Some of the music industry's deals include:
♪ Master Buyout Deal –This deal is ideal for music labels. In short, the label owns the final completed project, which is called the Master and retains the copyright ownership. The company hires a musician for an agreed upon set fee for providing a contribution to the musical work. The agreement includes buyout options such as the paid artists performing and/or publishing rights plus states the company’s copyright ownership to the track as well. It is likely that the company will offer the artist a royalty on the sales.
There are two types of buyout deals. Most times the artist that is offered this type of deal is signed to the label and work exclusively with the label. As in, Whitney Houston did not own 'I Will Always Love You', Dolly Parton and SONY Music do, but the late great Nippy receives a percentage of the sales of the song. Moreover, she worked exclusively with Columbia. Yet, the buyout can also be a 'One-off' deal. For example, a songwriter might get paid to write a theme song for a production company. The writer is paid for his service and the show owner owns all the rights to the musical work and can exploit the song freely. In a One-off deal, the hired artist is not exclusive to the label.
♪ Master Licensing Deal - TV and Film companies use this agreement often. The artist owns a song and gives a range of permissions to a company to exploit a musical work for an agreed upon fee. The permissions can include a rate per usage fee to terms on which mediums the song can be used in. After the term date expires the artist retains all the rights again.
♪ Pressing & Distribution Deal - The owner of a musical work with contract with a distributor to manufacture and/or distribute such work. The distributor is mainly providing a warehouse for the merchandise, while some distributors use their connections with retailers and e-commerce site to market the merchandise. This is a non-exclusive deal and both parties are typically free to work with third parties.
♪ Joint Venture Deal - This is likely the most used agreement for upcoming artist. An artist pays a producer a certain fee for beats and studio time plus all the outstanding costs. The producer normally has access to a studio and owns the tracks until the producer is reimbursed for the tracks. The goal of this deal is to get a recording deal for the artist and/or producer. Who owns the copyright and the split sheet percentages are set between the artist and the producer. Depending on the terms of the agreement the artist may or may not be exclusive to that producer.
♪ Work For Hire Deal - An entity is composing a musical work and commissions musicians (and anyone contributing to the track really, even the random person in the studio who changed ONE word) to make the composition. The commissioner of the song typically retains the copyrights and may give an artist a portion of performing rights or just retain all the rights to the song. Those hired, from the guitarist to the engineer, are paid for their services rendered and have no ownership in the song. This deal is important for song producer of a song because it is possible that contributors to the track may claim the idea and ownership of the record. Moreover, this is a nonexclusive deal and the musicians can work freely.
♪ 360 Deal – This is the record companies new favorite standard. The company takes a percentage of an artist record, touring, merchandise and all of artist total sales. In exchange for giving a portion of these sales, the label will promote, market and cross market the artist brand on a larger scale than if the artist worked independently.
Now that you are aware of these different types of deal, be cognizant of the type of agreement that you are negotiating and signing. Additionally, you do not have to take the first deal offered. Be sure to negotiate your terms. Moreover, know what you are talking about and what you want to gain out of the agreement. The music industry preys on new artists ignorance, it's a business, a ruthless one at that, the labels goal is to make money off of artist and their fans, so it is in the artist best interest to understand business of the music business.
#TipOfTheDay When in contract negotiations READ EVERY LINE YOURSELF. Trust no one to do this for you. NO ONE!
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