Record Companies & Record Contracts

1. Music Industry
The Record Label & Record Contracts
www.musicstudentinfo.com
Chris Baker
24th Oct 2012

2. Record Companies

3. The Record Label
• Label Manager - responsible for running the label
• A & R - networks for the label from talent scouting,
to someone who mentors the band through to final
recording
• Studio Engineer - works to producer’s instruction
during recording and post - production mixing

4. The Record Label
Producer – usually employed by the label to record
the act. producers fee is charged to the artists
advance, and can be 3 - 5% of PDP
Product Manager – responsible for ensuring that a
labels product is monitored through recording to
distribution
Business Affairs – responsible for negotiating the
deal with the act

5. Record Deal

6. Types of Deal
•Development Deal - act given studio time and
producer to produce sample tracks. Cost of this
could be treated as a recoupable advance
•Exclusive Recording Deal - act asked to produce a
certain number of albums for label

7. Record Contract Clauses
• Exclusivity
• Territory
• Term
• Creative control
• Advance - the amount of loan to the artist
• Headline royalty rate – the rate of royalty paid to an
act on records sold – expressed as a percentage
of published dealer price 15% to 20% is typical

8. Contract Clauses
• Some deals offer profit splits instead of royalties
• Deductions – how the headline rate gets reduced
(these can be for packaging, exports, club sales)
• Recording costs
• Real royalty rate - the net rate after deductions and
reductions
• Video
• Name/likeness/website

9. Contract Clauses
• Audit
• Key man/side-man clause
• Escalations
• Licensing
• Re-recording restrictions
• Termination

10. Advance

11. Advance
These are loans repayable to the label
• Label will charge what it can to an artist’s advance
including the studio time and producer
• Often an act will receive little by way of a cash
advance
• Advance is a loan and is recovered by the label
from royalties payable on sales
• Recoupment

12. Licensing Opportunities
• Labels own the sound recording and can licence
others who wish to use it
• Broadcasting rights and performing rights are
assigned to PPL
• Overseas labels may wish to market the
recordings – typically 20%
• TV advertisers - negotiable fee
• Independent film and programme makers
-negotiable fee

13. Record Label Organisations
• British phonographic industry (BPI) trade
association with major and independent labels
• Association of independent music (AIM) trade
association for independent labels

14. Mechanical Rights
• Refers to the royalty payable to the writer of any
song recorded by the artist for a label
• If the artist is the writer and has not assigned the
music rights to a publisher then label can deal
direct
• For all songs recorded that have been assigned to
a publisher or for which the writer is a direct
member of MCPS the label must deal with MCPS
• The royalty rate payable to mcps on ap schemes is
8.5% of the published dealer price - PDP

15. Market Shares
• Majors - Universal, Sony/BMG, Warners have
80% of sales between them
• Independents account for 20% market

16. Organisations
• World intellectual property organisation WIPO – un
organisation controlling copyright treaties
• International federation of phonographic industries
IFPI – representing the record industry outside us –
negotiates with local governments and BIEM the
mechanical rights organisation
• Record Industry Association of America RIAA
represents the record industry in the U.S.
• BIEM represents mechanical rights societies
throughout the world

17. THE END