EVALUATION OF ARTISTE SIGN ON CONTRACT: A DETAILED GUIDE ON MUSIC CONTRACT CLAUSES

EVALUATION OF ARTISTE SIGN ON CONTRACT: A DETAILED GUIDE ON MUSIC CONTRACT CLAUSES

A music contract entails/ outlines the essential rudiments, terms and clauses that guides and regulates the relationship between the contracting parties; usually between the artiste and the record label, producer or song-writers. It presupposes the express terms of partnerships, consisting of rights, royalties and the distinctive obligations of the parties. 

Musical works, is undeniably one of the works protected under the copyright law from unlawful reproduction or exploitation by anybody other than the author without express licensing or assignment. On one hand, copyright grants exclusive rights to the authors and creators whereas, on the other hand it sets out some limitations on the rights of the authors and creators. Thereby, creating a loophole for lawful use of works by persons other than the author's. This research work seeks to elucidate on the indelible contract clauses that are often evident in music contract, the rights and obligations of the contracting parties in relation to the musical contract, and the effect of principle of fair dealing.

Also Read: The Concept of Fair Dealing Under Copyright Act 2022

Introduction 

A music contract is a legal agreement between a musician and a record label or music company. It outlines the terms of the partnership, including rights, royalties, and obligations. However, the issue of conflicts and disagreements between artistes and record labels has become rampant all over the world, specially, in this study, Nigeria. There is therefore, need for artistes to familiarise themselves with the various elements that define these contracts, and watch out for, or consider certain clauses that can determine the protection of their rights, or not, before entering into music record contracts.

The Nigerian music industry is the second largest in Africa, with a thriving music scene that is becoming increasingly popular worldwide, The industry generates over $2 billion in revenue per year, making it one of the largest music industries in the world. it has experienced such significant growth, particularly in view of international collaborations and recognition. However, this cannot be boasted of in artistes’ knowledge of record contracts. The growth of the industry has led to an increase in disputes, specifically amongst artistes in the music industry, who have resorted to social media to air their grievances over the failed contracts between themselves and their record labels or distribution platforms. While record labels meticulously insert contractual clauses that will ensure that their investment in the artiste yields maximum profit, the artistes are usually too eager to hit the limelight and therefore end up signing contracts without understanding the contract document or negotiating the terms to their advantage. It is thus, very vital, that artistes are well aware of certain clauses that they must look out for, before signing a Music record contract. This paper lays out six (6) essential clauses that artistes should consider when reading and negotiating record contracts.

What a Music Contract Is

It is a binding agreement between an artiste and another business in the music industry (such as a record label or publishing company), which grants the business the rights to commercialise their music career. Music industry contracts include management agreements, recording agreements, master licence agreements, collaboration agreements, publishing agreements, booking agent agreements, 360 agreements, producer agreements, band partnerships and more. music contracts can be defined as legally binding agreements, enabling record companies to exploit or commercialise an artist's performance in a sound recording, in return for royalty payments.

Also Read: The Concept of Ownership of Land Under Common Law 

ESSENTIAL CLAUSES THAT SHOULD BE CONSIDERED BY ARTISTES BEFORE SIGNING MUSIC CONTRACTS

1. Term/Contract Period

This is the duration on which the music contract is to exist. There is no restricted industrial period for which the contract is to subsist, hence, the choice of duration varies depending on the parties and their divergent interests. The term clause disentitled either of the parties from backing out from the contract until after the expiration of the years stipulated and/or delivery of the specified tracks.

To establish how long the partnership should remain, Parties will typically create projections based on a variety of elements, including the talent's age, appeal, genre, and persona and the prospective monetary returns and values from such contractual relationship.

 It is thereby considered a prerequisite that term clauses of a music contract should be expressly written with clarity and precision so as to strike a balance between the conflicting interests and avoid unjustly favouring one party over the other by enslaving the Talent or elevating the Label. 

A modern approach for ensuring extensive relationship between the contracting parties is the inclusion of option term that enables the recording label to lengthen the record deal if both the label and the artist agree to it. However, an artiste who is not very confident about the ability of the record label to take his career far is advised to negotiate a shorter term, fewer tracks and avoid option periods.

 Common terms for different types of music agreements are:

– Booking agent agreements: 1-3 years;

– Management agreements: 3-5 years;

– Licence agreements: 5-15 years; and

– Recording agreements: as long as it takes you to make and release 2-4 albums.

Also Read: Difference Between Charitable Trusts and Express Private Trust

2. Advancements and Recoupment 

The prospect of an upfront monetary payout, known as a "advance," is typically what draws artists to signing a record contract. It is a lump sum of money that is paid out to an artist when they sign a contract with a record label, music publisher, or, less often, with an event promoter or merchandising company. Record companies may give artists advances to make sure they are financially stable and able to produce "commercially" acceptable songs. However, an advance is not a gift but rather an advance payment of future royalties. It is crucial that artists understand that, unless anything different is agreed upon, the record label will recover the advance payment from sales of the artists' songs. This is achieved by a procedure known as "recoupment". 

Recoupment is the practice of claiming an advance provided to an artist back from that artist personally.As a result, it is always advised that the artist is aware of the advances and expenses that are recoverable under a record deal and how that can affect the payment of his royalties. In the same vein, lawyers representing Artistes should object to Recoupment Clauses which make an advance repayable as a personal debt, as this will definitely place the Artiste under undue financial pressure. To avoid this outcome, advances should be set-off against record sales, failing which, the label should bear the loss.

Negotiating a lower advance, on the other hand, would allow the artist to receive larger royalties and lessen the pressure of becoming an overnight success, which the record label would anticipate if it provided a large advance. A recoupment of advances clause could be phrased as follows:

“No royalties will be due to the artist until the record label has been reimbursed for all advances made to the artist, on his behalf, or to any third parties in connection with this contract.”

3. Royalties 

Music royalties are payments made to rights holders, including songwriters, recording artists, and intermediaries like record labels, publishers, distributors, or producers for the licensed use of their work. It is important to note that for every song recording, there are two musical rights: “master rights”, otherwise known as recording rights, and “composition rights.” The recording rights entails the rights of the copyright holder of a sound recording to control the copying and distribution of the recording. Composition rights on the other hand are right that accrue to songwriters and music publishers. It basically concerns the melody, harmony and the lyrical composition of a musical work. It is otherwise known as publishing right, and in most cases belong to the same person.

Royalties that accrue to the parties in any music publishing contract can be mechanical royalties, performance royalties, synchronization royalties and print music royalties. These royalties are garnered from the commercial exploitation of the song through digital sales and downloads, live streaming, ringtones, radio plays, licensed integration of the music in adverts or movie; and the public performance of the music.

4. Accounting and Auditing Clause

This clause requires the record label to issue statements at agreed intervals detailing all revenue generated from the artiste’s music and specifying the recoupments made and/or royalty payable to the artiste. The clause should also make provision for the artiste to appoint a third party to audit the accounts/books of the record label. The inclusion of the accounting and auditing clause in a music contract affords the artiste to prevent a possible underpayment from the record label, and to ensure that the right royalties are duly paid.

5. Branding, Merchandise & Promotions

This is an exclusive agreement whereby an Artist grants merchandising rights to a company to allow it to use the Artist’s name, logo, likeness, picture, artwork, trade marks etc., throughout a defined territory in connection with manufacture and sale of products of any kind. However, balanced provisions should guarantee that the income streams are reasonable and serve as compensation for the artist's loss of ownership or control of these sizeable additional sources of income.

6. Territorial Jurisdiction 

 A record deal may be restricted to apply to a single territory, such as Nigeria, while another deal may apply to the entire world. One way to balance the so-called worldwide deal is to insert a Reversionary Clause which provides that if the label fails to release the artist’s music in specified jurisdictions, the rights would automatically revert back to the artist, granting the artist more control and power over the decision to self release or sign up with a better positioned record label in the target jurisdictions.

7. Exclusivity

It is challenging to find a record deal without an exclusive clause. The "exclusive arrangement" that limits the artist's ability to accept certain engagements without the record label's approval is often defined by the exclusivity clause. Under an exclusive agreement, the musician typically cannot record for another label, collaborate with another artist, or even enter into specific commercial contracts without the record label's consent. The performer would also need to be available at all times for all recording sessions and promotional events. If an artist finds these limitations to be burdensome, he can always demand that the contract be non-exclusive or at the very least, negotiate for the right to work as a Sideman/Side-Artiste with others. However,, it seems unlikely that the record label would accept such a counter-offer from a budding musician.

8. Rights

It is noteworthy, in order to commercially exploit the copyright of any artiste's music through license or assignment, the nature and extents of the rights of the parties needs to be expressly stated. Under the Nigerian copyright law, ownership of copyright are always advised to negotiate the insertion of copyright re-assignment clauses in the record contract requiring that the copyright and other allied rights assigned to the record label should revert to them after a certain period.

Similarly, it is beneficial that the music contract contains a “release commitment” clause to the effect that the music recorded must be commercially released by the record label to the public within a certain period after its delivery, failure of which the artiste should be entitled to back-out from the contract and/or purchase the master record from the record label for a specified fee.