Re: Music Business Law
Packaging and Giveaways- Artist are usually charged for these costs. This is taken out of the costs for the retail price of the product; this percentage is usually 25%. Giveaways are freebees given to radio stations- this sometimes results in another 25% taken out of the retail price of the product. Breakage is also another cost. The Breakage rule is that the artist only get 90% of royalties made to factor in losses accounted for breakage of products and damages of goods. Unfortunately this charge is also put on digital downloads. The ¾ rule- technology fee this includes cds (stupid since cds have been around since the 80′s), dvds, digital downloads. This means that on these technologies the percentage made by the artist is now ¾% what they would make on other goods. Keep in mind that this is just the recording contract and that the artist usually makes money from merchandise and tours.
Producers biggest job is keeping track of the recording budget.
Reserves Clause- deals with returns. The record company will hold back 20-40% of gross sales and will not distribute the royalties for these for up to two years in case if the records get returns. This is because most distribution of records is on consignment. This also happens on digital downloads.
360 degree deal- this is a contract that includes almost everything from performing, to acting, merchandising, publishing, acting. Artist make more money on record sales but loses tons of rights. This means that the artist gives away their freedoms in personal endorsements, so if an artist endorses something like a brand of shoes, then the record company can get a cut.
record sales and master licensing 50/50
Touring 85/15 in favor of the artist
merchandising 85/15 in favor of the artist
personal appearances/endorsements 85/15 in favor of the artist
acting 90/10 in favor of the artist
Major Labels get 20-30 new acts a year, and they can only properly advertise, fund and promote 6 acts. The others are usually not funded properly or maybe their records are never even released. The contract negotiation can take 6-15 months. Recording 2 weeks-6 months. Two months to determine if the record company is going to fund an album or not.
The producer books studios, musicians, takes care of dealing with unions, copyright and sample clearances. They might have a high overhead and help produce a bands sound. Most record deals make the artist get a producer. The artist pays the producer but the record company writes the check. The producer’s money is added to the total amount to pay back for the advance.