⚡ Details and examples of a contract between a band and an independent record label or label

¿Qué tipo de CONTRATO se debe hacer entre una disquera independiente y una banda?, ✅ Detalles a tener en cuenta 💼 ¿Cuáles son las mejores cláusulas?

Preliminary information


Before reading further, you should know that record labels use different types of contracts and if there are financial interests at stake, these can be even more complex.

The information found here is more applicable to small labels or independent labels, all the details are focused on how a small record company should face its contracts, but in some way as an artist, musician or band you can have an enlightening map to understand what type of contract the independent labels sign with you.

Although the basic ideas can be applied to any record label deal. Also, keep in mind that these tips are not a straitjacket and are not intended to take the place of good legal advice.

▷ 1. Who and what will be agreed in the contract?


The first thing that should be included in a contract between an independent label and an artist is basically who makes the deal and what the agreements are covered.

Who's part is easy; you can just say "a contract between (the label) and (the band)". The what is where it gets a little more difficult, but the most common is:

A license agreement for an album already recorded.

A digital distribution agreement:

We recommend you to know all the details of a good digital distribution with our:

Step by step guide to understand how to distribute your music on the web


A license agreement for an album or single (single), as well as another agreement for the label to release one or more albums in the future.

An agreement with the band to record one or more records that the label will release

A production or license agreement with the exclusive option for one or more future productions.

▷ 2. Duration of the agreement or contract


It refers to the length of time that the label will own the record covered by the agreement. It is obviously in the label's best interest to have the album as long as possible, but the term can be anywhere from a couple of years as long as possible. A term of 5-10 years is decent, and depending on how much experience the label has, the lower end of the spectrum is best suited. It's good for the label to include an option to renew the length of the contract.

Note that termination of ownership is determined by whether you "buy" the disc or just the license.

▷ 3. Where is the contract developed?


An independent label contract must specify the places where the label has the right to sell the album, if their label is based in the US or New Mexico and the band already has a UK deal, then they cannot try to sell the album. disk there too.

A fair way for the bands and the label is to include in the contract the coverage areas when the label has the distribution and the band does not yet have other types of contracts; and then include a clause that indicates that the label can request licenses or offers of distribution in other territories for the publication of the disc (this if the label owns or has its license).

▷ 4. $ Advances of money that is agreed in the contract


Now, we get to the money, the advances are advances against the band's future income, so just promise an advance that you can get back from record sales.

A good rule of thumb about advances is that if you are a small label, big advances are a waste of cash.

If money is tight, everything will be much better if you skip the payment of a big advance and instead save that money to invest in promotion.

The sale of records is an expensive business, if you want it to work, you have to spend your money on a promotion budget (Marketing), not on an advance.

▷ 5. Spending cap

The band does not make any money until the label has recovered all the money spent on the record (with the exception of the Royalties that the labels have to pay).

It is good to include a spending cap and an aside that says the label will consult the band after spending X amount of cash . It will save you a lot of trouble in the long run when the band complains about the money or says that you spent it all on publishing.

▷ 6. Making money


This is the crucial part of an independent label's contract, it is necessary to specify how and when the band can start earning payments, first of all, it is important to say here that the band will not be paid until the label has recovered all the money. spent on disk (including advance).

Next, the contract should indicate how the profits will be divided after the money has been recovered.

50/50

Agreement by percentage (in favor of the seal)

There really isn't much of a hassle here. Big labels almost always have percentage offers, but 50/50 is sometimes the easiest way for a small label.

7. The little details


There are a lot of extra expenses that come up in the course of releasing an album and now is the time to tackle them, for example if you are releasing on vinyl, if the band wants a full color printed shirt, if you don't want to pay for it. tour maintenance, include it in the contract as well.

Now is the time to anticipate all the expenses that could arise with a particular release and that you want to avoid and write that the label will not pay the bill for these expenses.

▷ 8. The fine print.


The above list details the basic concepts that an Independent Record Label contract should carry, but this does not mean that it is the only thing that can and should be included.

The following are just some of the optional things that can be attached and may or may not apply as the case may be:

Accounting

This gives the band the right to audit the label's books in relation to the release of the record at a given interval, for example once a year.

It can be as simple as showing the band how things move out, or it can be as formal as having an account to go and check in. Financial statements

 

License agreements

If there is a license for the album with a label in another territory, or if the licenses for a song on the album are held by a media outlet, how is the quota divided?

Acceptance and Delivery


This clause is one of the most important elements of a contract that is rarely used by independent labels, but you should be aware that it is there as an option.

Basically, it means that the label doesn't have to release a record that deviates from the kind of music they thought they were going to get and that the music has to be recorded in a format that could be played on the radio (that is, not on a 4-track recorded in someone's room). This is ... controversial, to put it diplomatically.

If all this has made you nervous, relax, the best contract is the one that the label and the band have agreed on with each other and that covers all possible eventualities, you cannot anticipate everything that will happen in the Label / Band relationship, just cover as much as possible and keep the lines of communication open and honest, in case it becomes necessary to negotiate again.

How complicated does the contract have to be? Nothing at all, just well written and remember that a single page covers as much as 20 complex pages.


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