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Presented With a Music Contract? Ask Yourself These 5 Questions.

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

sometimes don’t appreciate that they only have a limited license to use the beat, and do

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.


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