Performance of Contract
Basic terms
- A performance agreement establishes the date and time of the gig, the number of sets and their length, the payment, time for load-in and sound check, and of course, the most important of all subjects of negotiation, the size of the artist's guest list. A performance agreement may be an oral agreement or a simple one page written agreement. If a musician or a venue has more detailed requirements, for example, security, liability and hospitality issues, those are usually addressed in the document known as a rider, that is attached to the basic agreement. Performance agreements can provide for payment to artist in various ways. For example, a percentage of the gig, or a flat fee with no percentage, or a guaranteed fee or percentage of the gig, whichever is higher, or a guaranteed fee plus a percentage of revenues above the guarantee. In some cases, part of the fee is paid ahead of time. In which case, the timing and amount of payment should be included in the performance agreement. That way, for example, if the advance is not paid, the artist may have the basis to end the agreement. A performance agreement may also set forth how merchandise sales will be divided. Venues often snag a percentage of an artist's gross merchandise sales, usually between 15 and 40%. Often the venue, not the artist manages the merchandise sales. In that case, the artist delivers the merchandise, the venue signs a receipt indicating the count and at the end of the night, the artist inventories the remaining merchandise and is paid for the number of items sold or missing. Obviously, it's in the artist's best interest to keep as much of the merchandising revenue as possible. Aside from ticket sales, merchandise sales are the most lucrative aspect of live performing, bringing in an average of five dollars per concert goer. When the term hospitality is used in a performance agreement rider, it refers to food, drinks and other items provided to the artist by the venue. A rider may also include a clean and safe dressing room provision that will set standards for hygiene, privacy or safety. For example, it may require lockable dressing rooms. Some artists also attach a separate sound reinforcement rider to the performance agreement, that includes all the PA and mixer details, guaranteeing that the venue's sound system meets the artist's requirements. For some artists, the choice of introductory pre-show music is also important. If that's the case, the performance agreement rider can establish what gets played and who supplies the music. Next, I'll discuss liability and safety issues in performance contracts.
Liability and safety
- There's always some risk at a live performance, after all, a crowd of strangers, some of them intoxicated, has gathered in a dark, noisy environment. For that reason, performance agreement riders sometimes include measures to secure the concert area. For example, a rider may set forth a specific number of security persons working the show and even where they should be stationed. A performance agreement may also reflect attempts to shift any potential liability for injuries or damages from the artist to the venue or vice versa. Often it's in an artist's best interest to include a rider requiring that the venue provide certain insurance coverage. That is, the venue pays an insurance company and if someone is injured, the insurance company pays for the damage. Most venues have adequate insurance, but even if a club owner verbally assures an artist of insurance, it's best to get it in writing. That way if a problem occurs and the venue doesn't have insurance, at least the artist has a contractual basis to go after the venue. Even though venues carry insurance, some venues still require the artist to post a bond, or to assume all liability for damages if, for example, someone is hurt during the show. There may also be a separate pyrotechnics rider requiring a bond and a guarantee that if there's a pyrotechnics display, it will comply with local laws. Provisions like these in which the artist assumes liability should trigger concern for an artist, and may require a phone call with a lawyer. It is for this reason that artists who tour frequently incorporate their touring business or carry insurance, or both. Next, I'll discuss issues related to getting paid for performances.
Getting paid
- Some artists get their shows through booking agents. A booking agent arranges the tour and negotiates payments with the venues. These agents earn a fee for each performance they book, usually receiving 10 percent of the concert grosses. In some states, booking agents are regulated, and in California, for example, they must be licensed. Normally, an artist signs an exclusive at will arrangement with the booking agent. That is, only that booking agent can book the artist, as long as that agent represents the artist, and either party can terminate any time. If an artist obtained the show through a booking agent, and the artist gets stiffed, the artist should have the agent pressure the club owner. After all, the booking agent got the gig. The American Federation of Musicians, AFM, provides a standard union performance contract, known as the Federation Contract for its members. The terms are all standardized, and if there's a problem, the musician can file a dispute with the local union representative. Keep in mind that not all clubs have relationships with the AFM, and for that reason, many clubs do not sign union contracts or pay union wages. To learn more about the AFM, check out their website, afm.org. Artists who have the clout can demand payment if the venue cancels the show. Typically, under this provision, the closer the cancellation is to the show date, the larger the payment. Popular groups ask for 50 percent if cancellation occurs four weeks or more before showtime and 100 percent if cancellation occurs two weeks or less from the show. If a musician is ripped off by a venue, the performance agreement usually provides the ammunition for a lawsuit. Unfortunately, a lawsuit is rarely practical. If the musician is ripped off out of state, the lawsuit would have to be filed in that state, not the musician's home state, and it may not be worth the time or money. If a musician is ripped off by a local venue, there is the possibility of pursuing a lawsuit, most likely in small claims court. Most musicians don't want to bother with this, because they are afraid that if they assert legal rights, they will have trouble getting gigs in the future. This can be a very real concern for artists who need exposure. If a musician does intend to pursue legal recourse, the limit for small claims cases ranges from 2500 to 10,000 dollars, depending on the state. And remember, winning the case doesn't mean the musician will get the money. Enforcing the judgment can sometimes be difficult. As I've indicated before, agreements are only as reliable as the people making them, and this especially rings true for performance agreements. For that reason, common sense is obviously required. A club that has burned an artist once is likely to do so again and can't be trusted to keep their agreements.
Rights Agreements
Musician releases
- While in the studio, an artist may hire another musician, say, a session musician to record on a track. Copyright law requires that the artist obtain written permission to use the session musician's performance on the recording. For that reason, all major labels and most independents require a written agreement. If a session musician is under an exclusive recording agreement with a record company, they may need to seek permission in order to perform on outside recordings. If so, there may be a special credit required in the album information. For example, "Lindsay Maxwell appears courtesy of NBT Records." If a session musician is a member of the American Federation of Musicians Union, then they must be paid according to union rates. The session musician will furnish the recording artist with the AFM forms for each recording session. Recordings made for a major label usually must use union musicians. A musician release typically contains an introductory section with the name of the parties, a listing of the songs in which the session musician played, the amount of the payment, if there is no payment, indicate $1.00, and the credit the musician should receive. It should also include a statement assigning copyright, such as, "In consideration of the payments 'provided in this Agreement, 'Musician assigns all rights in the performance 'to the Artist and its assigns or licensees." Next, I'll discuss artwork permissions.
Artwork permissions
- Musicians usually need artwork in connection with recordings. There are two ways that a musician obtains artwork rights: either the artwork is created especially for the recording, or the artwork already exists, and the musician gets permission to use it. When artwork is created for a recording, the graphic artist should sign a written agreement, preferably before commencing work. At the heart of the agreement is the graphic artist's assignment of copyright. A statement such as, "In consideration of the payments "provided in this Agreement, Graphic Artist, "(or Photographer), assigns all rights in the artwork "to the Musician, and its assigns or licensees." In this way, the musician obtains all rights to the artwork, and does not need to return for additional permissions, if the artwork is used on merchandise or for other purposes. Equally important is the graphic artist's promise, or warranty, that the artwork will not infringe anybody else's rights, for example, that model releases have been obtained. In addition, these artwork agreements describe the services to be performed, the payment, when the services will be completed, and what credit will be given to the graphic artist. It also may include certain rights granted back. For example, that the graphic artist can reproduce the cover as part of a portfolio. If the artwork or photography already exists, it is unlikely that the graphic artist or photographer will assign all rights. More likely, the artwork will be licensed. In this case, the musician does not obtain copyright ownership. Instead, the musician rents the rights, and a written permission agreement should spell out the specific uses. For example, as album artwork, on T-shirts, at the musician's website, et cetera. The permission agreement should also indicate whether the license is exclusive, meaning only the musician can use the artwork for the specific purposes listed, or non-exclusive, and the length of time for which the license is effective. The graphic artist should also promise or warranty that the artwork will not infringe on anybody else's rights. The same approach can be used if a musician is licensing artwork for a video, although the musician must specifically list these uses, such as for sale, display, commercial distribution, or advertising of the video. If the artwork includes a person's identifiable image, the musician may need permission, in the form of a model release. Typically, it is the photographer's, or graphic artist's responsibility, to obtain a model release, a simple agreement that allows someone to use a person's image on their artwork. If the musician is responsible for the photo, he or she should obtain the model release. Although the term "model" is used, this does not necessarily refer to professional models. The term applies to any person whose image is used. It's possible that the musician takes a photo of someone for future use. In that case, the musician would need to obtain a model release, as well. The model release describes the imagery in which the person appears, for example, "photos of model taken at Union Square in 2014". The musician usually seeks exclusive rights to use the specific image of the model for any purpose related to the sale of music, such as recordings, or merchandise. If the model does not want to give up merchandise rights, or if the model wants to be paid an additional fee for merchandise rights, the recording artist will need to negotiate that, and provide details in the agreement.
Using samples
- Sampling is the process of copying a piece of recorded music usually on a computer or sampler and then reproducing it on a recording. When an artist samples another recording, it is a violation of copyright law if it's done without the permission of the owner of the recording, usually the record company and the owner of the song, usually, the music publisher. There are some exceptions to this rule, for example, if the sample is pre-cleared, that is the sample was licensed to you by a sample loop company. Sampling clearance is expensive and, for non-major label artists, difficult to accomplish. Some artists wonder if it is worth pursuing. After all, the copyright owner might never learn of the borrowed sample or might not be able to identify it in the mix or might not even bother pursuing a lawsuit if the sample is discovered. Why bother alerting the owner by seeking clearance? That's a difficult call, but when making the decision a musician should consider that the failure to disclose samples and some recording agreements might be a breach of the contract warranty leading to termination. Second, as a general rule, the more successful the recording the more likely it is that the sample will be discovered. However, as a practical matter using uncleared samples may make sense for some artists. For example, a musician who sells less than 1,000 downloads of a recording. In that case, it's unlikely that the owner of the source recording will ever learn of the use of samples and if they do learn of it, they may not be inclined to pursue recourse against the recording artist unless they sense there are deep pockets. Legal slang for people with substantial assets. Musicians who are concerned about sample clearance will need to enter into one or maybe two agreements for permission. Before proceeding, however, the musician may wish to seek the advice or assitance of a clearance expert. Type sample clearance service into your search engine. The cost for clearance are negotiable. There are no standard fees. Unless one party owns rights to both the song and the recording, the artist will need to negotiate and pay a music publisher and a record label. These companies will want in advance of several thousand dollars and a percentage of the song income anywhere between 15 and 50 percent. Alternatively, these companies may also want roll-over payments when a certain number of copies have been sold. These agreements are often complex and require the assistance of an attorney or sample clearance expert as they detail approved usages, income splits, territory and complex copyright issues. In summary, sample clearance agreements are not a DIY activity and will require expert advice.
Other Agreements
Band partnership
- A band partnership agreement is used by a band or group of musicians, to help them set standards for hiring or firing members, dividing up revenue and establishing who owns group property. Only bands operating as a partnership should use this agreement. It's not used if one member is hiring the other members of the group and treating them like contractors or employees, known as a sole proprietorship, or if the group is a corporation or an LLC. If the band doesn't fit any of these categories, then by default, the state government and the IRS will consider the group as a partnership. In the absence of an agreement, for example, under state laws, the group's profit must be shared equally and each member has an equal voice in running the business. If that's not the arrangement wanted by the group, then a partnership agreement is needed. A partnership agreement is also needed if the members want to establish ownership of songs, ownership of the group's name and other trademarks and to set standards for resolving disputes. Many groups get along fine without a written partnership agreement, especially hobby bands, for example, a band that plays only weekends at a local club. Generally, any band with the buzz or pending record deal, should consider writing out a partnership agreement before an unforeseen conflict swoops in and causes chaos. The members should agree on the following. Who owns the group name? That is, who can or can't use it if the group breaks up. Some bands agree that certain combinations of founding members can use the name or alternatively, that nobody can use the name. How will the money be divided? Typically most partnerships split revenue equally, but certain types of income may be divided on a different basis. For example, a member who supplies the van and drives, may be entitled to an extra cut of concert revenue. Songwriting revenue may become a sore spot. Who are the songwriters, and can they keep all the song money or should the non-songwriting members receive some of it? How does the group decide things? Is a majority vote sufficient for typical business activities? Is a unanimous vote needed for admitting new members? Does someone have tiebreaker voting power? How are disputes resolved? If members have a falling out, can a mediating person be brought in? What about arbitration? Mediation and arbitration are discussed in more detail in the contract basics chapter. For more details on band partnership agreements, my book, Music Law, provides examples of written partnership agreements with explanations. Next, I'll talk about music publishing contracts.
Publishing
- Music publishing contracts are made between music publishers and songwriters. Typically, the songwriter transfers the song copyright or a co-ownership interest to the music publisher, who in return agrees to promote the songs and administer the collection of payments from companies using the songs. The publisher keeps a percentage of the total song income, typically 25%. Some music publishers enter into arrangements where they don't own the song copyright but just administer it, known as administration deals, and in which the administrator receives a fee of 10 to 20%. At the heart of a publishing contract is the song copyright, one of two types of copyrights associated with music. The other is the sound recording copyright, which is acquired by a record label under a recording agreement. The owner of the song copyright is entitled to get paid whenever copies are made of the song, whenever it is played on the radio, downloaded from the internet, covered by another musician, or used in an advertisement, movie, or television show. Most music business experts agree that song ownership is the most lucrative aspect of the music industry. There are obvious benefits to signing with a large established publisher. A songwriter may get an advance payment, usually more than $50,000, and the promise of promotion. For example, that the publisher will pitch the songs to recording artists, record companies, and television producers. On the other hand, a letterhead publisher with no resources that is a publisher in name only that does not market or promote songs may not offer much in the way of value. So before signing away potentially valuable songs, the songwriter must evaluate the track record and history of the publisher and hopefully speak with another songwriter signed to the company to determine if there have been royalty payment problems. Keep in mind it's not that difficult for songwriters to create a publishing company and handle much of the collection of payments themselves, at least within the United States. However, non-US collection and video hosting sites may pose challenges for some homegrown publishers. The value of a publishing company like a record company is in its ability to promote the music. Ideally, the song publishing agreement should be for a limited group of songs. For example, only the songs on a specific album or albums. A songwriter should be wary of deals that lock in unwritten songs unless there is some form of ongoing payment. For example, an exclusive arrangement for all songs written over a two year period might make sense if there are ongoing payments during that period so the songwriter receives the equivalent of a paycheck. Of course, these are advances that will be deducted from future royalties. Ideally, the songwriter should retain at least 3/4 of all of the songwriting income, and as always, the deductions and when they are made should be spelled out in the agreement. Finally, it's always in the songwriter's best interest to arrange for some system for song reversion after a certain number of years, after which the songwriter gets back all rights to the song. Because there are many variations in publishing agreements and because the music publishing system is complicated, it's always in the songwriter's best interest to have an attorney review a music publishing agreement before signing away songs. Next, I'll discuss record shopping agreements.
Record shopping
- A shopping agreement is a form of matchmaking, in which someone acts as an artist's representative and solicits or shops the artist's recordings to a music label. A shopper is an industry insider, such as a producer, an attorney, or an independent promotion person who is paid a percentage of the artist's income from any resulting deal. These payments to the shopper may continue for the life of the deal, or for a limited period of time, depending on the arrangement. Shoppers traditionally receive up to ten percent of the record deal. Sometimes a musician can make deductions before the percentage is calculated. For example, if the label is advancing 50,000 dollars to the band to make a video, the band should try to exclude such payments from the shopper's income. In this way, deductions and commissions apply to shoppers in the same way as to managers. For more on this subject, check out the video on "Management Contract Deductions". By the way, there is usually no need for a shopping agreement if a musician has a manager, because the manager's agreement typically states that only the manager can shop the artist. Some payments to shoppers are "capped", that is there is a limit on the total amount paid to the shopper. For example, an agreement could give the shopper ten percent of the income from the record deal, up to 20,000 dollars; after that the shopper would stop getting payments. The shopper could also be limited by time. For example, payments would stop three years after an album is released. If the shopper won't agree to a "cap" or time limit, the musician should obviously seek to keep the shopper's percentage as low as possible. How much is fair is based on the musician's circumstances. For example, a shopper might accept a lower percentage for shopping a musician who already has a buzz, than from an unknown artist. The term; the period during which the shopper can solicit deals, should be as short as possible, for example six months. A musician should avoid provisions that allow a shopper to get a cut of any deal, regardless of whether the shopper solicited the company. The shopper should get paid only for "direct" solicitations, that is in which the shopper initiated contact and conducted the preliminary discussions. The shopper shouldn't get paid, if the label initiated the discussion without prompting from the shopper. And of course, the musician should have final approval over any shopped deal. Some attorneys engage in label shopping, and the musician should be aware of the possibility of a conflict of interest. For example, that an attorney who is getting a percentage of a record deal, may forgo other contract considerations, such as length of the contract or song ownership, in order to get the highest possible payments. Next I'll discuss producer agreements.
Producer agreements
- A producer is a professional who directs the recording in mixing sessions. Most producers are paid a fee for their work and receive a percentage of the income from their recording. Producer agreements typically come in three major flavors. The first type is a record company, producer agreement. In this arrangement, a record company hires a producer to produce his song or an album. Even through the record company hires the producer, the payment typically comes from the artist. That is the record company pays the producer and then later deducts that cost from the artist royalties. The royalties that are paid to the producer often, in addition to the producing fee, are also usually deducted from the artist royalty. So for example, if the artist is getting a 15 percent royalty, the artist may have to pay three percent or four percent of that to the producer. This type of production agreement usually includes a few major components, including the producer assigns copyright to the label, the producer takes on specific administrative tasks, for example hiring the studio or paying musicians, and the producer performs certain production tasks in terms of delivering acceptable master recordings. The second type of producer agreement is an artist, producer agreement. In this case, the artist not the record company hires the producer. This is a common course of action for major in any artist, who want to release music directly, or want a suitable master to shop to a record company. In this case, there may be a flat fee, say $500 per song and royalty payments. This type of agreement would include an assignment of all copyrights to the artist as well as a detailed listing of the producers obligations. Typically in this situation, the artist pays for the studio and any extra costs. The essentarl provisions of such a deal would be an assignment of all copyrights for work created preformed or produced the producer, a schedule for payment and delivery, an explanation of who does what and pays for what, and a system for resolving disputes. Payment should be fixed per track, and the artist may want to arrange to make the payment in stages, based upon delivery of the tracks. The artist may also want to include an approval process on those such provisions are tough to create and difficult to enforce. The third type of producer agreement is a spec or demo agreement between a production company and artist. In this type of agreement, a production company or producer agrees to produce a song or an album often on spec, that is, without an up-front payment. In return, the production company usually helps to shop the final product and obtains various future rights. These may include, future royalties, part ownership in songwriting, a percentage of any record company advances, or even more, such as a portion of merchandise income. Demo deals vary and are often similar to record shopping agreements. In some cases, the producer's entitled to a cut of any money received from an artist record deal, regardless of whether the demo was responsible. The demo deal may also grant publishing rights to the producer. Generally, artist have little negotiating leverage in producer demo deals. That is, the artist is usually told to take it or leave it. Since such deals are often extremely one sided, the artist should review each agreement carefully, and research the producer to determine if he or she is trustworthy and well-connected. Next, I'll discuss some basic contract principles applicable to all music agreements.
Producer agreements
- A producer is a professional who directs the recording in mixing sessions. Most producers are paid a fee for their work and receive a percentage of the income from their recording. Producer agreements typically come in three major flavors. The first type is a record company, producer agreement. In this arrangement, a record company hires a producer to produce his song or an album. Even through the record company hires the producer, the payment typically comes from the artist. That is the record company pays the producer and then later deducts that cost from the artist royalties. The royalties that are paid to the producer often, in addition to the producing fee, are also usually deducted from the artist royalty. So for example, if the artist is getting a 15 percent royalty, the artist may have to pay three percent or four percent of that to the producer. This type of production agreement usually includes a few major components, including the producer assigns copyright to the label, the producer takes on specific administrative tasks, for example hiring the studio or paying musicians, and the producer performs certain production tasks in terms of delivering acceptable master recordings. The second type of producer agreement is an artist, producer agreement. In this case, the artist not the record company hires the producer. This is a common course of action for major in any artist, who want to release music directly, or want a suitable master to shop to a record company. In this case, there may be a flat fee, say $500 per song and royalty payments. This type of agreement would include an assignment of all copyrights to the artist as well as a detailed listing of the producers obligations. Typically in this situation, the artist pays for the studio and any extra costs. The essentarl provisions of such a deal would be an assignment of all copyrights for work created preformed or produced the producer, a schedule for payment and delivery, an explanation of who does what and pays for what, and a system for resolving disputes. Payment should be fixed per track, and the artist may want to arrange to make the payment in stages, based upon delivery of the tracks. The artist may also want to include an approval process on those such provisions are tough to create and difficult to enforce. The third type of producer agreement is a spec or demo agreement between a production company and artist. In this type of agreement, a production company or producer agrees to produce a song or an album often on spec, that is, without an up-front payment. In return, the production company usually helps to shop the final product and obtains various future rights. These may include, future royalties, part ownership in songwriting, a percentage of any record company advances, or even more, such as a portion of merchandise income. Demo deals vary and are often similar to record shopping agreements. In some cases, the producer's entitled to a cut of any money received from an artist record deal, regardless of whether the demo was responsible. The demo deal may also grant publishing rights to the producer. Generally, artist have little negotiating leverage in producer demo deals. That is, the artist is usually told to take it or leave it. Since such deals are often extremely one sided, the artist should review each agreement carefully, and research the producer to determine if he or she is trustworthy and well-connected. Next, I'll discuss some basic contract principles applicable to all music agreements.
Baics of Contracts
Oral agreements and record keeping
- Should you ever use an oral agreement? Maybe. An oral agreement is the simplest, least expensive method of making a contract. It's fast, no drafting wordy documents. And it's cheap, no legal bills. But not every oral agreement will be enforced by a court. Some music contracts must be in writing. For example, an agreement to sell a copyright, known as an assignment, must be in writing. Other agreements transferring rights should be in writing as well, and in most states, a contract must be in writing if it takes longer than a year to perform, or if it's for the sale of tangible property over a certain value, typically $5,000. Equally important, common sense dictates whether you should make an oral agreement. If there is a chance that a dispute could arise, or that you may need to prove the contract's terms, then you should probably get it in writing, even if it is an informal written agreement drafted on a napkin. Remember the Chinese proverb: "Even the palest ink is better than the best memory." By the way, electronic contracts and electronic signatures are just as legal and enforceable as traditional paper contracts signed in ink. Federal legislation enacted in 2000 removed the uncertainty that previously plagued e-contracts. An electronic contract is an agreement created and signed in electronic form. In other words, no paper or other hard copies are used. For example, you write a contract on your computer and e-mail it to a booking agent, and the booking agent e-mails it back with an electronic signature indicating acceptance. Because a traditional ink signature is impossible on an electronic contract, people use several methodologies to indicate their agreement electronically, including typing the signer's name into the signature area, pasting in a scanned version of the signer's signature, clicking an "I Accept" button, or using cryptographic scrambling technology.
Boilerplate
- Most music contracts, no matter what the subject matter, include a collection of miscellaneous clauses, sometimes referred to as boilerplate. You may find them at the end of a music contract under a title such as miscellaneous, general, or standard. Here's a short summary of common boilerplate provisions. Some boilerplate, such as attorney's fees, arbitration and mediation are discussed in a separate video. Choice of law. This is a boilerplate provision that determines which state's legal rules will be applied in any disputes. Jurisdiction. In the event of a dispute, the jurisdiction clause determines where, in which state and county, the lawsuit must be filed. If there is no jurisdiction provision, the parties choose the location. Waiver. This clause lets one party excuse another for violating the agreement without giving up the right to sue for future claims regarding other similar violations. For example, if a record company is late with a payment, and the musician doesn't complain, the musician has not waived the right to complain about future late payments. Severability. A severability provision permits a court to sever, take out, an invalid provision and still keep the rest of the agreement intact. Integration. An integration clause says that the written contract represents the final agreement of the parties, and any last-minute verbal assurances or promises will not be honored, unless written into the agreement. Attachments. This provision guarantees that attachments and exhibits that are attached to the agreement are considered part of the agreement. Notice. The notice provision describes how each party must provide notices of renewal or termination. Relationships.
Attorney fees, mediation, and arbitration
- Three common provisions used in the resolution of disputes are attorney fees, mediation, and arbitration. A mutual attorney fees provision establishes that in the event of a legal dispute, the party that loses must pay the winning party's legal fees and costs. Often attorney fee provisions are one-way. For example, only the musician must pay a fee if she loses a lawsuit but if the record company loses, it doesn't have to pay attorney fees. Some states such as California have recognized the unfairness of one-way attorney fees provisions and automatically convert them into a mutual provision. If an attorney's fee clause is not included, each party bears its own legal expenses. A Mediation Provision requires that in the event of a dispute over the agreement, a neutral third person, the mediator helps the parties talk through their dispute and come up with a mutually acceptable resolution. The mediator doesn't make a decision about what to do and cannot bind the parties. The mediator is used to facilitate a resolution when the parties are willing to compromise. An Arbitration Provision prohibits the parties from filing lawsuits. Instead, the parties will use arbitration, a private trial-like proceeding in which the arbitrator decides how the disputes should be resolved. Typically, it's binding, meaning that the participants must follow the arbitrator's decision and courts will enforce it. Arbitration is usually faster, simpler, more efficient and more flexible for scheduling and filing a lawsuit. Also, it avoids some of the hostility of courtroom disputes perhaps because it's a private proceeding versus the public drama of the courtroom. But unlike a court ruling, a binding arbitration ruling can't be appealed. It can be set aside only if a party can prove that the arbitrator was bias or that the ruling violated public policy. The costs of arbitration can be significant. In some cases, they may even exceed the costs of litigation. That's because the people in the dispute pay the arbitrators and arbitration fees can run in the thousands. An attorney fee provision may also affect the costs because the losing side would have to pay attorney fees for both sides. That said, arbitration is typically cheaper than litigation and many states have Lawyers for the Arts arbitration programs that are fairly cost-effective. These organizations also supply an arbitration provision that can be inserted into an agreement. To find a state organization, look at the National Directory on the Volunteer Lawyers for the Arts website.
Five rules for all music contracts
- Here are five rules that musicians can apply to all music contracts. One, it's the people, not the paper. A contract won't protect you from a crook. This may seem obvious but I'll say it anyway. If you don't trust the other party, don't enter into a deal. Keep in mind that it's very hard to get out of a bad deal and one terrible deal can ruin a musician's career. Two, if you don't understand something in an agreement, don't sign it until you do. You may not have the bargaining power to change it, but you should have the ability to understand it. If an explanation for a provision is not covered in this course, there are plenty of online and print resources, including attorney referral services that can provide back up. Three, pay attention to what comes in and what goes out. Music, like every business, is built on margins. That is the difference between what comes in and what goes out. Don't focus only on the numbers coming in, how big the advance, how big the royalty numbers, how large the gate from the gig. Deductions and costs, which may eliminate any profits, are sometimes overlooked when negotiating. Four, get as big an advance as possible, hang on to what you can, and don't be afraid to ask for more. It usually doesn't hurt. Many people chip away at an artist ownership of songs and recordings. Try to retain as much ownership and control of copyrights as possible and if you must give up some rights, avoid giving them up to someone without any track record. Five, you can't always get what you want but, a musician who doesn't have a superior bargaining position should focus on getting one or two important changes in an agreement and accept the fact that the rest of the terms may not be ideal. For example, a musician might concentrate on issues like how long the agreement will last, or when rights will be recovered, and not dwell on less important issues such as piracy deductions or video royalties. Remember, all contract negotiations boil down to two issues, revenue and risk. So focus only on the most important ways to increase your revenue and lower your risk.
Next steps
Hopefully, you picked up some information about music contracting that you'll find helpful in your career. Remember that one of the keys to successful career is the ability to stay cool, and separate your emotions from the business issues. So try not to be disillusioned, or get too worked up when dealing with managers, record companies, club owners, or fellow musicians. Keep your eye on the music and let that be your guiding light when making business decisions. If you need more details on some of these agreements, check out my book, Music Law, or check out my blog,
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