Music Business Handbook and Career Guide Part 3

Music Business Handbook and Career Guide Part 3: Managing Artist Relationships

Artists’ Recording Contracts Chapter 11

Start Thinking. . . What role do unions play in record company contracts? What are the important issues that should be negotiated in a recording contract?

Chapter Goals Learn the basic elements in a recording contract. Be able to distinguish between royalty artist issues and nonroyalty artist issues. Understand union involvement in the process and the standing agreements that the AFM and AFTRA have with record companies.

AFTRA Agreements American Federation of Television and Radio Artists AFTRA National Code of Fair Practice for Sound Recordings covers all singers on a recording

AFTRA Agreements Vocal Contractors Union contractor 3+ AFTRA singers in recording singing member of the group supervises adherence to AFTRA code Overdubbing and tracking Sound recording copyright shares AFTRA’s Sound Recording Sessions Report

AFTRA Agreements Scale Classifications of employment Recording funds/advance Contingent scale payments Payments to nonroyalty singers AFTRA Health & Retirement Funds

AFTRA Agreements Acquired Masters Recordings by small companies and indie labels Signatory third party acquiring master: must ensure nonsignatory producer complied with AFTRA code must comply with all obligations H&R and contingent payments New use of masters

AFTRA Agreements Nonunion Recording Advantages of collectivism Changing technology But AFTRA obligations must be met when distributing nationally Money not saved in the long run by initially circumventing AFTRA and the AFM

AFM Agreements Sound Recording Labor Agreement Instrumentalists, conductors, arrangers, orchestrators, and copyists Covers provisions for production of music videos and concert DVDs Employer pays wages + AFM Health & Welfare Fund + AFM Employers Pension Fund

AFM Agreements Sound Recording Labor Agreement Contract provides 200% of sidemusicians’ pay for the leader AFM contractor for 12+ musicians doubling, cartage, etc. backup artists Royalty artists “Outside” masters

AFM Agreements Sound Recording Special Payments Fund Phonograph records record companies make payments to fund twice a year paid to musicians who performed in preceding 5 years same scale payments for all musicians Motion pictures Film Musicians Secondary Markets Fund payments reflect relative success of project

AFM Agreements Music Performance Funds Nonprofit organization to keep live music available to public Trustees schedule live music performances by AFM members If no admission charged live performances may be broadcast Digital downloading adversely affected physical sales and therefore MPF

AFM Agreements Nonunion Recording Taft-Hartley Act and right-to-work laws AFM control professional symphony and popular music recording less control in gospel, Christian, jazz, and country fields Young Sounds of the AFM Spec sessions

Royalty Artist Contracts Types of Deals 1. 2. 3. 4. 5. The label signs the artist; a producer handles project in-house; artist gets royalties The label already has artist under contract; retains independent producer Independent producer and artist produce master tape, then convince record company to acquire it Master lease deal Artist forms a production company to deliver a master tape to a label

Royalty Artist Contracts Negotiations Conservative signing policies Terms of contract Maximize self-interests versus compromise Royalty rate adjustments or bonuses as plateaus reached

Royalty Artist Contracts The Issues Term Exclusivity Royalties, advances Production budget minimums Creative control Commitment to promote Chargebacks Ownership of masters

Royalty Artist Contracts The Issues Publishing rights, controlled compositions Video rights Foreign releases Assignment Right to audit Default, cure Royalty discounts

Royalty Artist Contracts 360 Deals Power shift between artists and record companies Two types of 360 deals/“artist brand” agreements: 1. record company gets traditional revenues + percentage of the artist’s other income streams 2. true partnership Environment = double-edged sword

Royalty Artist Contracts New Use and Legacy Royalty Rates Dramatic changes in technology Historically, new uses fitted into existing categories Digital downloads Telephone ringtones Instant recording at live performance venues

For Further Thought. . . What is the difference between a royalty artist and a nonroyalty artist? What contractual issues related to creative control should be negotiated by an artist? Why is it possible for an artist to have fulfilled all recording obligations under a contract, have some recordings that sold well, but still not receive any royalties?