+
Music Industry Contracts, business and royalties Unit 39 GC 3-5
+
The Management Contract !
!
Someone else is representing you and your music, and you are paying them for the privilege. The contract will usually include:
!
Activities Covered Covered
!
Term and Territory
!
Commission, Earnings and Cashflow
+
Activities Covered !
!
!
These are the areas of your ‘artistic endeavour’ which your manager will represent you. Usually this will mean all of your music output, but if you already have a lucrative deal making music for ‘doorbells’ for example by negotiation you may be able to keep this separate. If you are an entrepreneur you may already have a business manager,, or if you dabble in acting you may have an agent. manager These will be different from your music manager.
+
Term and Territory !
!
!
!
You will need to determine how long the agreement (of him or her being your manager) will last. ‘Options’ may may be included, whereby if a contract lasts for one year,, for example, the manger may decide to continue or year extend the contract. You could include ‘performance clauses’, whereby you have the right to terminate the contract if your manager hasn’t bagged you a recording deal. ‘Territory’ refers to the countries in which your manager represents you. Most management deals are worldwide.
+
Commission, Earnings and Cashflow !
!
!
Commission for a manger is generally 20% of gross earnings (total incomes before tax). Ideally all income should go to the artist’s accountant and the manager should invoice him or her their share. However a less desirable, yet common practice, is for all the moneys to go to the manager who then later apportions them. If this is the case the contract should stipulate that accounts are given to the artist regularly.
+
The Publishing Contract !
!
!
!
!
Music publishing is the area of the music business which deals with songs and songwriting, distinct disti nct from roles of the performer. Every time your song is used somewhere you are owed a royalty. royalty. ‘Mechanical’ rights refer to the royalty you are owed from the sale of recordings. If your song is played on Radio One, for example, a fee will be payable to you from the PRS (Performing Rights Society). Good publishers will constantly be seeking where your material could be used (adverts, TV/Film etc). Your contract should include a ‘right of audit’ where you can examine the publishers books.
+
Assignment of Copyright, Advances and Royalties !
!
!
!
This determines the period over which you ‘hand over’ your songs to the publisher. The contract could include a ‘performance related’ hurdle, whereby if the publisher has made appropriate usage of your songs within a certain time the rights may revert back to you. Signing with a publisher means less paperwork and chasing up of royalties. They also pay non-returnable advances, which are recouped from songwriting royalties but are written off if you don’t earn enough. You might expect to receive around 70% of your material’s gross income. The publisher will keep the rest having collected your royalties from the dozens of collection societies around the world.
+
The Recording Contract !
!
!
Record companies put forth money to produce, release, and promote an album. Recording time, manufacturing, packaging, photos, distribution, marketing, and music videos are just some of the areas where the label must spend money on an act it has signed. It is estimated that under 5% of signed artists ever return the initial investment. Contracts usually demand exclusivity, If they have stumped up the cash for the recordings, they will also be regarded as the legal owner of the recordings.
+
Royalties from Record Companies !
!
!
!
!
The artist’s royalty percentage is usually 10% to 14% of the retail selling price. The record company may take ‘packaging deductions’ from an artist’s sale royalties, royalties, this can be as much as 15% for vinyl and 25% for CDs. The artist may also pay for up-to 50% for the cost of promotional videos. Again Again this money comes form the royalties from sales. The producers are also paid out of your share of the royalties. Record companies can exercise an option to ‘drop’ an artist between releases. If this happens all debts set out in the contract as ‘non-returnable’ are written off.
+
PRS for Music – Performing Rights Society !
!
!
!
This company licenses and collects royalties for songwriters, composers and music publishers whenever their work is broadcast, performed in public, or used online. Originally set up for collecting fees from used sheet music. Royalty rates vary dependant on where the music is played (for example, a national radio station will have a higher rate than a local radio station). Members are whole or part copyright holders of the music (usually the songwriters or music publishers) and are paid in lump sums each quarter.
+
PPL – Phonographic Performance Limited !
!
!
PPL was founded to collect money for performers and record companies when their music is played publicly. In 1934 the record companies EMI and Decca took a coffee shop owner to court for having recorded music playing. The judge agreed that permission and licensing was required. Any performer (from a member of a choir choir to the lead guitarist) guitarist) can join PPL and may be eligible for royalties. PPL collects collects money for the use of recorded music for its members, whereas PRS collects money for the use of lyrics and songwriting for its members. Its very common to musicians to be members of both.
+
Quick Quiz 1-4 !
1. Name 2 things that should be covered in a ‘managing contract’.
!
2. How much commission would a manager generally take?
!
3. What is meant by ‘mechanical rights’?
!
4. Name 3 things a record company would spend money on to promote a newly signed artist?
+
Quick Quiz 5-8 !
5. What is the estimated % of artists who will return the initial investment given to them by record companies?
!
6. How do music producers get paid?
!
7. What does PRS do?
!
8. When and why did PPL start?
