In today's rapidly changing music business, major labels are hesitant to sign new, unproven acts to their rosters. However, do not be disheartened; a major label deal is only one avenue to obtain mass exposure for a musical artist. This article will explain some alternatives to signing a recording contract with a major label.
Independent Labels: These labels tend to specialize in a particular style of music and obviously have smaller rosters. This can work to the artist's benefit because the act should receive more attention. Also, an independent will usually have some form of distribution in place, which is necessary to put records in stores. Many independents have become successful subsidiaries of major labels, which has provided them with major label distribution.
Distribution Deals: Here, the artist delivers to a record company an agreed amount of completed product (e.g., compact discs). Then, the label will distribute the product to stores. Sometimes, the label will also market and promote the product. Otherwise, this duty is left to the act. For its services, the label will collect a percentage of the selling price of the record. Digital distribution these days is normally part of any such deal.
[part 2 next week]
Ben McLane Esq
benmclane.com
Tuesday, January 18, 2011
Monday, January 10, 2011
Music Business/Law Tips - "How Distributors Pay" (Part 2)
The artist will only be paid the remaining 75% of the monies for records actually sold and paid for in/at the store. Although it is a bit complicated, a distributor normally has an arrangement with a store whereby the store can "return" any record it orders for a refund or credit from the distributor if it cannot sell the record over a certain period of time. Since there is no way for a distributor to know how many records sold to a store will ultimately be sold to customers (and hence not returned), the distributor will hold back a "reserve" of the sales monies it was paid by the store for a period of time to see if there are returns (which are common). This is how a distributor protects itself so it does not overpay the artist. To combat this, the artist needs to provide in the distribution agreement that there is a return limit. (The average is 25% for an album and 50% for a single.) Also, the artist needs to provide that the reserve can only be held back for a limited time; the shorter, the better. Note that there are/should be no reserves hold back against digital sales.
Finally, once a distributor is paid by the store for the record, the distributor has a duty (after its fee is deducted and reserves are accounted for) to pay the artist his or her share. Generally, the distributor will pay the artist anywhere from between 30 to 90 days after it is paid by the store. Obviously, the sooner the better.
A distributor is a necessary cog in the record selling wheel if the goal is to maximize record sales. Therefore, an artist should seek out a reputable distributor for its product.
Ben McLane Esq
benmclane.com
Finally, once a distributor is paid by the store for the record, the distributor has a duty (after its fee is deducted and reserves are accounted for) to pay the artist his or her share. Generally, the distributor will pay the artist anywhere from between 30 to 90 days after it is paid by the store. Obviously, the sooner the better.
A distributor is a necessary cog in the record selling wheel if the goal is to maximize record sales. Therefore, an artist should seek out a reputable distributor for its product.
Ben McLane Esq
benmclane.com
Monday, January 3, 2011
Music Business/Law Tips - "How Distributors Pay" (Part 1)
For an artist to increase his or her chances of selling records, a record distributor should be utilized. This article will attempt to simplify how the artist gets paid by the distributor.
The artist/distributor relationship at its most basic is as follows: (1) the artist records a record; (2) once the record is manufactured, a distributor will sell/ship the record to a store (brick and mortar or e-commerce); (3) the store will, in turn, sell the record to a record buyer. Hence, the distributor's main job is to sell. Ancillary to the function of selling, the distributor will also warehouse the record (if CD), ship the record, collect the money from the store, and pay the artist. Occasionally, a distributor will also promote and advertise an artist, but that is the exception.
Once the distributor receives an order from a store for a physical record, it will sell the record to the store at a wholesale price (far less than the retail price), but for e-commerce the record is basically in the "cloud" waiting to be downloaded/sold.
From the wholesale price it is paid by the store, the distributor will then deduct its fee, which is generally about 25% of the wholesale price.
[part 2 next week]
Ben McLane Esq
benmclane.com
The artist/distributor relationship at its most basic is as follows: (1) the artist records a record; (2) once the record is manufactured, a distributor will sell/ship the record to a store (brick and mortar or e-commerce); (3) the store will, in turn, sell the record to a record buyer. Hence, the distributor's main job is to sell. Ancillary to the function of selling, the distributor will also warehouse the record (if CD), ship the record, collect the money from the store, and pay the artist. Occasionally, a distributor will also promote and advertise an artist, but that is the exception.
Once the distributor receives an order from a store for a physical record, it will sell the record to the store at a wholesale price (far less than the retail price), but for e-commerce the record is basically in the "cloud" waiting to be downloaded/sold.
From the wholesale price it is paid by the store, the distributor will then deduct its fee, which is generally about 25% of the wholesale price.
[part 2 next week]
Ben McLane Esq
benmclane.com
Tuesday, December 28, 2010
Music Business/Law Tips - "Band Partnership" (Part 2)
Fifth, profit splits are very important. In most cases an equal percentage of the net profits (i.e., after expenses) as well an equal division of any losses is the most equitable approach. The splits can be different, however, if certain members contribute more than others (such as songwriting, etc.).
Sixth, leaving member issues need to be anticipated. A way of handling this would be to allow a leaving member to receive the same percentage for activities he or she participated in before departing, but no percentage for any future activities of the group.
Seventh, voting is also crucial to any partnership agreement. It is probably best to provide that any band decisions - such as hiring or firing a new member, buying a piece of equipment, etc. - be approved by a majority vote. If there is a deadlock situation, this can be overcome by a third party vote (such as a manager) or by a coin flip.
Finally, every member of the group would need to sign and date the agreement.
As explained above, this is merely a guideline for some provisions that should be in a band partnership agreement. Obviously, each group situation is different and may require additional - and perhaps more complicated - terms. Although a partnership agreement might seem unnecessary when everyone is friendly and there is no money being made, if the band considers it to be like an insurance policy to prevent possible future disagreements, it can certainly make any transition in the group happen much smoother and without the threat of a lawsuit.
Ben McLane Esq
benmclane.com
Sixth, leaving member issues need to be anticipated. A way of handling this would be to allow a leaving member to receive the same percentage for activities he or she participated in before departing, but no percentage for any future activities of the group.
Seventh, voting is also crucial to any partnership agreement. It is probably best to provide that any band decisions - such as hiring or firing a new member, buying a piece of equipment, etc. - be approved by a majority vote. If there is a deadlock situation, this can be overcome by a third party vote (such as a manager) or by a coin flip.
Finally, every member of the group would need to sign and date the agreement.
As explained above, this is merely a guideline for some provisions that should be in a band partnership agreement. Obviously, each group situation is different and may require additional - and perhaps more complicated - terms. Although a partnership agreement might seem unnecessary when everyone is friendly and there is no money being made, if the band considers it to be like an insurance policy to prevent possible future disagreements, it can certainly make any transition in the group happen much smoother and without the threat of a lawsuit.
Ben McLane Esq
benmclane.com
Monday, December 20, 2010
Music Business/Law Tips - "Band Partnership" (Part 1)
When a band forms, the usual intention is to become a successful recording and/or touring act and to make a profit. To accomplish this collective goal, the individual members contribute their time, talents and money. In essence, there is an implied partnership agreement between the band members. When most people go into business together, there is an official written partnership agreement. However, the majority of bands - including many who are best selling acts - have never formalized their relationship. Often this can lead to expensive litigation when a band breaks up or a member leaves because there exists a question as to how profits are to be split, or who actually owns the group name. This being the case, bands should be encouraged to enter into a simple partnership agreement early on when everyone is getting along. This article will briefly explain the contents of a basic partnership agreement.
First, there needs to be a name for the partnership. Generally, this will be the name of the band.
Second, there needs to be an official location selected as the place of business. A band member's address will do.
Third, the complete name and address of each partner must be specified.
Fourth, ownership of the group name must be discussed. Normally, the group as a unit owns the name and a majority of the members performing together can use the name. The common problem which arises is when a member leaves the band and feels that he or she has the right to perform under that name. A situation such as this needs to be addressed in the agreement.
[part 2 next week]
Ben McLane Esq
benmclane.com
First, there needs to be a name for the partnership. Generally, this will be the name of the band.
Second, there needs to be an official location selected as the place of business. A band member's address will do.
Third, the complete name and address of each partner must be specified.
Fourth, ownership of the group name must be discussed. Normally, the group as a unit owns the name and a majority of the members performing together can use the name. The common problem which arises is when a member leaves the band and feels that he or she has the right to perform under that name. A situation such as this needs to be addressed in the agreement.
[part 2 next week]
Ben McLane Esq
benmclane.com
Monday, December 13, 2010
Music Business/Law Tips - "Gig Contract" (Part 2)
Sound/Lights - Make sure the agreement specifies who provides/pays for the sound system (PA) and the sound operator, as well as when/if there will be a sound check. Also, specify who provides/pays for the lights and light operator.
Insurance - Although this is often overlooked, it is important that the club have a liability insurance policy in place which covers the artist's performance so that if some injury occurs in relation to the show on the premises of the club, the artist is not liable.
Cancellation - From the artist's perspective, if the club cancels, it should pay the artist a specified amount of damages (preferably the guarantee).
There are some other points that can be covered such as promotion/advertising commitments of the club, allowing the artist to sell merchandise at the club, etc. Above all, make sure the club signs and dates the agreement.
By entering into the above agreement, the artist will find that there are less hassles because there is certainty as to what is to take place and how the artist gets paid. Although there is always the possibility that a club might renege, at the very least, the agreement offers some form of legal protection.
Ben McLane Esq
benmclane.com
Insurance - Although this is often overlooked, it is important that the club have a liability insurance policy in place which covers the artist's performance so that if some injury occurs in relation to the show on the premises of the club, the artist is not liable.
Cancellation - From the artist's perspective, if the club cancels, it should pay the artist a specified amount of damages (preferably the guarantee).
There are some other points that can be covered such as promotion/advertising commitments of the club, allowing the artist to sell merchandise at the club, etc. Above all, make sure the club signs and dates the agreement.
By entering into the above agreement, the artist will find that there are less hassles because there is certainty as to what is to take place and how the artist gets paid. Although there is always the possibility that a club might renege, at the very least, the agreement offers some form of legal protection.
Ben McLane Esq
benmclane.com
Monday, December 6, 2010
Music Business/Law Tips - "Gig Contract" (Part 1)
For musical artists that perform in clubs, especially artists that intend to tour, the best form of protection is a "performance agreement" ("agreement") between the artist and the club. It is not always possible to get a club to sign an agreement. However, it is worth requesting. Having your own ready made agreement to present to the club will ensure some comfort that there is proper payment, etc. Such an agreement is imperative if the musician is traveling out of town for the gig.
A performance agreement should contain the following provisions:
- Place Of Show
- Date/Time And Length Of Show
- Wages - It is best to get a "guaranteed" fee agreed to in advance. This is generally paid 1/2 at some time prior to the show and and 1/2 at the gig. Sometimes there is a guarantee, plus a percentage (or else just a percentage alone). It is important to specify what the percentage is based on and how it is calculated. Is it a percentage of ticket sales? Is it a percentage of the door? Is it a percentage of the bar? Is it based on gross or net (after expenses) receipts? If the deal with the club is for a percentage of the door, put a friend at the door with a clicker counting people coming in. Stipulate in the agreement that there are no free entries for anyone (unless they are part of the music industry) if they are not on the guest list.
[part 2 next week]
Ben McLane Esq
benmclane.com
A performance agreement should contain the following provisions:
- Place Of Show
- Date/Time And Length Of Show
- Wages - It is best to get a "guaranteed" fee agreed to in advance. This is generally paid 1/2 at some time prior to the show and and 1/2 at the gig. Sometimes there is a guarantee, plus a percentage (or else just a percentage alone). It is important to specify what the percentage is based on and how it is calculated. Is it a percentage of ticket sales? Is it a percentage of the door? Is it a percentage of the bar? Is it based on gross or net (after expenses) receipts? If the deal with the club is for a percentage of the door, put a friend at the door with a clicker counting people coming in. Stipulate in the agreement that there are no free entries for anyone (unless they are part of the music industry) if they are not on the guest list.
[part 2 next week]
Ben McLane Esq
benmclane.com
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