By Matt Gorman (Entertainment Lawyer / @oceantownmusic)
Being presented with a contract in the music industry, whether a big deal or small, can
be both exciting and anxiety-inducing. It’s very common for a client or potential client to
call me and say something along the lines of: "Matt! I’m super excited about this deal.
But don’t quite understand it. Is this legit or a crap deal? Should I do it?!"
There are many different types of deals you might see throughout your career in the
music business, such as management, recording, distribution, publishing, etc. These
contracts can be long, complex, and filled with annoyingly dense legalese. However,
when presented with a music contract, take a deep breath, and start by asking yourself
the following 5 questions, which will help you assess the contract at the early stages
(although not a substitute to having a music lawyer review in detail!).
Contract Term – How long are you going to be married to your music partner?
Although the "term" of a contract doesn’t sound very sexy, it is a critically important part
of most contracts in the music business and is often negotiated. For example, a
publishing or recording agreement might contemplate an "initial period", with the
publisher or record label getting 1 or more "options" to extend the term for further
successive periods. A management agreement might be structured the same or might
simply be set at a fixed period (e.g., 2 - 3+ years). In the music world, an "initial period"
plus 2-3 options, for example, can easily run 4-6 years. In short, always understand how
long you are bound to your contract, which is often exclusive (remember, if the deal is
"exclusive", you are married and cannot work with other partners that cover the same
contract scope).
Delivery Requirement – How much music are you required to deliver during the term?
A music contract will typically state that you need to deliver something to the
counterparty, and you need to understand what that is. For example, in a publishing
deal, how many songs/compositions are you required to deliver to the publisher and
when? If you need to deliver 10 songs, for example, what if you only wrote 50% of each
song? In that context, "delivery" might actually mean 10 songs at 100% ownership by
you, or 20 songs at 50%. In recording agreements, for example, there is a big difference
between an album needing to be a minimum of 12 songs and not less than 40 minutes
of playing time, versus a minimum of 8-10 songs and no less than 25-30 minutes of
playing time. Do singles and/or EPs count towards your delivery requirement?
Copyright – What rights are you granting to the other party? Every artist and creative
on the planet needs to understand the difference between a copyright license versus an
assignment of copyright. If you are assigning your copyrights to another party (your
songs or sound recordings, for example), you are transferring ownership. That is, you
no longer own your songs or masters. A license, on the other hand, is permission to use
your copyrights, where the licensor (i.e. you) continues to maintain ownership. A 10-
year licensing deal with a record company means that the record company has permission to use your sound recordings for 10 years only. An assignment of copyright
in perpetuity to a record company, on the other hand, means that you are giving up
ownership to the sound recordings forever (subject to a reversion right, if any). This
distinction is also important in the beat-making world, where artists who "buy" beats
not own the copyright to the beat. A related question to the above is: "whether you assign
copyright or license it, under what conditions might you get control of your copyrights
back, if ever?"
Money – Is the proposed investment in you and your project proportionate to the rights
you are giving up? Money is a tricky topic in music deals. Where little to no advance is
being provided, but where the music partner attempts to secure significant rights to your
copyrights and/or bind you to a long-term deal, this could speak to the fairness of the
deal. Practically speaking, bargaining power is huge in the music industry, and if you
don’t have such power or leverage to exert during a deal negotiation, it may be difficult
to get the movement you want. Although money and upfront investment from your
music partner can be hugely important, money isn’t everything. Any investment or
advance payable to you is more than likely "recoupable", which means that the music
partner "recoups" or is "paid back" that investment/advance (from your share of
royalties/receipts) prior to you earning revenue from the deal. As such, it’s more than
reasonable to fight for a fair upfront investment from your music partner, but be self-
aware and maintain perspective on this piece.
Relationship – Is this music partner a good fit? When I chat with clients or give
presentations on music industry topics, this is one of my favorite points to drive home.
Clients pay music lawyers good money to review and draft pieces of paper, which is
absolutely critical to ensuring your deals are fair and you fully understand the deal in
front of you. However, even the best and most brilliantly negotiated piece of paper won’t
amount to much if your music partner isn’t solid and they aren’t a good fit. Before
signing any deal, consider your goals, needs, and your plan for thriving in the
ever-changing music business. You also want to consider how the music partner will
help you achieve those goals, needs, and execute on those plans. Speak openly and
candidly with the potential partner before a contract is even presented.
As always, reach out anytime with questions or comments.
Above Matt:
Matt Gorman is a Canadian-based lawyer and focuses his practice on entertainment
law, intellectual property more generally, and corporate/commercial transactions, with
an emphasis on music and talent advocacy. His clients range from award-winning
performers, songwriters, and producers, to managers, social media influencers, and
indie music publishers and record labels. Matt has extensive experience drafting and
negotiating entertainment contracts of all kinds, involving globally recognized talent.
Outside the office, Matt loves to play drums, piano, and guitar and hang out with his crazy
but super fun kids.