Members zebra3.5 Posted October 15, 2002 Members Share Posted October 15, 2002 I'm looking over a contract I've been offered by an indie label looking to hook up a distribution deal with one of the majors. Can anyone tell me what the industry standards are (if such a thing exists) for new artists with respect to the following: 1. Record royalties2. Merchandising royalties3. Producer's royalties4. Length of term (in albums) Mechanical royalities are mine, of course. I have no real clout to speak of, and of course, there is no guarantee anything will happen. That said, is it worth it for me as a poor musician to shell out 1-2 grand (which is a lot for me now) on an entertainment lawyer to look this thing over, or are there resources out there on the Web or in print I can educate myself with? Time is of the essence. Thanks in advance if anyone has info on this, and my apologies if this is an all too common thread. My first time in this forum. Link to comment Share on other sites More sharing options...
Members 6am eternal Posted October 15, 2002 Members Share Posted October 15, 2002 That said, is it worth it for me as a poor musician to shell out 1-2 grand (which is a lot for me now) on an entertainment lawyer to look this thing over HELL YEAH! If you can't spend 1 or 2 grand, sign a contract with a lawyer. He'll take 5% of your profits, so you don't have to shell out anything at first. Now of course, 5% sounds like a lot, but think about it: he's going to try to make the biggest 5% he can, which means he's going to get you the biggest 95%! [usually attorney that are under contracts with the artist tend to get the biggest advance, even if that means less royalties]. Get an attorney. There are no standards, but to give you a general idea, a new artist usually 12 to 14% of SRLP (major), or 9 to 13% (indie). There are so many considerations that come into the calculation of royalties (escalations, "all-ins", reserves, return privilege, promo copies, breakage, free goods...) that the number alone really don't mean much. And of course keep in mind that 99.95% of artists signing with a major label never see a peny in royalty, so concentrate your efforts on the advance. An attorney will help you with that. As for the advance, expect to be offered between $0 to $100,000 for an indie, and between $175,000 to $300,000 for a major. Those figures are for a new artist signing. They can vary a lot depending on your clout, sales expectations, and wether you have been the subject of a bidding war or not. An attorney will help you. Good luck, and don't forget: GET AN ATTORNEY! Read this book and this one too. But get an attorney anyway. Oh and one last thing: don't do anything without AN ATTORNEY! Link to comment Share on other sites More sharing options...
Members EngineGuitarist Posted October 15, 2002 Members Share Posted October 15, 2002 6am gave you some good advice, but in response to your question about merchandising.....don't give them {censored}. that belongs to the band and is one of the few things you will actually see money from. (without becoming HUGE!) Link to comment Share on other sites More sharing options...
Members Scheming Demon Posted October 15, 2002 Members Share Posted October 15, 2002 According to your original question you stated you were offered a distribution deal. This is very different than a licensing deal or a recording contract. A distribution deal means you pay for everything to get a finished master, artwork, packaging & duplications. They just hook you up with their network of distributors to "possibly" sell your product. They may help you with advertising and may offer a very nominal advance but the advance is unlikely in a distribution only deal. These contracts are usually much simpler than a license or a recording contract, which escalate in complexity. You may not need a lawyer, however if there is anything you don't fully understand in the contract (and it's a simple contract) you may be able to hire a local entertainment attorney for a few hundred dollars to review the contract and explain it in detail for you. Link to comment Share on other sites More sharing options...
Members StratKat Posted October 18, 2002 Members Share Posted October 18, 2002 Thanks for that info SD! Ive been hearing more and more that the industry may be leaning the way of distributing deals rather than out and out recording contracts. Is there truth in this? Link to comment Share on other sites More sharing options...
Members Meatpuppet Posted October 24, 2002 Members Share Posted October 24, 2002 theres a real good article written by Steve Albini that you can find pretty easily online. Its call The Problem With Music. It details the normal conditions that a band will get signed under and shows you just how screwed you'll be once you sign your name. Link to comment Share on other sites More sharing options...
Members EngineGuitarist Posted October 24, 2002 Members Share Posted October 24, 2002 Originally posted by StratKat Thanks for that info SD!Ive been hearing more and more that the industry may be leaning the way of distributing deals rather than out and out recording contracts. Is there truth in this? more majors are doing this because the distribution is what they really pretty much completely control. well all the big stuff anyway. the majors have been buying or making deals with now former independents more and more lately. I personally think some of it has to do with the fact indie labels find talent whereas majors generally find "performers". add to this that an indie can make a record that sounds jsut as good (if not better) than a major for WAY less money and its looking even better. Also, as more and more kids discover the "evils of the business" they have more respect for artists on small labels. so majors buying or doing dist. deals with indies lets them get money from the kids that would otherwise not buy there records. Also, the way record sales are going lately i wouldn't be supprised if the majors were making a last ditch effort trying to make their bucks from dist. instead of records since that hasn't been doing to well lately. Link to comment Share on other sites More sharing options...
Members thamiam Posted October 29, 2002 Members Share Posted October 29, 2002 Standard Recording contract: 1)Bend Over 2)Smile Seriously, check out a website from the Future of Music Organization. They go over paragraph by paragraph some of the most common screw-jobs in contracts. Most importantly, get a dictionary and look up the word "recoupable". Link to comment Share on other sites More sharing options...
Members jdechant Posted October 30, 2002 Members Share Posted October 30, 2002 Originally posted by zebra3.5 4. Length of term (in albums) You said an indie deal, so I am not sure there, but major deals typically are around 7-10 albums with 7 being more normal than 10... or look at in terms of life... life of your career that is... a 7 album contract is 14 years if you put out an album every other year... I doubt you would want to or even could put out an album every single year... albums are usually 2-3 years apart... and sometimes more... so thats 14-21 years... not very many artists last that long and those that do are usually not as prominent as they used to be at the end of those 14-21 years... there are exceptions like the consistent big super stars and the that have endured... watch out for demo deals where like the label will pick you up for say like 1 album or 6 months to see how you do and then decide after that initial period if they want to sign you... most of the time they have no intentions of signing you ever and simply use these types of deals as tax write-offs (hey its a BIG bussiness isn't it)... but yes, a good rule of thumb is that most record deals are for life (of your career). Link to comment Share on other sites More sharing options...
Members jdechant Posted October 30, 2002 Members Share Posted October 30, 2002 Originally posted by StratKat Ive been hearing more and more that the industry may be leaning the way of distributing deals rather than out and out recording contracts. Is there truth in this? If we are talking about majors here, why would they unless you are a very established artist and a distribution deal is the only way they can sign you??? it seems that they'd stand to loose more money, or rather make much less money with a distribution deal than with a record deal, so why would any big record company in their right mind offer you a distribution deal instead of a record deal unless that was the only way they could sign you cause you are an established artist?? Link to comment Share on other sites More sharing options...
Members jdechant Posted October 30, 2002 Members Share Posted October 30, 2002 StratKat, I see now that maybe you meant distribution deals with indie labels... I thought you were refering to distribution deals with artists... but even here it would make more sense for a big label to just buy out an indie label if they think its gonna bring in revenue... big bussinesses are always looking to buy out smaller ones... I mean its like a similar thing that is happening in music publishing... the major publishers aren't looking to do co or sub deals with indie publishers... they are looking to buy out the indie publishers if they have a decent catalog... I don't see how from a business standpoint it would be any different in the recording side... they would want to buy out the indie labels if they have good artists so they could completely own the masters, etc... wouldn't you think? Link to comment Share on other sites More sharing options...
Members min7b5 Posted October 31, 2002 Members Share Posted October 31, 2002 I shopped around and found a entertainmeant lawyer to look over my distribution deal for $75. Sure, he wasn't the Rolling Stones' lawyer but I walked out very clear as to what I was getting into, and with several key amendments to the contract. Link to comment Share on other sites More sharing options...
Members StratKat Posted October 31, 2002 Members Share Posted October 31, 2002 Well, my point was meant as the total cost to a label of owning a group in todays marketplace, versus just selling that groups material after it was already produced and manufactured. In todays market (especially with piracy) the majors are losing bucks. To cut costs all around they can shave off Half of their investment if the band has already manufactured the product for them to distribute. The lion share of profits comes from distrubution and sales, not the initial investment to manufacture. So taking a product that is already to be sold and just using their network of outlets and distrubutors makes economic sense. At least, until the piracy thing is either controlled or it collapses the majors... In the majors corner of the debate they cant afford large investments that will be lost on piracy. So the less they have to do with a group the cheaper their costs and less threat to the investment they make. Link to comment Share on other sites More sharing options...
Members jdechant Posted October 31, 2002 Members Share Posted October 31, 2002 Originally posted by StratKat In todays market (especially with piracy) the majors are losing bucks. In todays market in the US, pretty much all industries are losing money... we're in a recession, and you had better pray that it ends soon, because we are near the edge of it turning from a recession to a depression... just wanted to point out that its not just the music industry that is losing money. Link to comment Share on other sites More sharing options...
Members BlueStrat Posted October 31, 2002 Members Share Posted October 31, 2002 Originally posted by jdechant In todays market in the US, pretty much all industries are losing money... we're in a recession, and you had better pray that it ends soon, because we are near the edge of it turning from a recession to a depression... just wanted to point out that its not just the music industry that is losing money. Not exactly true. Housing is up, durable goods are up, and unemployment is steady at about 5%, which is virtual full employment by normal standards. The stock market is only going through adjustments because it was so artificially inflated and built on a house of cards, but it too will level out. The music business is losing money not only because of piracy, but because of the myriad of entertainment options available today, including the internet, DVDs, home theaters, satellite radio and CD channels, etc. Music has become just another cheap entertainment commodity in a shrinking market competing for a finite number of dollars going elsewhere. Link to comment Share on other sites More sharing options...
Members thamiam Posted October 31, 2002 Members Share Posted October 31, 2002 Originally posted by StratKat In todays market (especially with piracy) the majors are losing bucks. To cut costs all around they can shave off Half of their investment if the band has already manufactured the product for them to distribute. The lion share of profits comes from distrubution and sales, not the initial investment to manufacture. So taking a product that is already to be sold and just using their network of outlets and distrubutors makes economic sense. Just a fine point clarification here, but the record companies don't decrease their investment by distributing pre-produced albums, they only decrease their risk. Production costs are all recoupable by the record company from the artists share of profits before the artist sees a dime. Distribution deals are only make more sense for the record company if the band doesn't sell enough to cover their production costs. Even this isn't entirely accurate, because by signing a recording contract instead of a distribution deal, the record company has the option of keeping the artist away from their competitors. Even if the record is not succesful, the company can "shelve" the artist for up to seven years, preventing them from making records with any other company. So distribution deals only marginally decrease a record companies risk, usually not enough for them to bother with all but the most guaranteed artists. Link to comment Share on other sites More sharing options...
Members 6am eternal Posted October 31, 2002 Members Share Posted October 31, 2002 In todays market (especially with piracy) the majors are losing bucks. Don't forget that majors are owned by the same big corporations that own the big japanese stereo manufacturers. (Sony, Pioneer, JVC and whatnot). While they sell CDs at a loss, they give the public a reason to buy more stereos, car stereos, walkman, mp3 players and such. Link to comment Share on other sites More sharing options...
Members StratKat Posted November 1, 2002 Members Share Posted November 1, 2002 All true points there fellas! Link to comment Share on other sites More sharing options...
Members jdechant Posted November 1, 2002 Members Share Posted November 1, 2002 hey did ya fellas see.... the numbers for this last quarter just came out and GDP for the US is up 3%... making our climb back up the hill I hope. Link to comment Share on other sites More sharing options...
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