Record contracts have changed vastly over the last few years. The internet has forced dramatic changes in the way that the music industry carries out business, the key terms to look out for in a record contract are as follows:

Exclusivity

Obviously the record label is not going to be exclusive to you, however you will be exclusive (at least for the designated recordings) to the record label. There is little scope for argument here, quite frankly why would the label sign you if you could put the same work out to others.

Rights

The record company will want an assignment of copyright in the recordings for the life of the copyright.

Territory

This is a matter for negotiation and will depend upon the record labels expertise, more than likely the contract will be worldwide with the label (if they are an independent) using associate companies in territories that they have no presence in.

Term

Traditionally the term of a record contract has been linked to a number of albums, up until recently an 8 album deal would have been quite usual however artists now spend longer recording albums and the record labels tend to prefer a gap between releases so 5 album deals have become the norm. With digital downloads now taking up a large part of the market we are also seeing more record deals that are linked to the release of downloads i.e. singles. The trend with online sales is towards individual tracks rather than whole albums, of course record labels have noticed this and have started to tailor their agreements towards this so don’t be surprised to be offered such a deal.

Obligations

It is important the contract includes an obligation on behalf of the record label to exploit the music. Otherwise you can potentially end up in the situation whereby you have recorded an album the label refuses to release it but you are still tied to them and cannot go elsewhere i.e. you cannot make any money. It must be said that where such contracts have come up in court they have been found to be a restraint of trade and the artist freed from the contract, however it is prudent to ensure that this obligation is included in order to avoid the expense and hassle that a legal dispute can bring.

Royalties

Perhaps the clause (or more accurately clauses) that you will be most interested in. In most record contracts there will be a number of different royalty percentages depending on the market in which the music is sold, it’s format and constitution i.e. album or single. These clauses will also mention an advance (if there is one) this advance is likely to include a sum for recording the album, the rest of the advance will be for you to live off until royalties start (hopefully) flooding in. One important point to remember is that you must pay the advance back before you start to receive royalties (normally anyway).

Payment

Usually you will be paid your royalties every 6 months, this clause will determine the process i.e. invoicing, how many days to pay etc.

Accounting/Audit

You will need a clause in the contract to ensure that your accountant’s can audit the accounts of the record company in order to make sure that you have been paid the correct royalties. Where there are errors the record company will be required to settle the amount with you and pay your accountant’s costs.

Merchandising/Sponsership

Due to the fall in sales of recorded music record labels are increasingly looking at other income streams. One of their favourite routes is that of merchandising / sponsorship as such it is more than likely that they will include a clause to that effect in your record contract thus ensuring that they get paid for your sponsorship deals etc. These are so called 360 deals.

Obviously there are many other clauses in a record contract however the above gives you a flavour of some of the most important clauses and things to look out for.

Lawdit offer a comprehensive drafting service for record contracts, for a full contract our fees are £1500.00 + VAT however depending upon exactly what you are looking for i.e. length / complexity etc we can draft an agreement from between £750.00 + VAT to £2000.00 + VAT.

If you already have a template contract or you have been offered a record contract by a label we can advise you on the same and make amendments for £500.00 + VAT.

You can contact us by phone on 02380 235979 or email: legal@lawditmusic.co.uk