BEFORE YOU SIGN THAT
By: Leslie Warren Cross, Jr., Esq. (The Music Business Heretic)
-w-
Paul Wall (The People’s Champ)
SMASHWORD EDITION
Published by Cross Live Media in association with CashFlow Systems, Inc., Houston, Texas.
Copyright 2011 Leslie Warren Cross, Jr. All Rights Reserved
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The materials in this book represent the opinions of the author and may not be applicable to all situations. Many deal arrangements appear similar, but differ in respects that may be legally significant. Additionally, laws and customs change over time, and may do so by necessity of the lapse in time between the writing and printing of this book. Regarding the clause-by-clause analysis, the discussions are not intended to replace professional counsel; rather they are meant to educate Artists, attorneys, managers, and anyone else who is interested in developing a basic understanding of an Exclusive Artist Recording Agreement.
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TABLE OF CONTENTS
Chapter 1 - PUTTING THE CHESS PIECES ON THE BOARD
Chapter 2 - OPENING CHESS MOVES
Chapter 4 - EXCLUSIVE RECORDING SERVICE CLAUSE
Chapter 5 - RECORDING COMMITMENT CLAUSE
Chapter 6 - RECORDING PROCEDURE CLAUSE
Chapter 11 - MISCELLANEOUS ROYALTY PROVISIONS
Chapter 12 - ROYALTY ACCOUNTINGS
Chapter 13 - WARRANTIES, REPRESENTATIONS
WARRANTIES, REPRESENTATIONS PART 2
Chapter 14 - MECHANICAL LICENSES: PUBLISHING
Chapter 15 - SUSPENSION AND TERMINATION
Chapter 17 - DISTRIBUTION /UPSTREAM AGREEMENT
Chapter 18 - 360 DEGREE RIGHTS
Chapter 19 - AUDIO-VISUAL WORKS
Chapter 20 - ARTIST WEBSITE/SOCIAL MEDIA
Chapter 21 - I SEE ALL THE PIECES ON THE CHESS BOARD
ARTIST PERFORMANCE ROYALITES – FIGURING OUT PENNYRATE
GETTING OUT OF DEBT TO THE RECORD LABEL
GENERAL BUSINESS/SELF EMPOWERMENT BIBLIOGRAPHY
This Book is dedicated to any individual who when asked to sign a document that they don't understand, have the courage to say NO!!!
We also dedicate this book to our wives and children who had to invest the time and effort in watching their husbands and fathers grind this project out. There is nothing like receiving the support of your Loved Ones while going through a difficult journey. Paul and I have a great supporting cast.
Leslie Warren Cross, Jr., Esq.
Paul Slayton p/k/a Paul Wall
This book is about facing your fears. Yes, facing your fears is what this book is all about. Through our many years participating in the entertainment industry, Paul and I, collectively from our respective positions (Paul as a internationally renowned platinum recording artist) (and myself as a entertainment attorney representing hundreds of singers, mc’s, musical groups, bands, songwriters, composers, musicians, producers, record labels, etc.), have each witnessed and experienced the tragedy of musically gifted individuals destroyed because they would not face their fears.
The main character of our book is named Star. Star is a gifted songwriter, musician, producer and performer. However, underneath his immense talent, Star has a major weakness that he has kept secret from everyone but himself: he is totally afraid and intimidated to deal with any type of paperwork – especially contracts. Despite this secret weakness, as you read through the book, you will see (and learn) how Star forces himself to fight through his intimidation and fear in order to gain a true understanding of the recording contract he has been asked to sign. In fact, you will discover as you work your way through reading the book that Star makes the life changing decision not to ever again consider signing his name to an agreement or contract that he has not read or that he does not understand.
Go Getter is another character you will meet in the book. Go Getter is the CEO of an independent record label named Fame Records. Fame Records is the label which is attempting to sign Star to an exclusive recording contract. As you get near the end of the book, however, you will discover that (just like Star), Go Getter knows very little about the contract that he is asking Star to sign with his Record Company, despite the fact it is his company’s contract (this situation happens all the time in the music industry –especially in the independent arena, where neither the artist or the label’s CEO understand the agreement they are signing with one another). So at the end of the story, Go Getter (as a CEO) is also forced to face the fact that his fear of not wanting to deal with contracts has placed his Record Label in a huge dilemma of possibly losing the one artist he has waited a lifetime to work with.
In further analyzing Go Getter’s character, one thing we want to emphasize is that this book is not about bashing Independent Record Labels and the passionate individuals who run them. More than any other mechanism in the industry, independent record labels are the engine that drives the music business especially when it comes to discovering new talent and pushing new music. As such, we don’t paint Go Getter out to be the villain or the evil person in the story you are about to read. Instead, we attempt to illustrate that Go Getter, in spite of certain negative aspects of his contract offer, really desires to develop a successful partnership with Star and that he actually believes in Star’s music and wants to spread it far and wide.
Okay, so we have provided you with the background themes of the book. As you read, you will immediately notice that the book reads like a story and not like a technical book. We purposely structured the book in this way, because we did not want your reading experience to be that of going through some stuffy technical book about contracts. Instead, we have created a story designed to capture your imagination by bringing in real dynamics so you can live and breathe with the characters as they struggle to map out an understanding of the recording contract and how it will impact their chances of long-term success in the entertainment industry. We also attempt to pull you in to the purposes and strategies behind the contract terms so that you can understand why certain clauses are worded in the way they are and why you have to carefully pick and choose your battles.
With the above in mind, read this book. No matter if you are a singer, an mc, or member of a band/musical group, or a musician, or a songwriter/composer, or a producer, or a manager, or a DJ, or a CEO, reading this book will help you overcome any fear you may have with regard to understanding recording contracts. Further, after finishing this book, you will realize how important it is not to sign your name to any document you don’t understand.
Finally, we want to discuss briefly the importance gender played in writing this book. We went back and forth about whether to make Star's character male or female. In fact, choosing Star’s gender turned out to be a major struggle in getting our storyline organized around certain themes. In the end, we decided to go with Star as a male character, only because we felt it would be easier to come up with a more believable character. Just think about it, men are notorious for not wanting to ask for help (actually a better way to express it – men are afraid to ask for help). As an illustration, (before the age of GPS) if a man was loss in attempting to find a location, he would drive around forever trying to figure out how to find the place, instead of just pulling over to ask someone for help. Well, prayerfully you get the point. Ultimately, we felt that making Star a male character would better illustrate the type of fear and intimidation we want you to overcome and conquer through reading this book whether you are a male or female.
So why should you read this book? So you will gain wisdom and knowledge on why you should never, ever sign your name to an agreement or contract that you have not read or that you don’t understand.
Leslie Warren Cross, Jr., Esq.
"SEEK FIRST TO UNDERSTAND AND THEN TO BE UNDERSTOOD."
Stephen R. Covey
“KNOWLEDGE IS POWER”
Sir Francis Bacon
"DO, OR DO NOT. THERE IS NO 'TRY'."
Master Yoda ('The Empire Strikes Back')
"OPPORTUNITIES MULTIPLY AS THEY ARE SEIZED."
Sun Tzu
"SOMETIMES IT IS NOT ENOUGH TO DO OUR BEST; WE MUST DO WHAT IS REQUIRED."
Winston Churchill
“KNOWLEDGE = EMPOWERMENT = FREEDOM”
Leslie Warren Cross, Jr., Esq.
I have been trying to write this book for a number of years, but I simply did not have the discipline to force myself to sit down long enough to do it. Lack of discipline to follow through on projects is a serious problem with many people both inside and outside the music industry. We often become so consumed by what we have to do that we don’t do what we should. It is unfortunate, but we can and will do better. Right?
So, why write another book about the music industry? To be honest, I don’t think that there are enough “how to” books on the workings of the music industry out there. In case you’re thinking it, no, I am not saying there is a conspiracy to keep knowledge hidden. I am just saying that compared to other subjects, where there are tons of books available (i.e. investments, buying a home, etc.), there are not as many books available on this particular subject.
However, I must admit that I do have my favorite “Industry Books”: Donald Passman’s “All You Need to Know About the Music Business”; Moses Avalon’s “Confessions of a Record Producer”: Kashif’s "All You Better Know About the Music Business; and M. William Krasilovsky and Sydney Shemel’s "This Business of Music" (the unofficial bible of the music business). These are all great books, and I highly recommend that you read each of them. I have even listed others in the back of this book that can help you build a more comprehensive understanding of the music industry.
Unlike the purpose of the aforementioned books, which are mostly intended to aid “artists” in dealing with major label deals, I have a different mission to accomplish through having you read “Before You Sign That.”
The music industry has experienced a number of significant changes over the last few years, and continues to drastically change every day. Technology and changing tastes of the music buying public are driving most of the changes. This is important for a number of reasons one of which is the fact that now the number of artists signing directly to major labels has drastically decreased. Today, the vast majority of the deals that artists sign involve entering into exclusive recording contracts with independent Record Labels.
The above fact leads us to ponder another reason why reading this book is a justified investment of your time. In many instances, as we just noted, an artist is not dealing with multi-million dollar recording contracts offered by huge multinational conglomerates which possess marketing and promotional machine staffed by literally hundreds if not thousands of individuals all geared to make the signing artist a superstar. Deals of the sort just described are very rare these days, especially as of the first edition year of this book.
Instead, artist for the most part are dealing with small independent labels, production companies, or artist development companies who typically have small staffs and a much more limited marketing and promotional machine to push artist signed to their companies.
So with the above as a backdrop, do you have any idea what happens when most artists are presented with paperwork from a small independent label, production company or artist development company? Well I will tell you what happens because I have encountered time after time as an entertainment attorney, the artist signs the recording contract immediately.
Let me describe how the above happens: normally, an artist sits down to talk business with the indie Record Label CEO or Producer, but really is only focused on the fact that he/she/they have struggled for months or even years to get signed to a recording contract, so why wouldn’t they sign the contract presented on the table. After all, (the artist thinks to himself/herself) this is not the time to ask questions or ruffle the feathers of the people who believe in my music, instead, just sign the contract so that I can get my project recorded and released and then we can all get paid.
Unfortunately, the artist described above does not understand, or maybe the better word is appreciate, the fact that his/her simple act of signing this piece of paper has far reaching and long-term consequences for his or her musical career.
The act of signing that piece of paper can lock an Artist into a virtual nightmare, if he or she does not truly understand the magnitude of the rights, conditions, commitments and obligations he or she is about to make under the contract.
I truly wish I had the ability to transport myself into the room right before the artist is about to sign his or her name to the contract. At that precise moment, I would shout out, “Wait” “Wait” “Before You Sign That” “Have You Read the Document All The Way Through” Do You Really Understand What Is Going On With The Document You Are About To Sign Your Name To?”
Why Is It Important For Us To Go Through The Major Clauses Of A Recording Agreement (Clause By Clause?)
As we begin this chapter and throughout the remainder of the book, we will be following the times and experiences of Star, an up and coming artist/producer/songwriter who is making serious moves in the music business. Star is twenty-two. He is the ultimate underground artist. He can sing, rhyme, and play instruments. As a live performer, over the last year, Star has been amazing audiences wherever he has played. Everyone around him and people that see him perform know that Star is going to be a huge artist, if he is able to obtain the right opportunity and exposure (in other words, a lucky break by signing with a Record Label).
In the area where Star lives, because he has become such a hot commodity in the streets and clubs, he has several local independent Record Labels trying to sign him to an exclusive artist recording deal. Each of the Labels know that if a recording company can get Star to sign, produce a single and record an album, big money and huge opportunities will be right around the corner (in other words, the Label will get that once in a lifetime lucky break by signing the perfect artist who becomes a money making music machine). So, everywhere that Star hangs out and every time he performs at a club or party or event, several independent record labels, production companies, management companies and artist development companies pursue him to sign a recording contract.
In looking over his situation regarding everyone trying to sign him a recording contract, Star should be thrilled that a bidding war has been created around his music, but instead Star is terrified, though he is trying to down play his fears. The problem for Star is that although he has spent years working on his music and performance skills, he has never once taken time to give himself some background on how the recording music business itself operates. Whenever somebody mentions recording contracts, artist royalties, or whatever, Star always says to himself, “I don’t have to worry about those things right now. I will have time to think about those things at the time someone is actually trying to sign me to a recording contract.” Star then usually goes on to comfort himself by thinking, “Right now, I just want to focus on my music.” Well, the time to worry about contracts is at hand because the labels, production companies and management companies have become very aggressive in their attempts to sign him immediately to some sort of recording deal. Star knows deep down inside that he does not know what to do. He is both truly confused as well as very afraid.
Star’s dilemma helps illustrate why it is so important for artists to go through the major parts of a recording agreement, clause by clause. Star has a very serious problem, due to the fact that people are asking him to sign a document that he does not understand. Star is not alone in this type of dilemma. I will bet you that on the very day you are reading this chapter, somewhere, some artist has just signed his or her name to a recording agreement that he or she does not adequately understand.
The above is quite unfortunate, because typically, in a year or so after an artist signs the recording contract and things are not going the way he or she expects, then all of a sudden the artist begins asking all sorts of questions of the record label, production company or management company that never seemed important for them to ask before.
In fact, in many instances, once the recording contract is signed, artists don’t even bother to keep up with their copy of the contract. However, as previously mentioned, when things begin going downhill, the first thing artist start screaming is that the Record Label is purposely trying to keep them in the dark about their contracts by not giving them a copy of the “paperwork.”
Eventually, if the situation does not improve from the artist’s perspective, he or she begins to place the blame and responsibility for the failure of their project entirely on the Record Label, Production Company or Artist Development Company. There after the Artist’s primary complaint is their sincere belief that the Record Label took advantage of him or her because of the unfairness of the terms contained in the recording contract.
Now, I will not debate with you over whether any particular artist has signed a good or bad deal. The point I want to make is that the vast majority of new artists are so eager to sign a recording contract that they could care less about what is actually contained within the contract itself.
One final note before I move on from our discussion above. When I meet with a client for the first time to review a recording agreement, as often as possible, I attempt to make the following comment at the beginning of the consultation:
“Whenever you read through an exclusive artist recording agreement, every sentence in that contract is either taking money out of your pocket or putting money into your pocket. So, don’t sleep walk or blindly skim through a recording agreement, because the fine details you miss will cost you a boatload of money!”
I am going to repeat the above statement to you over and over again within the pages of this book. My caution to you is to not let your brain shut down because of allowing fear to hold you hostage into believing that the material contained in this book will be too complicated or challenging for you to grasp. After all, for those of you who are musical, I am willing to bet that you do whatever is necessary when you have to hit a high note; or remember all the words to a very long song; or learn to play a difficult part on your musical instrument. In the case of your music, whatever you have to do to work through the issues or challenges, you make it happen, because you have made a commitment not to be defeated when it comes to your music. This same level of commitment becomes necessary when applied to learning the contractual and business sides of the music industry (hereinafter referred to as “the Game”).
Let me also say the following to you, “Please, don’t go through the effort of buying this book and then never invest the time to read it. I am not saying that you have to read it cover to cover, but my greatest joy comes from thinking that your purchase of this book will pay for itself many times over through the knowledge and wisdom you will gain by reading it. Finally, on this point, let me also emphasis that I am not trying to turn anyone reading this book into an entertainment attorney (though I hope I can inspire some to go in that direction if so inclined to do so).”
With all the above as a back drop, you still need to have the motivation to empower yourself in one of the most significant decisions you will face as a recording Artist. For most of you, you will only get one chance to make the right decision, so you better make sure you get it right the first time.
Before closing this section out, let me point out one final observation which I hope will help you obtain a better picture of the adventure we are about to take. Throughout the remainder of the book, under certain subtopic headings and passages, you will notice that I have provided references to the game of chess.
Okay, you ask what is the significance of having chess references in a book about Exclusive Artist Recording Agreements? Before I answer your question, let me clarify that in terms of my skills in playing the real game of chess, I consider myself to be an average player, but in terms of applying the principals of chess to contracts and agreements, I rank myself as a Grand Chess Master. Those of you reading this book who are not familiar with chess, you owe it to yourself to find out more about the game.
One of the fundamental requirements to be a good chess player is to be able to map out a strategy by thinking three to four moves ahead of your opponent’s moves. Great chess players have the ability to visualize 15 to 40 moves ahead of their opponents because of their experience, study, and training. Therefore, they are able to masterfully counter every move you make to achieve the ultimate victory by checkmating your King, because they have already anticipated your likely moves.
The reason the above discussion is relevant to our pending review of the Recording Contract on a clause by clause basis is the simple fact that as an Attorney, I look at negotiating an Artist Recording Contract as similar to playing a game of chess, hence the reason why I have used chess references throughout the book. I have thought of Recording Contracts in this way for years. However, before I was able to make this connection between Recording Contracts and the game of chess, I had to understand the regulations, rules, purpose, and function of the Contract.
Similarly and more specifically, before you can sit down and play a game of chess, you have to become familiar with the purpose of each chess piece that you have at your disposal. For example, you have to know that with your “pawn” you have very limited mobility, but your “knight” has much greater mobility. Yet, the “knight” despite having greater mobility can only move in a certain way.
Furthermore, you must know which chess pieces are better played as defensive pieces and which are more effective played offensively. Gaining knowledge and insight of the purpose of each chess piece is a lifelong pursuit, and you continually learn something new that you never thought of before as you continue to study and play the game. The same is true for the various clauses that make up an Artist Recording Contract. I have been studying these clauses for years, but I am constantly gaining new insight and making additional discoveries as I continue to work with the clauses. So, as we go through the Contract, clause by clause, don’t get confused by my occasional chess references. I am simply giving you an additional method to visualize why it is important for you to gain an understanding of your Contract before you sign it.
Ok, let’s see what Star is about to get himself into….
PUTTING THE CHESS PIECES ON THE BOARD
One Record Label in particular, Fame Records, has aggressively pursued Star for the last six months to sign a Recording Contract. The company’s CEO, Go Getter, has been telling Star repeatedly that Star needs an album in the stores and a hot single getting rotations (“record spins”) on the radio.
Go Getter instinctively knows that if he can convince Star to sign a recording agreement with Fame Records, that Fame Records will be perfectly positioned as a major player on the national music map. However, equally important to him as commercial success, is the fact that Go Getter really believes in Star’s talent and wants the world to be able to enjoy Star’s phenomenal music and performances.
Go Getter was able to meet with Star at Star’s last live performance. The conversation between Star and Go Getter went extremely well, and after six months Star finally agreed to consider the possibility of signing a deal with Fame Records.
Go Getter and Star agree to meet the next day to review the paperwork and discuss things further.
The next day arrives and as he enters into Fame Records’ office location, Star immediately feels his mouth turning dry and a cold sweat breaking out all over his body.
Go Getter welcomes him at the entrance and walks Star through the recording studio portion of the office toward a door on the other side of the studio that marked with the word “Private” on it.
As they walk through the recording studio the music that was jamming suddenly stops because, people in the recording studio immediately recognize Star and come up to speak with him and ask questions.
Go Getter quickly takes control over the situation and tells everyone “give the man some space we are trying to get some business taken care.” “Y’all need to get back to working on that single…we have got to get it up on iTunes before the end of the week.”
At Go Getter’s admonishment, everybody tells Star that they will talk to him later and that they hope he will soon become a Fame Records artist.
Immediately, the music comes back to life and Star loves the atmosphere and energy of the studio, as he observes everyone getting back to work on the track.
Despite his excitement, however, Star also notices that he is getting an increasingly dry taste in his mouth.
Star and Go Getter quickly get to the other side of the studio and enter directly into Go Getter’s small office and Star can clearly see a document entitled “Exclusive Artist Recording Contract” placed at the center of Go Getter’s desk.
After asking Star to have a seat, Go Getter looks up at Star and says “ as we discussed last night, Fame Records wants to offer you an exclusive artist recording deal.”
Go Getter goes on to say “Star the agreement you are looking at is the standard artist contract for Fame Records.”
Go Getter continues by saying “now Star if you desire, you can have an attorney look over the contract. On the other hand, you and I can briefly review and discuss the contract for about 30 minutes or so and then we can sign off on everything.”
As Star listens to Go Getter, he looks around Go Getter’s small office. It is obvious that this man has a passion for the music business. There are pictures all over the walls showing the various places Go Getter had traveled as a road manager for the various bands and musical groups he had worked with over the years.
Star looks over to his right and looks across a huge board (which is practically taking up the entire wall) which is filled with the names of dj’s, music directors, record pools, distributors, merchandisers, session musicians and background vocalist. The board is organized into categories and functions for each name listed.
To his left he see an entire map of the United States (which is also huge) and is all marked up with lines and arrows with different colored flags with each flag containing the name of a record store, street team, promoter and night club. The map was literally filled with flags.
On the shelf behind Go Getter’s desk, Star notices that Go Getter has no less than seven different mobile phones each labeled differently with the words “record company phone”, “media phone”, “merchandising phone”, “radio phone”, “artist phone”, “studio phone”, “personal phone”. This man is a music marketing machine, Star thinks to himself.
Star is very familiar with Go Getter’s career and knows that Go Getter has a reputation for not only being a true musical workaholic, but that the artist signed to Fame Records are fiercely loyal to Go Getter and believe that he is truly a marketing and promotional genius who will take their music to places they could never achieve without his involvement.
Yet despite the seemingly perfect fit Go Getter and Fame Records appeared to have in taking his music to the next level, time has seem to have literally grinded to a stop in Star’s mind as he continues to look around the room while listening to Go Getter’s pitch.
Star is amazed at the level of fear that he is feeling at this moment. Although he has performed for thousands of people, he has never experienced stage fright on this level before.
He has been working and waiting for this opportunity for years. Now, the opportunity is finally here for the taking, and all he has to do in order to secure a marketing and promotional genius behind his music is to sign the piece of paper on the desk before him.
As Star ponders what his next action should be, he feels Go Getter looking at him, trying to figure out what is going on inside his head.
“What’s wrong with me?” Star keeps asking himself; “Why am I tripping?
His heart begins to race as he asks himself; “Why won’t I just sign the contract?”
Then, not knowing what else to do, Star slowly picks up the contract and looks down at it.
His palms suddenly start sweating.
Star slowly scans through the pages of the contract.
As he looks down at the document, it is like trying to read a foreign language for the first time.
He has no idea what the contract is saying. Still confused, he decides to turn to the last page of the contract and immediately zero’s in on the number forty-five (45) at the bottom of the page.
Star thinks to himself “This contract is forty-five pages long, and Go Getter is asking me to sign it in about thirty minutes from now.”
Go Getter observes the obvious nervousness that Star is displaying. Go Getter has seen this scene many times before, so he knows at this stage just to be quiet and let Star work it out in his mind.
However, despite his cool outward demeanor, in the back of his mind, Go Getter is tempted to pick up the recording agreement and tear it up and say , “Star just tell me what you want and we will build an agreement from scratch that will try to be a win/win for both you and Fame Records.”
Despite this incredible impulse to tear the contract up, Go Getter also remembers all the money he had to pay to his attorney in order get an iron clad recording contract in place and he also can hear his attorney telling him repeatedly how unwise it was for him to be constantly trying to make artist friendly deals over the best interest of Fame Records.
The tension in the air is thick enough now to be cut with a knife as each man struggles with his own internal demons and angels.
Go Getter and Star are now stuck in a vortex that neither man knows how to escape from.
However, a small voice inside Star’s mind begins growing and says, “Wait before you sign that.”
In this small voice, Star suddenly remembers the other option Go Getter provided him with a few minutes ago - to have an attorney look over the agreement.
At this moment, Star knows what he has to do.
Star nervously looks up at Go Getter and says, “Man I need some time to think about this and I am going to have an attorney to look over the agreement to make sure everything is straight.”
At Star’s statement, outwardly Go Getter continues to show no expression or concerns, but inwardly he knows he should share his heart with Star about tearing up the contract and building one from scratch between the two of them.
Unfortunately, the moment of truth passes…and Go Getter decides to play it safe and responds to Star by stating, “Sure I understand, but let me know something as soon as possible because I truly believe that you and I are about to make history.”
Later that same day, Star decides that he will make contact with an entertainment attorney that a friend has been trying to get him to meet for some time. Star feels almost as nervous as he did with Go Getter as he dials the attorney’s office.
The receptionist answers the phone, “Hello, this is the Cross Law Firm. How may we serve you today?”
“Hi. My name is Star. Is Attorney Cross available? I really need to speak with him.”
The receptionist responds, “You are in luck Mr. Star. Attorney Cross is available. He will be on the line shortly.”
Star’s heart begins beating furiously. How much more of this can his heart take in one day.
As he waits, Star thinks to himself, “Man, it sounds like this guy is going to cost me a thousand dollars just to say Hello. I probably need to hang up this phone right now. I can’t afford this dude. I must be crazy. No, I really need to hang up the phone right now before he answers.”
Just as Star is about to hang up the phone, a voice comes on the line.
“Hello, Mr. Star. This is Cross. What’s up with you man? I have heard so much about you from other clients. In fact, I’ve been following your moves over the last year through Facebook and Twitter. You are really on fire. How may I serve you today?”
Star feels all the nerves drain out of his body as he takes in Attorney Cross’ response.
Star says to himself, “Maybe I am making the right move by talking to this attorney.”
Star nervously gives Cross a quick rundown on what happened with Go Getter and Fame Records earlier that day and asks if Cross can help him understand the contract he has been asked to sign.
Attorney Cross confirms that he will be honored to review the agreement and says he will transfer Star over to his staff to set the appointment immediately for the next day.
Star responds to Cross with a weak sounding, “Okay, thank you Attorney Cross."
Sensing the strained response, Cross asks, “Is something wrong Mr. Star?”
“Attorney Cross,” says Star, “I am doing well in the music game, but I don’t have thousands of dollars to pay for your services. I want to be up front with you.”
“I understand.” Cross responds. “My initial consultation and contract review is done on a flat fee basis, and that charge is not thousands of dollars. Relax—my staff will take care of everything. Make sure to get a good night sleep, because tomorrow is going to be a very important day for you.”
Star thanks Cross, talks with the law firm staff and gets everything arranged for his meeting on tomorrow. As he hangs up the phone, he is experiencing comfort in that at least he is not alone in trying to decide what to do next about the recording contract.
“Maybe talking to this Attorney will at least give me a better sense of direction so I won’t feel so blind about this contract,” Star says to himself as he hangs up the phone.
As the afternoon turns into evening, the more Star thinks about the meeting he has scheduled tomorrow with Attorney Cross, the more convinced he is that he is making the right move.
Star works on a couple of songs and tries to get some sleep knowing that tomorrow is going to be a big day for him.
It is early the next morning, and Star attentively sits with Attorney Cross in a conference room with the recording agreement spread out on a conference table before them. Attorney Cross explains to Star that they will be discussing the following major clauses of the contract:
Term Exclusive Clause
Exclusive Recording Service Clause
Recording Commitment Clause
Recording Procedure Clause
Recording Cost Clause
Advances
Grant of Rights Clause
Royalties Clause
Miscellaneous Royalty Provision Clause
Royalty Clause
Warranties, Representations, Restrictions and Indemnities
Mechanical Licenses; Publishing
Suspension and Termination
Publishing
Distribution Agreement/Upstream Agreement
360 Degree Rights
Introduction
Side-Artist
Release Commitment
Tour Support
Assignments
Audio-Visual Rights
Artist Website/Social Media
As Cross reads through the index of the various clauses, Star begins to feel afraid and weak inside. For a moment, he thinks he is about to have a panic attack. Star is actually tempted to bolt from his chair and run out of Attorney Cross’ office. Instead, Star forces himself to take deep breaths and slowly counts to ten. He tells himself, “You can do this. You can make it through this. It is important for you to stick it out.”
Star repeats this over and over in his head, and he feels his heart rate slowing down and his breathing returning to normal. Star cannot believe how afraid he is. His fear is like going out to perform in front of 80,000 fans and coming down with the worst case of stage fright. “Okay,” Star tells himself again. “Focus on Cross’ voice, and what he is saying.”
Attorney Cross rolls up his sleeves, looks at Star, and says excitedly, “Let’s get started, I love this”! The first clause we will look at, and one of the more important clauses of any recording agreement, is the term clause. The term of an Exclusive Artist Recording Agreement determines how long you will be obligated to perform recording services for a record label. Let’s look at what the clause states:
Term: The term of this agreement (hereinafter, the “term”) shall commence as of the date this agreement was executed and shall continue for an initial term ending on the date; (i) nine (9) months following the initial retail release date of the album to be delivered during such initial contract period or (ii) twelve (12) months following the date on which Artist delivers to company the fully equalized, digital tape masters to be used in manufacturing the phonograph record units to be made for distribution in the United States.
“Let’s stop here and discuss what we have read,” says Cross. “When artists try to read through the term clause, they typically get confused by the concept. The thing that you have to understand is that labels need time to put out singles and albums. They do everything within their power through the provisions contained in the Exclusive Artist Contract to preserve their ability to adjust to changing conditions. Let’s examine this closer,” says Cross.
Cross continues, “Star, stay with me because I am going to explain a concept that confuses scores of Artist attempting to understand how the Term clause works and it is a perfect example of what I just described about Record Labels wanting the contractual flexibility to adjust to changing conditions.”
Star remains silent, but nods his head to confirm he is ready.
Cross begins “For most of us, we are conditioned to calculate time from a definite beginning to a definite end. For example, if you work 9 to 5, your work time is calculated from 9 a.m., when you clock in, and time ends at 5:00 p.m. Then, you are out of there until the next morning at 9 a.m. Well, unfortunately for artists, as stated previously, record labels don’t want to be locked into only having an artist’s services from 9:00 a.m. to 5:00 p.m. Instead, what the record label wants to do is have you required to show up at 9:00 a.m., but they don’t allow you to punch the clock until the truck you have been instructed to unload has actually arrived at the store. The illustration I just described is the key to understanding how the “Term” clause operates within Exclusive Artist Agreements. The artist is required to show up and work to get the album done; however, for the purposes of calculating when his or her actual contract obligations end, the company is using two bites of the apple. The artist’s contractual obligation will either end nine 9 months after the initial retail release date of the album, on the one hand, or twelve 12 months after the label has accepted delivery of the masters that will make up the album, on the other hand.”
“Let’s look at this further,” Cross continues as Star sits quietly listening.
Under (#1), the initial contract term period will not end until nine (9) months from the initial retail release date. The artist needs to make sure he or she has a good understanding of what the record company defines as the retail release date (this is very important -- make sure that if you are not clear on what the retail release date is that you demand that the label put in specific language defining what will constitute the retail release date). Under (#2), the initial contract term period will not end until twelve (12) months from the date the record company accepts delivery of the masters that will make up the album. The important thing to remember here is that you want to make sure you have a definite understanding of what will constitute acceptable delivery. The artist has to know for sure what requirements are in place for the company to acknowledge that artist has successfully delivered the project to the record label’s possession.
Now with either (#1) or (#2), what the artist(s) has to keep in mind is that his/her/their contract period will not end until the triggering events contained in #1 or #2. For example, (in #1) if it takes the artist ten months from the date the contract is executed to get his/her/their album recorded, and then an additional three months for the Artist’s album to achieve retail release, we have a total of thirteen months that the artist has been performing services under his/her/their contract. However, for the purposes of calculating when the initial contract term will end, we only count forward from the initial retail release date of the album up through nine months from that original release date. The previous thirteen months that the artist has been under contract and performing services will not apply toward the calculation of when the initial contract term will end. Similarly, with #2, let’s say an artist has been recording material for seven months, but the record label has only officially accepted ten (10) tracks when the artist is required to deliver twelve (12) tracks under the contract. Now, let’s assume that it takes the artist three more months before the record label finally accepts delivery of the last two (2) tracks. What does this mean in calculating how much time the Artist has left on his or her initial contract term?
“If the company fails to release the album containing the twelve (12) delivered masters within twelve (12) months from the date the last master was accepted, then under scenario #2, the initial contract period for the artist will be completed.”
“How much time did the artist’s initial contract term last under #2 with the above example?
Seven (7) months + three (3) months + twelve (12) months = twenty-two (22) months. This means that the artist’s primary term lasted almost two years.”
Attorney Cross pauses for a moment and continues, “Now, let’s continue reading further in the Term Clause.”
Star looks up briefly. He feels his nerves building back up, but he forces himself to keep breathing deeply. “Focus on what the man is saying,” Star tells himself.
As Star listens to Cross he thinks to himself, “I don’t like the way this contract is sounding, and we are just getting started. Why can’t the term just last for a straight 12 months and then end?”
Star refocuses on Cross’ voice. Cross is already reading the next section.
The next section reads;
(a) Artist hereby grants to the Record Label five (5) irrevocable options to renew the term of the exclusive Artist Recording Agreement for additional contract periods upon the same terms and conditions applicable to the first contract period.
“The above clause is known as the option clause,” Cross goes on to say. “The option clause grants the record label the right to record additional albums featuring the artist performances, depending on how many option periods the record label has been granted.”
Cross continues “Under this contract Fame Records is requesting five irrevocable option periods to be identical to the initial contract term. By using the words “irrevocable options”, the record label is telling the artist that it is the label’s choice as to whether to keep the artist under the contract for additional periods for the delivery of additional albums, or, on the other hand, release the artist from future recording obligations.”
Cross continues “Under the typical recording agreement an artist will have no say so as to whether or not he/she/they can back out of the contract for additional term periods. What this means to the artist is that when he/she/they sat down to think about signing a recording agreement containing a clause that includes the phrase “irrevocable option periods,” he/she/they must deal with the reality that he/she/they may be facing a major and significant commitment that can extend for years even if they actually want out of it.”