"What You Need To Know About Recording Contracts"
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Music Publishers |
Recording contracts are the Holy Grail of the music industry. Because of this, few artists will ever admit that they got a bad deal, since most musicians will take a record deal in any shape or form. However, despite popular opinion, there is no such thing as a good deal unless you are selling millions of copies of your albums. Of course, few albums go platinum every year.
The further difficulty with recording contracts is that the majority of artists have no idea what all the fine print means. This presents a large problem, since the pages of strict legalese hold the fate of the finances of the artist. Part of the problem is many artists are young, and do not have the financial clout to hire a lawyer to decipher the contract for them, so they simply sign. If they do, and they do actually have an album that fans buys, there are two major sources of income they can expect.
The first source is from the royalties. The "artist's share" of the profits, this is often a very small percentage of actual sales with many record contracts. The royalties are generally figured as points, with each point being a percentage of the retail price of the album. In most cases, 15 points or 15% is average in contracts. It is not just that simple, however. If a producer charges a two point fee, for instance, these come out of the artist's share -- leaving them with even less of a profit.
The record companies can further reduce the amount of money that the artist takes to the bank. They generally will only be paid royalties on 85% of the albums that are sold. In theory, this was to cover the cost of broken vinyl records, though this has held over into the CD age. Freebies to retailers will also not earn the artist a royalty. Many contracts will ship 12 CDs for the cost of 10, but the artist will only receive credit for the 10 that are paid for. Lastly, the cost of packaging comes out of the artist's pocket as well. All in all, the vast majority of artists will not make money on royalties.
Recoupable costs will eat up any money you might make. Advances usually will have to be repaid. The cost of producing videos eats into the profits as well -- even the costs of hair and makeup artists come out of the musician's profits. Tour support is also recoupable by the label.
Another thing you have to be careful of is to find out if the company will even promote you. Often, the company will sign you with no obligations for promotions.
The second way to make money is through songwriting mechanical license fees. This is how much the songwriter and publisher gets paid for writing the song, often around seven cents per CD. Again, the record company's rules apply to how much you will actually see of that money, but there is good money to be had. This money also is not used to cover recoupable costs, so you will always get paid even if you owe the label.
In order to make money, there are some strategies. Get a big advance, and sell of your publishing. Or work hard to keep your costs down. Or, avoid the major labels entirely and try an independent label -- just watch the fine print. Or, wait to sign until your career is firmly established so that you can hold out for a better deal.
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Brian Cook is a freelance writer whose articles on music and songwriting have appeared on many websites.
You can find more of these at SongwritersGuide.com.
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