Should I Have a Lawyer Review My Recording Contract Before I Sign?

Absolutely. Recording contracts can cover more than just the masters (sound recordings). Sometimes publishing rights, songwriting, and an Artist’s other entertainment activities are affected by these agreements, too. Before signing a recording contract, an Artist should have an entertainment attorney review the terms regarding copyright ownership, work-for-hire, assignment of interest, any power of attorney, the duration (including any “options”), and financial terms regarding recoupment of recording costs.

Two copyrights in every recorded song

One very important concept the parties will need to grasp to fully understand a recording contract is that there are two different intellectual property assets in every recorded song: 1) the sound recording itself, and 2) the underlying musical composition. Therefore, you could have a copyright holder who owns 1 (usually the record label) and a different individual (usually the songwriter) who owns 2. Different types of music royalties are also generated by each of these assets, and consulting an entertainment attorney who knows the difference is crucial.

Who pays for the recording, and what is recoupment?

Typically, in many recording contracts, the record company will pay for the recording costs up front but will want to own the masters in return. They will most likely also want to recoup those recording costs and any advances given to the Artist from income generated from the masters. Essentially, if the recording, marketing budgets, and advances are part of the costs the company pays up front, it is possible that the Artist will end up needing to recoup a significant amount of money before the songs are even released. It’d be wise for an Artist to have some sort of consultation right regarding these budgets so they know how much they will end up needing to recoup from future music royalties.

Not every “record deal” is a recording contract

It’s also possible to have a “record deal” that has nothing to do with the recording process. For example, an Artist may be presented with a distribution agreement which only covers distribution and administration of the masters. In this case, the Artist may have already gone through the recording process on their own and may have a catalog of masters the company is interested in distributing for commercial release. These agreements may still affect who collects royalties generated from the masters, but distribution agreements usually have a more “hands-off” approach regarding the Artist’s publishing and other entertainment activities. Still, it’s important to understand the terms and to make sure a distributor is only collecting royalties generated from the masters and not from the musical compositions if they have no ownership interest in them.

What is a 360 deal?

On the other hand, a “360 deal” may encompass more than just the recorded music and address songwriting, publishing, other entertainment activities such as touring, merchandising, personal appearances and potentially even acting or literary opportunities. If the Artist is further along in their career, and especially if this is not the Artist’s first recording or entertainment contract, they will need to make sure they are able to enter into such an agreement and that they do not have any pre-existing obligations that would conflict with the terms of or violate any other agreement they’ve already executed.

Name, image, likeness, and artwork

A recording agreement may also affect who has the right to use the artist’s name, image, likeness, and other biographical information. It can also affect intellectual property rights to trademarks, trade names, cover art and visual art used in connection with the masters.

Exclusivity and working with other artists

The recording contract will likely also affect whether the Artist can work with third parties. Many record labels typically want to sign their Artists on an exclusive basis, meaning the Artist cannot record for anyone else during the term. If, however, the Artist wants to work with another Artist and bring them in on their project with the label, the label will likely want approval rights and may also want the Artist to be responsible for clearances when it comes to third party involvement. It’s possible a record company may include terms in the contract so that the Artist is responsible for obtaining clearances, licenses, or even work-for-hire agreements from third parties who are involved in the recording process.

How long does a recording contract last?

The duration of the agreement can also be difficult to ascertain because it usually begins at a future, uncertain date, such as the date of a first commercial release of a master. Then, there may be “options” the record label can exercise to extend the term and to obligate the artist to record and release more music beyond that which was part of the original term. An Artist will also want to ensure their recording obligations are realistic and to check the definitions for terms such as “album” (which can range anywhere from about 10-16 songs—that’s a wide range)!

Because there are so many variables in recording agreements, it is very important for both the Artist and record label to clearly outline the obligations of the parties and to each have an experienced entertainment attorney review the terms before signing.