The music business is becoming more and more prominent in Nigeria and we are reaping the benefits either as creators or just consumers or even industry practitioners. Sadly, however, for all the average consumer thinks he knows about the music business, basic concepts seem to elude him. Comments that surround artist/label run-ins make me cringe as many do not have a clue how many basic concepts work in the music industry. So I have decided to break down a few concepts for readers and hope that will help their music education even if just on a residual level. Also if you have ambitions of entering the industry in any capacity, you might want to get in here or just look this way.
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Recording contracts are a basic component of the music industries all over the world. They are the single most important instrument of advancement in the industry as artistes depend on them to get by and record companies dole out royalties and sell records on the basis of the terms set out therein. So, here is what you must know about a recording contract.
What is a recording contract?
A recording contract is an arrangement between an artiste and a record label aimed at exploiting the artiste/performers work in return for an advance and royalty. The contract is usually hinged on purpose (selling music or song sheets (publishing)), exclusivity (on the artiste’s part), territory (region/country), terms (it could be based on a number of years or number of albums or mixtapes) and a release/exit clause which allows the artiste to leave the deal under certain circumstances. Also, a recording should have certain rights which are bequeathed to the artiste signing depending on the status of the artiste. The knotty issue of master recordings is usually sorted out under this category.
There are two extant forms of recording deals in vogue: traditional recording deals and 360 deals. There are also distribution deals which are not to be confused with outright recording deals. Here is how each works with small examples.
Traditional deals are the classic examples of recording deals where the record company pins to profit from revenues off the artiste’s recorded intellectual property. Typically, the artiste is to sign over to the label the rights to sell his /her music for a given period of time and usually, he/she is required to deliver a certain number of records or singles. Upon signing, the artiste is paid an advance and given a production budget to deliver a raft of singles or an album. Both packages are called inclusive recording fund.
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Royalties are stipulated in the contract body but the artiste does not get paid until the label profits the full value of the advance fee and recording budget. In essence, if Artiste A gets paid 10 million Naira as advance and a recording budget of 7 million Naira, the artiste is not due a royalty check until his/her album sells out to the value of the total outlay of 17 million Naira. Royalties usually never amount to more than ten or twenty percent of every Naira the content makes which essentially translates to twenty percent (at most) at any given time. The bigger an act gets the more money he/she can negotiate in total contract value.
A 360 deal refers to an arrangement where the label supports a wider spectrum of activities in the artiste’s professional life including touring, live performances, merchandising etc. beyond merely recorded content. In return, the artiste’s accents to the label get a percentage off each income stream. The 360 deal is a recent invention and the arrangement has been in response to dwindling revenue from record and CD sales thanks to digital music in the past 25 years. In other words, “the 360 deal reflects the fact that much of a musician’s income now comes from sources other than recorded music, such as live performance and merchandise.”
Distribution contract is a legal agreement between usually an (independent) artiste and a record label in order to handle distribution on his or her behalf in a certain territory. Many Nigerian artistes have distribution deals with international labels and they are either regionally specific or international deals. Labels with deep pockets tend to leverage partnerships with regionally relevant labels to promote some of these acts. When an artiste has a non-exclusive deal with a label, he/she may use different labels for different regions across the world.
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