How to Negotiate a Record Contract
An offer of a recording contract is an exciting event for a new artist. However, it is easy to forget that a badly negotiated contract could leave an artist without much of the fruits of her labor. Although many artists are not business-minded, the recording industry is a business, and any artists involved in it should have a basic understanding of how it works. Certain terms should be included in any recording contract between an artist and a label.
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Instructions
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Research the recording industry and make sure you understand the nature of the business relationship between labels and artists. You should also view sample recording contracts so that you will know what issues are normally dealt with and how they are usually resolved.
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Make sure that the maximum duration of your record contract is no longer than three years, including renewal options. This is especially important if you are not dealing with a major label. Not all labels are capable of adequately promoting an artist's work, and a long-term record contract with an ineffective label could ruin your career.
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Seek a royalty of at least 6 percent of domestic sales and 4 to 5 percent of foreign sales. Your original demand should be significantly higher than this, in order to give you room to offer concessions during the negotiating process. If you are a good negotiator, you may be able to secure royalties of up to 10 percent. The higher the royalty you demand, however, the lower your advance is likely to be.
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Seek an advance that is more than sufficient to cover your production expenses (recording and mastering a CD, for example), so that you will not have to cover these expenses out of your own pocket. You may need to research these expenses on your own before you sit down at the negotiating table, so that you will know how much to demand.
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Insist on detailed provisions concerning the label's duty to promote your work. Clear minimum standards should be established, and you should have the right to terminate the contract if these standards are not met.
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Insist that ownership of the master recordings of your songs revert to you when the record contract expires or is terminated for any reason.This will allow you to keep making money from your songs long after the recording contract expires.
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Tips & Warnings
Retain the services of an attorney who is experienced in writing and negotiating record contacts. The benefits of this course of action are likely to far outweigh the legal fees you will have to pay.
Ultimately, it is your willingness to walk away from the negotiating table that provides you with most of your bargaining power. If you are secretly willing to accept any terms offered by the label, you probably will not be able to hide it, and you will likely end up on the short end of a one-sided deal.
