With a background of understanding contracts generally, it is important to also understand the different types of contracts and their different aspects that exist especially for musicians in the industry. These contracts range from 360 Record deals, Publishing, to Distribution deals and I will break these down for better understanding for those who might still be trying to find their feet in the industry.
By Israel Sebenzo
A Record Deal is when an artist assigns and transfers ownership in their sound recording copyrights to a record label usually in return for an advance and subsequent royalty payments. The record label often agrees to market, promote, and license the recordings to music users such as streaming services and consumers.
Before signing any record deal, it is best to compare different deals by different labels and settle for the one that serves your interests best. Never sign any recording deal without doing research first!
Publishing Deal / License Deal
In this type of contract, a songwriter assigns and transfers ownership, or partial ownership, in their composition to a music publisher in return for an advance and subsequent royalty payments. The writer, in effect, sells, in whole or in part, their composition. Again, comparing and signing the best deal in this regard goes without saying. The terms under this deal usually entail the following:
• Artiste must provide Master Recording
• Artiste is owner of Master
• Artiste must provide all promo toolʼs ie: clip
• Artiste is owner of all promo tools
• Usually label will have a promo budget to exploit these tools
• Artiste is paid by royalty
• If advance is given, artiste gets royalties once advance is recouped
• Recoupment is from Artiste Royalties
• Mechanical Royalties go to songwriters
• Artiste gives label a term(usually 3-5 years) and territory for release
• Options for future releases can be enforced here
• Once Term is expired Masters go back to artiste
Pressing & Distribution Deal
In Distribution deals; artistes give a company the right to distribute their copyrighted sound recordings for a set amount of time. The company usually collects a fee or takes a percentage of the royalties that the songs earn. Here, the artiste retains ownership in their recordings.
• Labels responsibility is to press and distribute ONLY
• Artiste is the owner of Masters
• Artiste must do all Marketing / Promotion
• Therefore, artiste must generate all promo tools
• Label/Distributor gets their % and artiste gets their % once pressing is recouped
Administration Deal / 360
This is where business entities agree to handle the administrative work needed to license and/or collect royalties for one or a set of copyrighted works for a specified amount of time. The licensor retains ownership in their copyrights. Contemporary administration deals today include name and likeness rights, touring rights, music publishing rights in songs written by the artist, and more. This is also known as the 360- all-encompassing deal. More and more companies that started off as strictly publishing or management entities are now moving towards a 360 approach in an attempt to become a one-stop-shop for musicians. The downside to this however is that there is danger of overlooking a number of things as focusing on everything may often compromise other areas, be on the lookout for this!