Three Unmistakable Indicators You Have a Bad Record Deal Contract

Three Unmistakable Indicators You Have a Bad Record Deal Contract

Your Record Deal Contract Could Be a DUD – Here Are Three Indicators to Look For

I don’t think I’d heard these three unmistakable bad record deal contract clauses before but I posed the question to Mike Mowery! If your record deal contract has any of these three issues – RUN! Or renegotiate a much, much better deal.

Also, quick reminder, GET AN EXPERIENCED ENTERTAINMENT LAWYER before signing any contract.

Three tell-tale signs the record deal contract you just got is BAD:

“The terms of the record deal far exceeds how long you’ve been in a band”

Your recording contract will include both a time and release term. You’ll be expected to produce x number of albums in x number of years before the contract has expired.
The above point from Mike makes total sense. If you have only been playing with the other members for a few months, or a year, and yet your recording contract is for for five years, ten years, or even more, can you really be sure THIS is the band you want to be stuck with?

Is the label?!?

Sure, the excitement and comradarie is there now… but at some point those little problems will become bigger and that commitment-level during “salad days” becomes lower when times get tough.

When you’re a “new” band, a record label should be amenable to a shorter term contract. If not, it’s either a bad deal or you need someone to negotiate on your behalf. The argument from the label is they are going to invest in your growth and need to benefit from that for years to come. That’s fine, but benefit from it during the next contract when everyone knows better what working together will be like.

“There are no increases in advances or royalties based on performance in the record deal”

When you are struggling and the label’s investment isn’t paying off like they’d hoped it would, it makes a certain amount of sense they want to keep more and invest less in your career. It sucks, but it makes sense.

But it ALSO makes sense when you are succeeding, they need to keep you happy and incentivized to continue to succeed. At that point, you MUST get more of what you are generating financially from your music in the form of royalties. And your success should also both inspire and necessitate greater investment in future releases from the label in the form of greater advances.

As you begin to succeed as a band you should be earning more both because you are generating more, but also earning a greater percentage of what you generate. Make sure it’s in the contract!

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“They want 360 provisions but provide no additional direct help to increase those revenue streams”

A 360 deal is one where the label makes a piece of all income you earn – merchandise, performance revenue, licensing, publishing – everything. These have become fairly standard for major labels and independent labels with a significant presence.

And artists HATE them.

Instead of being able to keep most of what you earn on the road, for example, or if another band covers one of your songs and it gets put in a movie and you getting most the publishing from that, now a chunk of that money goes to the record label. AND THEY DIDN’T DO ANYTHING TO EARN IT.

That’s where the rub is. If the label is demanding a piece of all revenue you and your music generates they need to document IN THE CONTRACT what they will be doing to earn that piece. In truth, a 360 deal can be a great one for the artist. But the label has to be contributing to the creation of that revenue for it to be worth giving them a piece of that revenue.

I’m not much of a reader. I prefer to skim.
So if you’ve skipped down to this part without reading the above, you and me are alike. But you can’t skim a contract. Look out for these three tell-tale signs you have a bad contract on your hands while you’re skimming and it will save you a ton of grief – AND MONEY – in the future.

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