NEGOTIATING A RECORD LABEL AGREEMENT

In an era where artistes and record labels disagreements are rampant, it is essential to examine the legal issues involved and how they can be avoided. It so happens that many upcoming artistes hastily sign to a record label without proper contractual engagement, usually because “they want to blow” and they subsequently realize that they made an almost irreparable error by signing up a contract without proper legal consultation. Many of these contracts are regarded as slave contacts because they often do not contain fair clauses on the part of the artiste. This is why it is imperative for an artiste who desires to sign with a record label or even sign with a fellow artiste, to engage the services of a lawyer well versed in the areas of Intellectual Property, Entertainment law, and contract negotiation, before signing a record label contract.

A record label contract is a legally binding agreement between a recording artiste and a record label company. The importance of this contract cannot be overemphasized as it spells out the terms of engagement of the artiste by the record label.

A lawyer represents the interests of his client and is expected to conduct due diligence (a background check) on the record label his client (artiste) is about to be signed to. Below are some of the factors to consider before signing a record label agreement:

? Legal Status of the Record Label: This is necessary in order to ascertain the existence of the label and that it is properly registered under required laws.

? Management Structure: It is important to examine the management structure (to know who is who) such that in the event of issues and disagreements, there is no confusion concerning whom it should be addressed to, and who is to be held liable.

? Track Records: This is in relation to the legal principle of Res ipsa loquitor which means the fact speaks for itself. It is important for a lawyer to assess the past records and operations of the label with previous and/or current employees and artistes alike.

? Work Culture: An understanding of the work culture of any business or venture is important before signing up for it. Thus it is important to have an insight into the modus operandi of the business.

Upon completion of the due diligence exercise on the record label, the question then is “upon satisfaction, should the artiste immediately proceed to sign the contract? The answer is NO. Before signing the contract, there must an agreement drawn up and reviewed by the lawyer, and amend the terms contained therein, if necessary (although it is always necessary, because the terms are hardly ever favourable to the artiste). The following are some of the terms to look out for when negotiating a record label agreement:

? Terms of the Contract: Typically, contracts are made for a specific term, such as 1-5 years. It is important for an artiste to find the contract length reasonable, and also consider whether there are options to extend or terminate the contract after the initial period.

? Exclusivity: It must be expressly stated whether the contract is exclusive i.e. the artiste can only record and release music through the label or non-exclusive i.e. allowing the artiste to work with other labels or release music independently. Exclusivity can limit an artiste’s creative and financial freedom, therefore one must be careful about this clause.

? Ownership and Control: There must be clarity about who owns the rights to the music. Ideally, an artiste should retain ownership of his intellectual property (master recordings, publishing rights etc.), but the label may request certain rights for the duration of the contract.

? Recording Commitment: This refers to the number of albums or songs an artiste is obligated to deliver during the contract duration. It should be a reasonable workload that is manageable by the artiste, considering the creative process and schedule involved in making a song.

? Advances and Royalties: The terms for advances (money provided upfront by the label) and how royalties will be split between the artiste and the label must be express and unequivocal. It is important to be aware of different royalty rates for physical sales, digital downloads, streaming, and sync licenses in order to avoid future disputes in that regard.

? Marketing and Promotion: It is important to ensure the label is committed to promoting the artiste’s music and the specific marketing efforts they will undertake to market and promote the music should be stated. Caution must be made of contracts that place all marketing expenses on the artiste.

? Termination and Exit Clauses: An artiste should be aware of the conditions and procedures for terminating the contract, and whether there are penalties or buyout options. In other words, the exit procedures must be clear to ensure the artiste is not signing a lifetime contract.

? Distribution and Territories: This is to determine the territories where the label has the right to distribute the artiste’s music. Consideration should be given to whether an artiste wants worldwide distribution or prefers to retain certain territories for himself.

? Sunset Clauses: Sunset clauses are clauses that stipulate how long the label continues to receive royalties after the contract ends. These clauses must be clearly stated in the agreement and agreed to by both parties.

? Dispute Resolution: There must be an agreement with respect to how disputes (in the event of any) between an artiste and the label will be resolved; whether through arbitration, mediation, litigation or any other means of dispute resolution.

? Rights Reversion: This is in relation to conditions under which the rights to the music revert to the artiste, such as if the label fails to meet certain obligations, which must be spelt out in the agreement.

It is worthy of note that negotiation is a standard part of the process and it determines the direction of the contractual relationship. At this point, many artistes get tied (eternally) to record labels and when they want out, they cannot, because they signed the contract. Once a contract is signed, it cannot be modified or undone unless an amendment clause or a rider is made to the original contract, which the parties must agree to.

Conclusively, as an artiste, it is important to take your time during contract negotiations and not be in a rush to be “tied” to a record label so your career doesn’t get “slaughtered” on the altar of unnecessary haste.

We, the Bohemian lawyers, empathize with the family, friends and fans of Ilerioluwa Oladimeji Aloba Promise, with the social moniker “IMOLE”, who sadly passed away recently.

May the souls of those faithful departed rest in peace.

Since the news of the untimely death of “IMOLE”, and all the news surrounding the circumstances of his death, it has become imperative to torch light on certain issues with regards to record labels, artistes, agreements and the legal pointers to be on the lookout for by upcoming artistes.