talking about a five year maximum deal with up to nine albums. Nine albums is quite a lot, it's a heavy commitment, so with negotiation one would hope to get that down, but probably not below five."

And here we come to one of those little surprises of contractual habit which the inexperienced might never spot.

"A year in a recording agreement doesn't mean a year," is David's cool appraisal of the record industry's ability to rewrite the calendar. "There will be provisions to say that if the product isn't delivered within a certain time frame, the 'year' is extended for up to six months. The extension usually runs from after the delivery to the record company to give them time to release it."

In most agreements there will be a provision to say that no single year will be more than three years... still a long time, though.

Then there's the question of releases. A record company will always agree to record a band but that does not imply an automatic agreement to release what is produced. Record companies very rarely commit themselves, but new case law may change this.

"So you may say, okay, it's unlikely that a record company would spend a lot of money making a record and then not release it, but in fact they very often don't release records if they don't like them." They have massive A&R budgets, and all the A&R department need do is turn in a profit at the end of the year. There may be some kudos attached to signing the likes of Wham! but it's money that counts. And if they think your album won't make any of that treasured stuff...

"A&R control is a very important area for the manager to get into, A&R directors like to feel that they are in complete control; managers and bands like to feel they are in complete control. Unfortunately the reality of it in the early days is that the record company is going to control the product and you have to be a very strong band to stand up to that."

What the band requires from its appointed experts is advice on where the record company may be flexible. With good negotiators on your side it should be possible to improve both advances and royalty rates substantially.

"It's a very interesting fact," he reflects, "that this could be a unique area of the law where all these agreements are quite happily re-negotiable providing there is success."

But won't a record company hold out against renegotiation?

"Well they generally won't, strangely enough, for these reasons. Firstly the pipeline is a long one so there's always money coming through, especially from foreign sales. It can take 18 months to get that money back. So if you go back and ask for more, all they're doing is paying you a bigger proportion of money which was going to be yours anyway. They just haven't received it yet. And of course," another mild smile "they want to keep a big act happy. A very small percentage of recording agreements go wrong, really. There are problems, but very few that cannot be resolved."

And now, at last, the money. Royalties. Your percentage of the dosh made when your records are sold. Rates will vary wildly. They can be as low as 7% or if you're a stupidly famous rock personage then think in terms of up to 20%.

However, what you should be considering first of all are advances, and what they mean. "Suppose the A&R man suggests £50,000." (Tip, try to get something on paper, however informal. It's a place to start.) "Now, do recording costs have to be met from that? If so, there'll be precious little left. If not, it may be quite a nice figure for a first record." In other words, what are the expenses?

And that royalty offer, does the producer's share come out of your earnings or the record company's? Some producers are asking 3 to 4% these days. And delving deeper into the contract, you'll find a list of situations where royalty rates and payments are reduced (drastically) or removed altogether.

For example nothing for promotional records, those the companies send to magazines for review. Fair enough, you say, no money changes hands. But did you know that some record companies still consider 12in mixes to be "promotion" even though they sometimes outsell the 7in version and are far more expensive? A shocker that, isn't it?

And — though of course this never happens — it doesn't even have to be promotion for your record. Picture the (entirely fictitious) situation where a company rep says to a local vinyl emporium "you can have four of X's albums free if you buy two of Z's". That's promotion. Great for Z because you poor Xs are the ones who see their royalties dwindling. But that's a whole different part of 'The Biz' and no contract can protect you against an Arthur Daley.

In fact what can it guard you against?

"Every band has a different concern," recalls David, "but there will inevitably be a lot of discussion about independence — bands don't want their music 'interfered with' and record companies will inevitably want to have control. A newly signed band will always want the choice of producer, which they'll never get, they'll always want choice of repertoire, which they'll never get, and they'll always want final approval over which tracks go out as single, which they might occasionally get." Though all this will change as success grows.

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Publisher: Making Music - Track Record Publishing Ltd, Nexus Media Ltd.

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Making Music - Feb 1987

Feature by Paul Colbert

Previous article in this issue:

> The Dumb Chums

Next article in this issue:

> The Jay Arthur Column

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