Well I’ve been dancing around this topic since I started the blog 5 months ago. I haven’t written this blog for some unknown reason. It is certainly not due to lack of interest from you all. The emails and votes for a blog on a record deal have been relentless. So now I will give in and outline the inner details of doing a deal with the devil.
Through the decades I have managed quite a few bands. Every one of them has lusted after a recording contract. After the first few contracts I developed the habit of telling all of these starry-eyed children that getting signed to a recording contract was the worst possible fate. All of them laughed. All of them ignored me. Did this bother me? No, it was just me covering my moral ass. If I hadn’t warnedthem, with what I know about recording contracts, then I would have been guilty indeed. All of the musicians I represented got what they wished for. All of them regretted it in one way or another. In some cases it destroyed them and ruined the band. Oh well, I warned them. Now I will warn you.. [Bad Brains -Pay to cum]
Listen carefully -You do not need a record deal. You do not want a recording contract. You will be making a big mistake if you sign a recording contract. Are there exceptions to this? Yes, of course. If by some strange twist of the time space continuum you, the reader are a guy named Elvis and the guy giving you advice goes by the name of Col. Parker then ignore me. If your name is Jimi, you play a lefty strat, and the most important fact it is June 1966 in your world then go right ahead and sign anything anyone offers as long as it comes with a cash advance that is available now. For all of the rest of you….DO NOT SIGN A MAJOR LABEL RECORDING CONTRACT!!! Is that clear? [The Who -Dr. Jimmy]
Now I know you will all ignore me. So be it. If you are being offered a major label deal then it is extremely important to keep in mind that any major label deal is ridiculously complex. YOU MUST HAVE A REAL LAWYER INVOLVED! That means that your uncle Taco is out of the deal. Further you should have a professional manager involved and you should be taking his advice. If you do not have a manger then contact me and I will pass along some contacts or tell you what my consulting fee would be. (I can hear the wheels turning in the minds of many of my readers. Do not attempt to fake a deal in order to get an email full of names from me. It won’t work. The first thing I will do is contact the label and confirm the basic situation. Sorry, I applaud your creative thinking though) The advice I just offered is deadly serious. If you sign a contract without the advice of a real, experienced lawyer then you will get fucked. If you don’t believe me then think about it this way. If you are offered a deal and it is negotiated by a real lawyer and a real manager you will get fucked. With this is mind what will happen to you without their advice? You will get screwed so bad that someone else will end up owning everything including the band dog, the band groupies and that beat up piece of shit guitar that you keep around because you learned to play on it. Enough said.
Now I am not going to explain how to negotiate a recording contract, that will take a few blogs and I hope to get to that soon. Before we approach that topic I must explain how a recording contract works. For those of you taking prescription antidepressants now would be a good time to check that you have dosed yourself.
OK let’s go. Let’s assume that a major label wants to sign you. How does something like this happen, in real terms, how does it go down? [Bowie TVC15]
To reach this stage you will have done all the preliminaries, showcases, meetings, presspacks sent and read, managers and label dudes (and dudettes) making endless calls, rumors, fistfights, depression, elation…so now what happens?
Generally the label starts by issuing a “deal memo”. This is a letter that they send to your lawyer and manager. It is one page and it is a summary of the deal that they are about to offer. IT IS NOT A CONTRACT. It outlines the basics of the deal. That is to say it outlines the basics of the deal they would love you to sign since you haven’t negotiated with them yet. It will tell you how big the advance they will give you for the first few records. It will tell you the total length of the contract and it will outline their offer for your publishing. If they are not attempting to buy your songs then it will address how they plan to pay for the use of your songs on the records.
Your lawyer will turn this offer down and begin to negotiate with the label. Every young band will panic at this point and attempt to override their lawyer management team and sign the deal as first offered. They don’t want the label to change its mind. The band has been hoping and fighting for a deal for so long they talk themselves into believing that negotiating the deal is risky and may drive off the label. Actually the opposite is true. The label expects to negotiate. It is their favorite part of the process. If the band doesn’t try to sell itself high then the label can become doubtful. If the band doesn’t know in its heart that it is the greatest band on earth then how will the fans believe it? Taking a label’s first offer is a sure-fire way to speed up the process of the label losing faith in the band.
So you negotiate with the label and finally come to an agreement. At this point the label sends multiple copies of the 60 page contract. The band sits down and signs them all in multiple places. NOW YOU ARE SIGNED. What does a deal like this say? [Velvet Underground “White Light, White Heat”]
Every record company contract is different. Every deal is different but there are many things that are common to all the deals. These are the things that count. So I will explain them in as basic a fashion as I can. If you understand the basics of how deals like this work then you will be prepared to open your mouth in a meeting and maybe get what you want or need in a deal. This applies to both big label deals and small label deals.
Every recording contract is designed to lock the band into only recording for the label. As a result the deal will be split into two halves, the first covering what the band must do, can do and cannot do when it comes to recording. The second half will cover how the band gets paid for its services as recording artists. In addition there may be a third section covering specific commitments to promote the records and to provide tour support. Finally the contract may cover song publishing and include a complete publishing contract. I will not cover the details of publishing in tonight’s blog. You can check out some of what is involved in my two blogs about publishing royalties. [Yes -Close to the Edge]
Part one the section that covers how long the band is bound to the contract is always structured as a series of options. What the hell does that mean? Well it isn’t like choosing one item from column A and two from Column B at the chinese take out. (if you have no experience with chinese take out then you are either an underage hippie kid living at a remote commune, playing a hemp guitar, or not a musician)
The options in a recording contract work like this – the band must make the first record for the label. The label can take a god awful long time putting it out. You must wait. Once they release the recordings the clock starts to tick on the band’s option. Let’s say that it’s a one year option. This means that within one year of the album’s release the label must tell you if they would like another record from you. It is the label’s option not the band’s. It is NEVER the band’s option. [Jackson Five -I want you back] If they say that they would like to “excercise the next option” then the band makes another album. Most major label record deals have TEN options. In practical terms this means the band is committed to the record label for up to 15 years. (California has restrictions on deals that are this burdensome so most labels use NY law to get around this anti-slavery law. Think carefully about this sentence….yes….a recording contract is a form of slavery…remember I warned you….)
Often bands will talk about getting “three records guaranteed”. This means that the label commits to exercising the first two options after the first release. In practical terms this is never true. The label can usually get out of the options by paying off a penalty. [Iggy Pop- The Passenger] If the label decides it doesn’t want to release any more records from a band, any band, they will stubbornly stick to their guns. Even though the band may have language in their deal that states that the label must do it in practical terms this will not make them release the record. They will pay the penalties, no matter how large, and move on. Even a sizable non-release penalty payment is cheaper than releasing a full-scale release. When you add in the fact that an unwanted release would require lots of staff time, time that could be spent on a record the label is excited about, then you can start to see why they do this.
So a contract that guarantees three albums will be released doesn’t mean three albums will be released. What does it mean? Well it shows that the label was enthusiastic enough when they signed the deal to commit serious money to the project of developing the band. So deals like this primarily measure how committed and excited the label was about the band during the negotiation process and little more. All bands and all labels rise and fall in their enthusiasm and this affects the way albums are promoted.
Now we’ve established that the contract revolves around options and that options are set to certain time periods and all of this is nailed down to the concept of a “record”. This concept is certainly being tested in the modern market. Bands no longer go into the studio and put together a 10 song, 34 minute vinyl LP (the standard from 1967 ’til 1987) nor do bands go into the studio and put together a 12-14 song , 45 minute Compact disc (the standard from 1987 ’til 2003). I think we can also rule out the old school idea that bands go into a studio and cut two tracks which are turned into a single.
[Mission of Burma “Academy Fight Song”]
The current environment is one of changing standards where bands are releasing individual tracks as downloads, collections of varying lengths in every format they can concoct and in the near future streaming the live creation of recorded music through peer to peer networks. [Bad Brains “Banned in DC”]
Despite the state of chaos and the coming changes labels seem to be sticking to locking a band’s output into the concept of albums and collections of songs. [Deep Purple “Pictures of Home”]. No matter how a contract is structured all of the band’s recorded output will be controlled by the label for the duration of the contract. If a contract did not accomplish this there would be no reason for the label to enter into the deal. In short the band will only record for the label and every single note put to tape during the contract will be owned by the label.
In this section of the deal the contract will also cover who controls the different aspects of creativity. Here’s a short list of things that will be covered.
1. Who’s songs are going to be recorded? Are there going to be any Bob Dylan songs? Is a ghost songwriter going to be employed? Can the label force songs on the band? Often the label will require the band to submit demos and then the label will pick out the tracks to be recorded. Sometimes the selection will be by mutual agreement. When the deal is structured in this manner the band will discover that it is very hard to win an argument on song selection with the label.
[Bob Marley “Crisis”]
2. Who will produce the recordings? Here is another case where the label will demand complete control. For all bands without a hit the label will use the producer to control the band and micromanage the band’s recordings. Once again if the band gets the label to agree to a situation where the producer is agreed by both sides then the band will have a great deal of trouble over ruling the label. [Love “Live and Let Live”] In many cases a band will attempt to be self producing. That is to say they want to make their own records and do their own tracking, mixing and editing with the help of a buddy who is an engineer. This kind of provision is very hard to get from a label for the simple reason that all major labels know that this is an extremely bad idea for any new band. The label knows that the band has no experience creating a record that will compete sonically on the radio. If the band makes this point a do or die point of negotiation the label will act as if they are giving in and just demand more flexibility to remix. Then under the cover of darkness they will “remix” the record by tearing it to pieces and producing the product they wanted all along. [Rolliing Stones “Sympathy for the Devil”]
3. The budgets for recording of each optional record. The language that covers the recording budgets will name maximums that the label is willing to put up for recording. They will often include language that allows the label to exceed these numbers but only with the written permission of the label.
4. The budget for the total amount of money to be advanced to the band. This will be a large sum which will include many smaller sums like recording budget, tour support, personal advances to band members, allowances for gear purchases etc. [Santana “Black Magic Woman”]
5 Budgets and maximum allowances of money to pay producers. Once again these sums will be controlled solely by the label. In general the producer will be paid an advance payment which will be part of the money that he will earn when the record sells. THIS MONEY AND THE ROYALTY POINTS COMES OUT OF THE BAND’S SHARE!
6. Allowances and advances set aside for the band’s manager. This amount is usually negotiated by the manager as he works out the deal. This is a blatant conflict of interest on the part of the manager and is, as a result, standard practice in the music business.
There are other items that are often included in the first section of a recording contract. I’m certain I am forgetting a few but it doesn’t really matter. What is extremely important to understand is that the number of options, the guarantee of options, the total contract length will all determine how long you may be locked into a label.
When a label is courting a band they will be the most charming, supportive, understanding, coolest people who you have ever met. This view will change once you begin to work with the label to create your first album. I promise that any label will be much less attractive once the deal is over. Always keep this in mind.
Without exception the area of the contract that covers options and budgets is the part that gets a band licking their greasy chops. It is very easy for these numbers to add up to over a million dollars for the first option. This is what lures the band in and gets them to sign.[Beatles- 8 days a week]
Now here is the fact that puts all of this in the proper perspective. Everything that is done to create, manufacture and promote the record, everything that is done to pay off the business, all of the advertising, all of the advances , all of the tour support, all of the gear allowances, all of the catered food and press events, all of the plane tickets given to writers, all of the cash put up to print up t shirts, everything in every possible way that is paid for by the label ultimately comes out of the band’s cut of money. Go back and read that again. What does this mean? EVERYTHING DONE TO MAKE THE RECORD AND PROMOTE IT IS PAID FOR BY THE BAND OUT OF THEIR ROYALTIES!!!
Think about this fact. It the fundamental truth about record deals. The band pays for everything out of the royalties that the band MIGHT receive. As a result of this the way a recording contract is structured the average musician in a successful band will not only make no money from making records they will spend years OWING THE LABEL MONEY!!!
[Grand Funk “I’m your captain”]
I will explain how this works in the next installment when I cover royalty payments. Let me close by saying that it often works out like this :
Recording Studio $200,000
Each crew member $12,000
remix engineer $40,000
Mastering studio $20,000
Band member $7500 and a new guitar, amp and a few pedals
Ask yourself do you want to give the best you’ve got to give, perhaps the best you will ever give since you are in your prime, in return for $7500, a new guitar and amp and a year’s worth of crappy catered food as you make an album?
[Gang of Four “Anthrax]
©Brad Morrison/Billiken Media 2010