Wednesday, November 30, 2011

Music Business/Law Tips - "Video" (Part 2)

If an artist is signed to a label, a video usually will be produced to help promote the release. A video has two aspects: sales tool (i.e., MTV) and potential product (i.e., home video sales). Although a video is mostly a promotional tool, virtually all record contracts require that the artist grant video rights to the label. For contract purposes, a video is treated like a record. Therefore, the concept of recoupment comes into play. Recoupment means that the label will have the right to recoup the costs of the video, usually from all sources of income that the artist might make. As with records, the label will usually initially pay the production costs of the video. There is a strong argument that since videos serve to promote a record, not to generate sales of the actual video, only a part of the costs of the video should be recouped from the artist's royalties. Thus, most labels only require recoupment of 50% of the label's expense for production costs.

At first glance, it would seem that a signed artist would want to demand a guarantee of a as many videos as possible in the record contract. However, the artist must keep in mind that a label will usually spend an average of $25,000+ on a video. Since half of these costs are recoupable from the artist's royalties, a promotional video might not always be the wisest choice. The key is to try and keep the budget low. An artist on a label will also be concerned with creative control. Yet, unless an artist is quite successful, the label generally controls the content and the concept of the video. Finally, it is not reasonable to expect to make a profit from a video. There are rare exceptions (Madonna and Michael Jackson come to mind), but again the reason for making a video is normally to hype a record.

In conclusion, if an artist is unsigned, in most instances a video (with the exception of an internet only YouTube low budget video) is probably not the most practical way to spend money because chances are it will not be seen on mainstream TV channels like MTV. If an artist is signed, although the label will probably insist on a video, the artist should strive to get the budget low so the artist will not owe back as much money to the label.

Ben McLane Esq

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