Red Flags in Music Contracts
It can be so exciting to receive your first contract or deal in your artist career. Maybe it’s a single song publishing contract, or a sync licensing agreement, or a producer agreement. Whatever it may be, congratulations! Take a moment to celebrate someone noticing your hard work and commitment. Now, not to be a buzz-kill, but it’s time to actually sit down and read the proposed agreement. This is where it becomes very easy for an artist’s excitement to neglect the fine print.
When reading any contract in the music industry, it's important to be aware of certain red flags that may indicate unfavorable terms or potential issues. Here are some red flags to look out for: (Please note, I am not an attorney and this is not legal advice. Always consult an experienced and licensed attorney before signing anything)
Ambiguous or vague language: Be cautious if the contract contains unclear or ambiguous terms. It's essential to have a clear understanding of your rights, obligations, and the scope of the agreement.
Unfavorable royalty or payment terms: Pay close attention to the payment structure outlined in the contract. Ensure that you are being fairly compensated for your work and that the royalty rates or payment terms are reasonable and industry-standard.
Unexplained or excessive deductions and fees: Be very cautious of contracts with ambiguous fees or deductions that could reduce your earnings significantly. More often than not, the music industry operates from taking a percentage on the back end. If someone is asking for a significant fee up front, make sure you are very clear on what you will get in return and how to measure such returns.
Excessive or indefinite contract duration: Be wary of contracts with unusually long durations, especially if they bind you exclusively to the company or limit your ability to work with other parties. Especially the term “In perpetuity” which, by definition, means forever. Ensure there are provisions for termination or renegotiation if necessary.
Lack of creative control: Watch out for contracts that grant excessive control or ownership of your creative works, such as compositions, recordings, or merchandising rights. Maintain the rights to your intellectual property and negotiate fair terms for the use of your work.
Unbalanced recoupment clauses: Recoupment clauses outline how expenses incurred by the record label or other parties will be recouped from your earnings. Ensure that the recoupment terms are fair and reasonable, and that you have a clear understanding of when and how recoupment will occur. No money is free money!
Lack of transparency: If the contract lacks transparency regarding accounting practices, reporting obligations, or audit rights, it can be a significant red flag. Make sure you have the ability to monitor and verify your earnings and expenses associated with the contract.
One-sided indemnification clauses: Be cautious if the contract places excessive liability on you or requires you to indemnify the other party for a broad range of claims. Seek legal advice to ensure you understand the potential risks and liabilities associated with the contract.
Lack of legal representation: It's always advisable to have a lawyer review any contract before signing it. If you're presented with a contract that discourages or restricts you from seeking legal advice, RUN!
Remember, contracts in the music industry can be complex, and it's crucial to understand the terms and potential implications before signing. Part of being your own boss is taking the time to know exactly what you are signing and where your time and money is going. Consulting with an experienced entertainment attorney is highly recommended to protect your rights and interests.