Chapter 10: KNOWING THE FACT WILL SAVE YOUR 100% RIGHT
WHAT YOU NEED TO KNOW BEFORE SIGNING A CONTRACT
I am compiling this here because a lot of upcoming artist /musician may not have thought of this facts before signing a contract but it is important as it will be of advantage to your career as you start your journey to fame. When you sign with a recording label, you are agreeing to make sound recordings and audiovisual recordings (i.e., music & videos) exclusively for them. This means that during the Term of the contract, you cannot record or release music for anyone besides the label.
WHAT THE RECORD LABEL DO
Record labels set the terms and conditions of artist contracts in their favor. In the case of newly signed artists, record labels can control the type of music they record, which can include everything from the way the music sounds to the song lyrics. They also control album cover art in most instances.
Record labels are the ones pouring money into the artist. They are doing all of this work upfront to hopefully make money off you eventually; they're not doing it for free.
Record labels also has the right to drop an artist whom is not productive, that is why it is important thing to remember as you head into it. However, you don't need to sit back and cross your fingers that nothing goes wrong. Instead, you should be actively taking steps toward trying to ensure that you hold onto what you've earned for yourself
5 TIPS EVERY ARTIST MUST KNOW BEFORE SIGNING THEIR FIRST RECORD.
1. Watch out for contracts with an initial term lasting more than one year. Before signing that contract, make sure the record label isn't locking you into a lengthy contract with no escape.
2. Get a release commitment, though the record label will decide if initial release meets financial or cultural expectations, if they believe in the artist enough.
3. Make sure your royalty rate is reasonable. Though the artist will also receive an advance payment. An advance payment is the money an artist gets when they sign, and is usually an advance against royalties the label thinks you'll eventually earn.
4. Watch out for hidden royalty deductions. The MU feels that only the cost of recording and personal advances should be offset against royalty income. You should try to get references to 'other costs' deleted from an agreement, or at least make them subject to joint agreement.
Try to limit the number of remixes the company can commission without your approval or it's possible that recording costs will spiral. Also, never agree to cross-collateralisation of advances against non-royalty income, such as PPL, or income from other contracts
5. Make sure you can audit the record label on royalty payments.
When a production company successfully sells on the recordings to a record company, the artist will be required to sign an 'inducement letter
RECORDING OWNERSHIP
It is important to remember that because the record company has initially commissioned and paid for the recordings, in the eyes of the law they are the owners and not you. The agreement will make this clear and assign all copyrights in the recording to them.
However, if you have made and paid for recordings yourself then you probably own copyright in them. So if a label expresses interest in releasing them you should think seriously about whether to assign your copyright to the label or simply grant them a licence to exploit the recordings.
If this situation arises, the MU generally always advises that you license your recordings and retain copyright in them yourself, unless there is a very good reason to assign them. Contact your Regional Office for advice, or if offered a contract that assigns copyrights you own, discuss it with the MU's Contract Advisory Service.
A recording contract will require you to give consent for the company to exploit your performances contained on the recordings by selling records and authorizing others to broadcast them. The MU feels that these consents ought to apply only to record sales and the right to give others permission to broadcast recordings. Vague 'audio visual rights' or 'other uses' should be subject to negotiation from time to time and not just signed away in the initial agreement.
VIDEO RIGHTS
As well as the right to make records, the production company will require the exclusive right (but not the obligation) to make videos. It is unlikely that the artist will be able to secure many rights of approval as the production company will not want to be fettered in the rights it can grant a third party. The costs of videos will be an expense deductible from gross income.
MECHANICAL LICENCES
The right to reproduce musical compositions is called the 'mechanical right' and is one of the rights owned by the author of the composition or their assignees (for instance, music publishers). Recording agreements will almost always contain a clause that warrants that the record company will be able to obtain such a licence.
The mechanical royalty rate in the UK is negotiated between the British Recorded Music Industry (BPI) and PRS for Music, and is calculated as a percentage of the price of records.
In Europe the rate is set by BIEM. However, in the U.S. and Canada the mechanical licence fee is fixed by statute with the rate varying according to the length of the composition and the year recorded. Equally, you should expect a clause whereby the artist also warrants that the record company will be able to secure synchronisation licences enabling the making of videos and that where the videos are used purely for promotional purposes, this licence will be free of charge. This is standard.
It is very important that if an artist has signed a publishing deal prior to entering into a recording agreement, they ensure their publisher agrees to the contents of such clauses.
RE-CREATING RESTRICTION
Recording agreements almost invariably seek to prevent the artist from recording any song that has been recorded during the term of an exclusive agreement for a period after that agreement ends.
The artist should, however, seek to limit the effect of the restriction to recordings released during the term of an exclusive agreement, or within a short period thereafter.
GROUP PROVISIONS
Expect to see a clause in most record label deals spelling out what happens if one or more of the artists (assuming that they are a band rather than an individual) leaves, are expelled, or if the band splits.
The label will want to ensure that it has the option to do one or more of the following:
Retain the services of the leaving member(s)
Retain the services of the remaining member(s)
Terminate the agreement with respect to the leaving member(s)
Terminate the agreement with respect to the remaining member(s)
If a band splits, it is important to ensure that separate royalty accounts are maintained by the production company in respect of the leaving and remaining members
MUSIC PRODUCTION AGREEMENTS
The number of so-called 'production agreements' being offered to artists has increased dramatically over the past few years. Production agreements are similar to recording agreements but differ in terms of what happens to the recording.
Commonly, a studio owner or a manager with studio access signs a band to a recording agreement not with the intention of releasing the recorded material themselves, but instead selling the act or its recordings on to a major or large independent record company.
If you are offered free studio time but have not signed a music production agreement, the MU offers Standard Contract M5, a short studio agreement to cover the position until the terms of a production agreement have been negotiated.
THIRD-PARTY AGREEMENTS
When a production company successfully sells on the recordings to a record company, the artist will be required to sign an 'inducement letter' with the third-party record company. This is an agreement between the record company and the artist whereby the artist agrees that, in the event of default by the production company, the record company can enforce its rights directly against the artist.
It is important that the artist be allowed to take independent legal advice on the terms of any such inducement letter. It is also likely that the production agreement will include a clause such as a "catch-all" provision, which provides that if any of the terms of the third-party agreement are less favourable to the artist than are contained in the production agreement, then the less favourable clauses will be deemed to be substituted.
It is often difficult to fight against these clauses, but it should at least be ensured that the record company cannot be entitled to a longer term or more options or a greater minimum commitment than is contained in the production agreement.
CREATORS' THOUGHTS 
JP_SMOOTHLY
JP_SMOOTHLY Knowing how the record label runs and preparing yourself before signing a record deal is what will help you keep your head up and also will save you from not getting your 100% right
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