On February 19, New York Supreme Court Justice Shirley Kornreich denied Kesha a preliminary injunction to separate the artist from Dr. Luke—her producer, label owner, and charged abuser. In Kornreich’s explanation for this decision, she ruled that Kesha’s contract was considered “typical for the industry” and not a strong enough reason in itself to release the artist from her agreement with Dr. Luke’s Kemosabe Records, which is under the Sony umbrella. Industry experts have speculated that when Kesha signed with Dr. Luke in 2005 at the age of 18, she probably didn’t have adequate legal representation to protect herself from the type of onerous contracts that are far too common in the music industry.

In hopes of preventing young artists from finding themselves locked into an unfair contract they can’t get out of, we spoke with Alex Threadgold of Savur Threadgold LLP, an entertainment lawyer whose firm has worked with clients including Salva, Tallest Man On Earth, Sun Kil Moon, and the Budos Band. Drawing upon 15 years experience in the music industry, Threadgold believes there are at least five key factors that you must consider when signing a contract. We have outlined them below.

 

Lawyer Up

Let’s say you’re an in-demand artist who’s been touring local bars and clubs for over five years. As a result, major and indie labels are sending their most engaging A&R staff to your shows. You make a new buddy and end up in a label’s office the next day. The next week, they send over a contract. Now it’s your job to decipher whether this contract honors your artistry as a priority, while still giving the label a reason to keep you on as a lucrative investment. Before you do anything, get a lawyer you can trust to look at the contract and handle the negotiations for you. The labels have their own legal team representing them, and so should you.

When looking for your own legal representation, treat your first meeting as if it were a job interview and you are the potential employer. Ask questions and evaluate their responses. If possible, seek out references to see if there is anyone you know or who you can get in touch with who has worked with them in the past. It may be in your best interest to check out the variety of clients the lawyer represents already, then see if those artists’ careers are inline with some of your own professional goals.

“Just like you want to feel like there is a creative fit with your label, you want to feel like you can communicate well with your attorney,” says Threadgold. “And that goes both ways. You should feel comfortable bringing things to their attention, and you should feel that they are able to explain to you what it is that they are doing.”

Determine the Scope of the Contract

The scope of the contract will be decided in part by what you, as an artist, bring to the table. One example is a licensing deal, which is more common when signing with indie labels. A licensing deal is often an arrangement for an artist who has already made her album—maybe either at home or in a friend’s studio—and is looking for a label to promote and distribute it.

The scope of the contract determines what kind of rights are being granted under the deal. “There are record deals that license just one EP for a three year term with no advance,” says Threadgold. “And on the other end of a spectrum there is the 360 deal with a major label where there’s five options, publishing rights, touring participation, merchandising, and so on.”

While some artists look at a 360 deal as the end of their creative control, many executives argue that the 360 deal gives the label an incentive to invest time and money into an artist’s career, in part for their own financial gain. Craig Aaronson, the former head of A&R at Warner Bros. Records, used to pitch the 360 deal as a 365 deal, because in theory, the record company would spend all 365 days of the year trying to produce and promote your record. Whether you think the label will really do that for you, is your decision.

Determine the Length and Breadth of the Contract

In a licensing deal, there may not be any future deliveries, so the only time period that might matter is how long the label can sell the record. These deals can be considered “one and done,” as opposed to the typical recording services deal, where the artist signs with the intention of making more than one record under the same imprint.

When signing a recording services agreement, there are two things to look out for: What are the number options (how many albums must be delivered, and what is the time expected to make them), and how long can the label put said albums out once it has the rights (after the product has been delivered or released). You then want to see how long your record company will sell your albums. Sometimes the label will own your album in perpetuity (it means forever, and that’s a mighty long time), and sometimes you can sign deals where you will get your albums back after some number of years (five, ten, twenty, etc.) down the line. Of course, many artists will want to acquire back their catalog because that can open you up to shopping the music to different labels, enabling you to make money off your old records all over again.

Finally, you must consider the scope of the contract in terms of territory. Is the label going to distribute your album worldwide? Maybe just North America. Typically when an artists signs with a major label, albums will be distributed globally. This is in part due to majors occupying offices all over the world and wanting to maximize on their investment. However, someone in the London office may not find a New York-signed artist interesting. So you hope that your major label staff, whether it’s in Los Angeles or Sydney, is hyped on your work. 

Consider the Financial Terms

The financial terms discussed in an artist agreement details the amount of money, usually including an advance, a label will give an artist to make her music. Typically, the artist will sign a label contract that lists how many albums she will owe the label and how much she will get paid in advance to make each one. For a mutually workable contract between the label and the artist, it must make fiscal sense.

Internally, labels often prepare a profit and loss statement (P&L) to measure the projected numbers on an upcoming record so that the financial terms are in line with the numbers an artist is expected to sell. “People need to know how to work in the realm of reality, and the numbers need to be right for the scope of the deal,” says Threadgold. “For example, if the artist clearly has a great chance to become a big success, it needs to be enough money to make the record a hit and [for the artist] to live while making the record, touring and everything else. What do you need to achieve that?”

On the other side, for an indie artist that only has a licensing deal, she may only require an agreement with a small advance and a marketing commitment.

Decide if It’s the Right Creative Match

In the end, picking the right label and signing the right contract can be a question of vibes. “Are you stoked to work with this label? Do you think they are welcoming about the creative process?” asks Threadgold. “Will you come up with an idea that they will let you and they will not get in the way?”  

Creative control goes beyond just making music. It can also mean that the artist will have the authority to approve album art, tracklisting, music video treatments, and anything else that would fall under the category of creative decision making. And if you’re an artist and your job is being a musician, that means having control of your career, and in turn, control over your future.

Note: The materials available at this website are for informational purposes only and are not for the purpose of providing legal advice. To obtain advice with respect to any particular matter or problem, contact a licensed attorney.