Recording Contract Royaltys

Bruce Hamilton · From: Vancouver BC Canada

Just curious. But what is a common artist"s royalty rate for each unit on a recording contract today assuming its their first contract? I have one of my kids being offered a contract and before I take it to a lawyer I thought I would check here.

Bob Hoffnar · From: Austin, Tx

Everything depends on the structure of the deal. The old days you got about 8% that you never collected anyway because of recoupables and cross collaterization. And about 50 other tricks. Now deals are much more open ended. Plenty of the bands I work for get 50% of the gross because it’s just a printing and distribution deal. It depends on your kids needs. Tour support, production costs, promo team all figure in. If they don't give you a big pile of money up front then the royalty rate should be very high. Whatever you do: Do not under any circumstance give up any publishing without massive amounts of cash!
The publishing should be off the table. You might as well sign your kid into indentured servitude. A typical publishing advance in the six figure range. Record companies always try to get your publishing as part of the deal. Do not give it up! Also try to retain the rights to ownership of any master recordings. That way you can protect yourself no matter what happens to the label.

Also get a lawyer to check out your lawyer.
I'm not kidding!

You can play hardball with the labels now because they are not so necessary anymore.

Bob

Tony Prior · From: Charlotte NC

What Bob says..I would just add one wee little thing..get a Lawyer who is familiar with and has a track record of successful contracts.One who has other clients that are not working at Wallmart to pay there tour expenses. If anything, I would give him a few cents more to bring this deal to the home.

NEVER but NEVER sign away ownership. You sign it away, they go under , they sell it to someone else and the quagmire begins and never ends.You end up working at Wallmart while someone else becomes a millionaire on your song ! Well thats a little drastic but you get the idea.

Congrats on you kids path to success.

A first deal could be on the low side of the percentages but the words should be the same. Strike a deal for some earnings but retain ownership , you have got to be named in the paperwork trail.

t

[This message was edited by Tony Prior on 22 July 2004 at 03:30 AM.]

Bruce Hamilton · From: Vancouver BC Canada

Toney and Bob thanks. We are all caught up in a bit of a whirlwind. The band has already been in the studio since May 24/04 and it will be another month before final mixdown and mastering. However we are just now beginning the bargaining on the actual recording contract. During the spring we went through a rather intense session negotiating a management agreement using a legal team which specializes in entertainment law and has a stellar record in this field. One thing we noticed was their fees were not anymore exorbitant than lawyers without this experience. In any event it looks like we are in for another session of bargaining.
Thanks Again

Gerald Menke · From: Stormville NY, USA

Dear Bruce,

There is considerable range among the royalty rates, unknown baby bands usually are offered around 10% (paid only after all the label's expenses are recouped of course) but established artists command much more. Michael Jackson used to have the most generous rate in the industry: 25%. It's important to note that royalty rates outside the US will generally be half of the domestic rate.

One clause that has changed (I believe) is that the rate is actually paid on 100% now instead of on 90%, even well into the CD era the rate was on 90%, a holdover from the LP era when record companies alleged that 10% of the discs would break during shipment, therefore they were not beholden to pay the artist on a percentage of 100%.

But considering how few artists ever realize any profits from royalties, I would, as Bob counseled you to, focus on publishing; I know of, and play with artists who received in excess of $250,000 for their publishing when they signed with a major. They were lost in the shuffle and dropped after their first album, but at least they had that quarter million to coast on for a while.

Definitely have an attorney look it over with a fine toothed comb, but remember, a record "contract" really isn't a contract: it's more like an at-will employment agreement. The label will retain the right to terminate the "contract" at any time for any reason or for no reason at all, and the band will have no recourse or remedy. The pay outs you hear about in the industry (Mariah Carey getting paid $28 million NOT to make any more music) are extremely uncommon.

But all that aside, congrats to you and your (son/daughter) for inspiring confidence in someone to consider putting up the not too small sum necessary to break a new artist. The very best of luck to you and them!

Gerald

[This message was edited by Gerald Menke on 22 July 2004 at 08:58 AM.]

Ken Lang · From: Simi Valley, Ca

Just to embellish the publishing part of the deal. Many commercials today feature old songs from the 60's onward. Who gets paid for the use the song? The publisher and the writer. That's why you need to have at least a share in publishing.

Many record companies will not make a deal with the artist or band if they don't have publishing. If you can't retain it all, make a deal for what you can get.

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