You should know what you’re signing before selling yourself to a record label
“A modern-day slavery”
That’s how Kanye refers to the music industry.
If you go through them you’ll see how high the stakes are for an artist starting a partnership with a label. But there’s some room for negotiation. Kanye did multiple renegotiations of his original deals. But again, it was an already famous Kanye West.
And as with any other legal document, you’ll see how wordy they are and far from a quick readthrough.
Always read a music contract thoroughly or you’ll soon regret it, just like Kanye did!
What started as calm criticism towards the current state of contracts in general (“Contracts in all industries need to be simplified now”) quickly turned into a fierce battle towards everyone and everything (“I said I don’t speak with non-billionaire employees… I need Arnaud De Puyfontaine to fly to meet me immediately”).
The main point here is about the ownership of what’s called “the master”.
So that’s where we’ll start.
The Master Recording
A master recording is the original and official recording of a song, sound, or performance. You can also call it the “masters”.
Usually, the masters are created like this:
An artist goes to a recording studio, records his songs with a team of performers, sound technicians, producers, and then mixes it until a final version for each song is achieved.
The phonogram in other words.
It’s the sacred WAV file that’ll be used from now to eternity.
The one paying for all this (hiring musicians, studio recording, mix and mastering, etc.) tends to be the owner of the master. And this entity is usually the record label.
They’ve invested a lot of money in it and now they want to milk it as much as possible.
The owner of the master will then use this recording to make CD’s (if that’s still a thing), send it to radios, stream it, use it in a movie/videogame, and wherever they want.
All in the pursuit of happiness.
You thought they were in for the art?
They want to get as much profit out of it as they can.
Now that there’s a product, what can the master’s owner do with the recording?
This where it gets tricky.
The songwriter only owns part of his song, for which he gets his share of royalties, but the owner of the master is the one who will decide how and where the song will be used.
Remember, they have the physical/digital product while the songwriter has the sheet music so to speak.
Many famous artists didn’t know (or didn’t care to learn) about this aspect of their contract, so when time passes by, they realize they’ve given too much power to the other party.
The Beatles never owned their music catalog. Taylor Swift is now trying to regain control of her masters. Many others are starting to fight to reclaim the ownership of their songs (the master’s portion of it).
And one other thing.
You can compose a song just once, but you can record it a million times.
So this leaves the owner of the master vulnerable. If what they have can be easily copied, their product becomes worthless. So to avoid this liability, the record label adds to the contract that their master’s version is the only acceptable one.
Otherwise, all their investment would’ve gone to waste.
Whenever someone else makes a cover of the song and tries to use it for a commercial purpose, fire will rain over their heads. Only the official version is the one allowed to be used for this purpose and only the label can decide how to use it.
But even artists have now been breaching their contract.
Well, if you’ve been following any artist that’s been doing live stream shows during the pandemic, they have showcased a version of the official song without the label’s consent.
They’re streaming a different version (their live performance) and getting paid for it.
So the songwriters can’t play their own songs whenever and wherever they want?
Doesn’t it sound absurd?
Another contract clause: the advance
When an artist signs a contract for their next album, the record label gives him money in advance.
One part of it is for their personal use (an amount that can be up to seven figures for mainstream artists), and the other part should be used for producing the album (hiring musicians, a recording studio, sampling licenses, etc.).
However, both of these advances have to be paid back. Just like a loan.
The artist gives back the money by taking a percentage from the different income streams their album generates (streaming platforms, live concerts, ad placements, and so on).
Let’s take one example from Kanye’s leaked contracts.
A contract for his 6th album Yeezus in 2013 states the following:
- $12,000,000 advance ($8,000,000 for personal use and $4,000,000 for the music production of the album)
- 22% royalty rate for Kanye (and 78% for the record label).
Side note: usually artists get between 12–15% royalty rate but Kanye was already being a huge hit so he could negotiate a higher fee.
Kanye exceeds this amount and asks for $1,523,000 more.
Total debt: $13,523,000
Until he returns that money, he won’t be seeing any extra income.
So how much money does the album have to generate before he gets even with the record label?
(Kanye’s 22%: 13,523,000 and Universal Music Group’s 78%: 47,945,000)
Once this sum is reached, Kanye will be able to cash any extra money from the album’s sale.
His 22% royalty rate that is.
If the album doesn’t break even, the record label will be “forced” to get the rest of the money from future albums (which Kanye might’ve already signed a contract for) or from Kanye’s royalties from previous albums. Albums that have already been successful and keep being licensed in advertisements, getting thousands of streams, and generating quite a generous revenue.
He’ll be giving his percentage share of royalties from these previous albums until all debts are paid. And in Kanye’s case, his golden egg is his album “My Beautiful Dark Twisted Fantasy”, which has been played 1 billion times on Spotify and sold more than 3 million units up to the 22nd of November of 2020.
The record label seems to own your life, don’t you think?
If you’re going to sign a contract, what should you do before committing yourself to it?
Until you sign, you’re not bound to do anything for the other person/company.
So the first thing you should do is take your time and read the contract in detail. You shouldn’t feel forced to sign as quickly as possible. You need to review it on your own terms.
Once you’ve read it, email them the changes you’d like to see in the contract. They’ll respond with other suggestions and then you’ll respond with your own terms until you get to a point where both parties are satisfied and can work things out.
You’re in the negotiation phase.
Having those contract changes and communication back and forth written down will give you a good paper trail in case something goes wrong (or if you need to be extra clear on something).
Keep in mind that the person that puts a contract in front of you is looking after their interests, and you’re trying to look after yours. This means that there has to be a reasonable middle line where both of you can meet.
If you feel uncomfortable at any point, don’t sign it. The world isn’t going to end.
And then move on.
During the negotiation phase you have some of the following options at your disposal:
- A scenario: give them all your rights (composer and master rights).
- B scenario: give them the masters but have the right to chose where your songs will be played.
- C scenario: license the master’s rights for a certain amount of time, a couple of years for instance, and then get the rights back.
Of course, if you grant them less rights, they’ll put less money on your album (and career), so you have to choose what to fight for and what you should compromise on.
Or you can always start your own label.
Now, this usually happens when the artist is famous and all his contracts have been fulfilled, and they’re free to pursue their own path. Recently, this happened to Madonna, after a decade long contract with Interscope Records.
She is finally free.
But as I pointed out in another article, you can use your own home studio to do all the work, and retain all the rights.
And that brings us to the last part.
The future of the music industry
Since the digitization of music and the technological advancements of this industry, music-making has become available to anyone.
You can set up your own home studio and use social media platforms to promote your music and interact directly with your fans.
This wasn’t something you could do as an artist 20 years ago, but now you can and you should take advantage of it.
Just like the big corporate empires from today started in a garage, you can start your career from your bedroom.
At least experience the whole process of music-making at home. Learn to record, mix, arrange, produce, and deliver a master of a song so you learn the tricks of the trade. Then, if you like, you can move to something else, but I encourage you to first try it out on your own (or with your band as a team effort).
The music industry is also trying to adapt to this new scenario. They’ve developed the so-called 360º contract. The record label takes care of everything, even your social media account, but they get a bigger piece of the pie.
This can turn into hell for you, or be your ideal scenario. They get the work done and you just follow their path and don’t have to think about anything.
Now it’s up to you to figure out how to proceed, but above all please be mindful of your decisions and be aware of where you put your signature.
Don’t sell your soul to the devil (or put some fight at least)!
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