from an article originally published in GIG Magazine in April 1998
Recording Contract from Hell
1998-2000, Diane Rapaport. All Rights Reserved. Used By Permission.
weeks ago, the guitarist from a well known Native American instrumental
group made a distress call.* He figured out that the recording
contract his band signed with an independent record label took away
the band's publishing rights. The moment of truth dawned when the
band discovered that one of their songs had been licensed to a German
record label naming the artist's record company as the owner of
the copyrights. "Aren't we owed mechanical royalties in addition
to recording royalties," they asked? "Shouldn't our publishing company
have granted a mechanical lisense for the song to the German record
you understand what you were signing?" I asked.
were afraid the record company wouldn't sign us if we gave them
a hard time."
you have a lawyer look over the contract before you signed it?"
were too broke."
isn't the first time bands have signed bad contracts because they
were intimidated into believing that if they didn't, the contract
would be withdrawn. And it's not the first time bands haven't bothered
hiring a lawyer. Intimidation is one of the most commonly used 'tools'
of negotiation and so is the phrase "trust me."
are the worst clauses in this one page contract:
the use of the recorded material and for all rights thereto and
sole control thereof, [Record Company] shall pay a nonreturnable
advance royalty of $1200 to the Artist following satisfactory recording
of the Artist's songs. Such payments shall constitute an advance
against royalties, if and when earned, on the basis of $1.00 per
cassette and $1.50 per compact disc sold. These royalties are figured
at 10% of the retail list price. The books and accounting records
of [Record Company] shall fix the royalties to be paid Artist.
payment of the aforementioned royalty, all right, title and interest
in and to the recorded material and recordings, and the use and
control thereof become the property of [Record Company] free of
any claims by Artist or by any person representing Artist. The music
will be published by (Artist's Publishing Company). Licensing and
publishing fees will be divided equally between [Record Company]
are some of the questions the band should have asked prior to signing.
What does the following phrase mean? "For all rights thereto and
sole control thereof." The wording of both paragraphs is entirely
unclear as to what rights are meant.
the record company has the right to control promotion, sale and
distribution of the record. The composers own the rights granted
to them by the U.S. Copyright Office.
What type of royalty is being referred to? Typically a record company
pays two royalties: one to the band recording the compositions,
known as a record royalty, and one to the copyright owners of the
songs and publishing company, commonly known as a mechanical royalty.
If the music is published by the band's publishing company, why
are licensing and publishing fees being "divided equally between
Record Company and Artist"? Does the word 'licensing' refer to the
issuance of mechanical licenses? If so, what fees are involved?
What publishing fees are being referred to?
Who issues mechanical licenses if another band or producer wants
to rerecord one of our songs? Since our band is specified as the
publisher, wouldn't we do this?
the band asked any of these questions, they would have begun to
unravel the tangled assumptions of this contract and discovered
that the record company was about to walk away with their publishing
rights. They wouldn't have had to act "heavy" when asking. Looking
for information and clarification is the sensible thing to do.
contracts, even the simplest ones, are the means by which business
people open the door to negotiation. The parties are expected to
question the clauses they don't understand, push forward their vested
interests, and come to a mutual agreement about how they can work
together to make the record successful. Otherwise, why bother?
contract succinctly stated the vested interests of the record company:
they wanted to pay as little as possible for all rights. In this
case, the contract seemed to mean recording rights, copyrights,
publishing rights and artistic rights.
band never stated their wants: fair pay for giving the record company
a way to handsomely profit from the band's creativity; retention
of all publishing rights; control over their productions and budget.
They were so happy a record company liked their music that they
were afraid to make them unhappy by questioning the flaws in the
contract. They were unhappy to betray their ignorance by asking
what might seem like foolish questions. Unhappy relationships between
labels and bands often produce unsuccessful records. And once a
rift forms, no contract can shrink that rift and make the parties
want to work together. In this case, the band found a new record
company. And this time, they found a lawyer to help them negotiate
enough, this story may eventually have a happy ending. One of the
band members recently called to tell me that Harry Fox is suing
the record company for nonpayment of publishing royalties. . . not
just for the band I'm writing about but for many others on the label
what bands need to know:
Understand the difference between a record company and a publishing
company. The former is in the business to sell records; the latter
profits by actively selling songs to other record companies, bands,
producers, filmmakers and so on. Although an argument can be made
that a record company exposes the band's songs to a wide audience,
thereby enhancing the potential for further publication, the record
company is only a passive participant. Few bands these days sign
away their rights as composers to record companies. They hold those
rights as leverage for making a deal with a publishing company that
actively wants to exploit their songs.
Hire a lawyer specializing in music business to negotiate for you.
Read the contract and ask him/her about any phrase you don't understand.
If you're really cool, you'll also read one the good books available
on record and publishing contracts so that you won't be charged
for the time spent being educated by your lawyer. Use the lawyer's
time for his/her best skills: negotiating with the record company
on your behalf.
Remember these sentences: "You don't ask. You don't get."
name of the band and the record company are withheld at their request.