Music to My Ears: What Artists Must Know about the Business and Contractual End of Music
Introduction
It is said that an artist is nothing without talent, but that talent itself is nothing without hard-work. However, let me add that in terms of the music industry, both the artist, his talent and hard-work might as well be to nothing, without the business behind music. It is this business behind the music that brings the audience, money and fortune that musical artists enjoy as the price for their efforts and frankly, it is what keeps both the music industry and the artist going.
While some artists are more interested in the music than in the money that comes with it, some are simply into the music for the money (don’t worry, we wouldn’t judge you), while others are fairly interested in both. Which ever the category you fall into as an artist, you would still need to be informed of the contractual rudiments of an artist’s career, because you would be signing a lot of documents along the way and you might as well know what you’re signing. Also, it is the smarter move to have this knowledge as it gives you the necessary edge when entering agreements, to make decisions which will allow you enjoy the full monetary worth of your efforts. I mean, why not?
The Music Industry, worth more than US$130 billion globally, is one with a lot of promises; of wealth and fortune. For an artist looking to make it into the big time however, a lot of contractual and business due diligence is required to maximize this promise. With the Music Industry, “shine your eyes” is the watch word!
For the purpose of this article, I will try to break down some of the contracts which musicians may sign in the course of their careers; explain what they entail and point out a few peculiarities about them. The idea is this; you can not be informed about how to approach musical contracts without understanding what they are in the first place. So, we will start with the basic musical agreements.
Performance contracts
These are one-off contracts reached between artists and third parties who wish to have the artists perform at their pleasure at an event. It could be a public performance (e.g the Moet Hennessy Artistry Event) or a private performance (e.g. Performance at a Wedding or Birthday Party). Since these contracts are usually one-off, they are more often than not short term contracts which provide spell out the terms of the arrangement for the performance within the short period. These agreements are often reached with artists who have achieved some measure of success and as such have been invited to occasions to perform their music and entertain.
In signing performance contracts, an artist ought to look out for the following things in the agreement; the period of performance, length of performance, payment and conditions of payment (i.e money to be paid to the artist and conditions which may affect payment), dispute resolution clause (in case issues arise) and rights of both parties.
Luckily, there is little room for severe foul play in performance contracts. At the worse, the artist may lose the money he is entitled to for that performance if he is not diligent enough. It sounds bad, yes – but there are worse things down the list.
Band or Group Contracts
This contract is often overlooked since it is between artists and since artists themselves are hardly keen on contractual agreements. Wrong! For contracts so often ignored, they are very essential. These agreements are entered between artists who perform in a band or a group and the purpose of the agreement is to determine the terms of the band’s or group’s relationship as a business unit. This contract identifies the rights of band members, the sharing of royalties and other monies each band member is entitled to, issues of tax payment by the band and other relevant terms.
The key things to look out for in a band agreement is the profit sharing arrangement between members, the ownership rights in the music created by the band and most importantly, the way and manner the band relationship may be terminated.
Another equally important thing to consider with band agreements, is entering the agreements themselves. Bands always have issues! It’s inevitable. Having an agreement reduces the chances of avoidable squabbles as well as pre-determine the interests of members and shield the docile members for the excesses of the “stereotypical egoistical band member.”
Artist Management Contracts
This agreement is usually entered where the artist (who may be a solo performer or a band) enters into an agreement with a music manager or a management company to manage their career. This agreement also often doubles as an agency agreement as the manager gets to handle financial and legal business on behalf of the artists and take legal binding decisions on their behalf as the case may be.
These agreements are often essential as they give protection to the artists, as well as help to heave the burden of everyday business management from the artist’s shoulder so they can focus on the more exciting aspects of the music (such as jamming and lyrics writing.) While they are essential, these agreements can often be tricky and must be entered into with the greatest care.
A Management contract is not something to be entered lightly! I repeat, it is not something to be entered into lightly! An artist looking to enter a management contract need to look at the fine detail and comb through it with as much diligence as can be mustered. Preferably, they should get a “competent” lawyer to look at such contracts – very preferably. A good management contract could be the difference between failure and success for a musician and a bad management contract could be the very beginning of series of incomprehensible misfortunes for any aspiring artist that would end up with such an artist used, broke or worse. Examples abound home and abroad. The things to look out for in an Artist Management Contract include the following:
(a) Term: The length of such contracts are key. Make sure not to sign a contract that exists in perpetuity, or a contract that is virtual non-terminable at the artists instance. Also, look out for the “sunset” clause! The sunset clause usual spells out how long the agency will continue to benefit from the artist even after termination of the contract. Ensure the sunset clause is no too long and does not extend beyond music made by the artists during the course of their engagement with the agency.
(b) Commission: This is important! The commission is usually the percentage of monies the agency is entitle to. More often than not, the contract would spell 15 or 20 percent as commission. But it’s never that simple. Look out for whether it is 15 or 20 percent of the net or gross monies, look out for what exactly the agency has entitlements to commissions over such as music the artist made without their contribution etc.
(c) Rights and Duties- The Artist must look out for the rights he maintains and those of the Manager. More often than not, Managers try to sneak in clause that give them absolute control of the artists careers. That shouldn’t be. Also, most Management contracts ( as drafted by such Managers) barely have clear cut obligations under the contract – just vague promises of assistance lost within the almost obsessively detailed monetary demands. A manager should agree to render “such advice, guidance, counsel, direction and other services (including financial) as the artist may reasonably require to further the artist’s career and to develop new and different areas within which the artist’s artistic talents can be developed and exploited” at the very least.
Recording Agreements
This agreement is usually reached where a recording artist enters into a contract with a record label to allow the record label to (usually) take the rights to use of and exploitation of the artist’s sound recordings in return for a royalty that is paid to the artist.
Recording contracts – the (in)famous Record deals – are legally binding agreements, enabling record companies to exploit an artist’s performance in a sound recording, in return for royalty payments. In Recording agreements, usually, the music remains in the name of the artist, but the rights to its use, exploitation and utilization is transferred to the record label, who handles the rigours of publication and promotion.
Recording Agreements are quite similar to Artist Management Agreements but they differ to the extent that with Record deals, the artist is entitled to production and music marketing from the Record Company, while in Management Contracts, the artist gets management advise, access to opportunities and brand marketing from the Manager. The Manager does not produce or assist in the creation of music. The things to look out for in a record contract are similar to those to look out for in a Management Agreement. Some of them include:
(a) Term of agreement- most recording agreements last for 12 months and are renewable. The artists must make sure the contract is not one that continues in perpetuity or one that is impossible to break free from.
(b) Possibility of termination by the artist – most record labels insist on preventing artists from unilaterally terminating record agreements. An artist should look out for this and try to negotiate reasonable options for voluntary termination even if it requires paying the record label some money.
(c) Intellectual Property Rights: This is the most important. (The oga kpatakpata of them all). In a subsequent article, I will explain the rights associated with music making, their implications and how to navigate them. For now I will say this; look out for what rights the management agency gets and which you keep, the extent of the rights they get and possible reversions (return) of such rights. A callous commission or terms clause may affect an artist only as far as the contract lasts or until a breach occurs which necessitates termination, but a callous IP clause will affect an artist for life, except for divine (or court) intervention.
Artist Release Forms or Agreements
This is a contract between an artist and a record label or any other relevant party wherein the artist waives his right to the intellectual property in his music or sound recording in exchange for certain payments. These contracts are usually embedded in recording contracts but may also be reached separately in instances where an artist is to forgo his rights in his music either as part of a bigger contract such as a record deal or as a one-off divestment for pay.
As the implications of this contract suggests, it is not one to be entered lightly. An artist must be sure that they understand that they are absolutely forfeiting the copyright in such music or sound recording which they sign off under a release contract and must make sure that they get consideration worth the magnitude of such absolute forfeiture.
Termination Agreements
This operates to terminate an agreement between the artist and any agency, management company or record label they are tied to and serves to severe the relationship between them. These contracts are important as they are necessary to surgically separate the artist and his act from prior business relationships with managers or record labels and completely emaciate such an artist.
It is usually the most beautiful contract an artist would sign after a turbulent management or recording relationship.
The key thing to look out for in these agreements is that the severance from the company, agency, management or other third party is ABSOLUTE and that there are no further obligations or duties left to be executed between them, especially by the artist – basically ensuring that the agreement is an effective “good day and a merry good bye to you!”
It is important that an artist knows what all these agreements are and what they entail. This is because when signing these documents, knowing what they are and what they mean for the artist, would help the artist in making crucial decisions, undertaking renegotiation as well as in deciding whether or not to sign the agreements in the first place. But beyond that, knowing and understanding these agreements puts the artist in a pole position to call the shots in a setting where he would otherwise have been short changed i.e when doing business with management agencies and record labels essential and other third parties better skilled in the business end of music and ordinarily well poised to strong arm the artist. This would by extension protect the artist from being exploited and prevent them from making half-informed decisions which may benefit the label or agency but sabotage their career as is so often the case.
Apart from knowing what these contracts are, it is also important that artists diligently examine the terms contained in contracts they are to sign. It is not enough to know what the contracts are, although this is a crucial starting point. But to really be contractually prudent, the artist must go the extra mile to put in effort to read and cross check the implications of each term in the contract since knowing the contract may not of itself protect the artist from exploitation. Alternatively, the artist can have a competent legal adviser who would assist with this due diligence. This is especially important in the case of Management Contracts and Record Contracts; with these, absolute care is advised – again.
There are few industries with as much promise of pomp and fanfare as the Music industry and there are few ventures more financially and socially rewarding as a career in music. But with great promise of wealth comes great risk of exploitation, simply because that is how the human society has chosen to wire itself. Musical artists must cut the act and beyond playing tough and singing about being woke, they must actually wake up to smell this burning coffee and fast.