Part 3: Managing Artist Relationships

Chapter 11

Start Thinking. . .
 What role do unions play in record company contracts?
 What are the important issues that should be negotiated in a recording contract?

Chapter Goals
 Learn the basic elements in a recording contract.
 Be able to distinguish between royalty artist issues and nonroyalty artist issues.
 Understand union involvement in the process and the standing agreements that the AFM and AFTRA have with record companies.

AFTRA Agreements
 American Federation of Television and Radio Artists
 AFTRA National Code of Fair Practice for Sound
Recordings
 covers all singers on a recording

AFTRA Agreements
 Union contractor
 3+ AFTRA singers in recording
 singing member of the group
 supervises adherence to AFTRA code
 Overdubbing and tracking
 Sound recording copyright shares
 AFTRA’s Sound Recording Sessions Report

AFTRA Agreements
 Classifications of employment
 Recording funds/advance
 Contingent scale payments
 Payments to nonroyalty singers
 AFTRA Health & Retirement Funds

AFTRA Agreements
 Recordings by small companies and indie labels
 Signatory third party acquiring master:
 must ensure nonsignatory producer complied with
AFTRA code
 must comply with all obligations
 H&R and contingent payments
 New use of masters

AFTRA Agreements
 Advantages of collectivism
 Changing technology
 But AFTRA obligations must be met when distributing nationally
 Money not saved in the long run by initially circumventing AFTRA and the AFM

AFM Agreements
 Instrumentalists, conductors, arrangers, orchestrators, and copyists
 Covers provisions for production of music videos and concert DVDs
 Employer pays wages + AFM Health & Welfare Fund +
AFM Employers Pension Fund

AFM Agreements
 Contract provides
 200% of sidemusicians’ pay for the leader
 AFM contractor for 12+ musicians
 doubling, cartage, etc.
 backup artists
 Royalty artists
 “Outside” masters

AFM Agreements
 Phonograph records
 record companies make payments to fund twice a year
 paid to musicians who performed in preceding 5 years
 same scale payments for all musicians
 Motion pictures
 Film Musicians Secondary Markets Fund
 payments reflect relative success of project

AFM Agreements
 Nonprofit organization to keep live music available to public
 Trustees schedule live music performances by AFM members
 If no admission charged live performances may be broadcast
 Digital downloading adversely affected physical sales and therefore MPF

AFM Agreements
 Taft-Hartley Act and right-to-work laws
 AFM control
 professional symphony and popular music recording
 less control in gospel, Christian, jazz, and country fields
 Young Sounds of the AFM
 Spec sessions

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Royalty Artist Contracts
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The label signs the artist; a producer handles project in-house; artist gets royalties
The label already has artist under contract; retains independent producer
Independent producer and artist produce master tape, then convince record company to acquire it
Master lease deal
Artist forms a production company to deliver a master tape to a label

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Royalty Artist Contracts
Conservative signing policies
Terms of contract
Maximize self-interests versus compromise
Royalty rate adjustments or bonuses as plateaus reached

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Royalty Artist Contracts
Term
Exclusivity
Royalties, advances
Production budget minimums
Creative control
Commitment to promote
Chargebacks
Ownership of masters

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Royalty Artist Contracts
Publishing rights, controlled compositions
Video rights
Foreign releases
Assignment
Right to audit
Default, cure
Royalty discounts

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Royalty Artist Contracts
Power shift between artists and record companies
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Two types of 360 deals/“artist brand” agreements: record company gets traditional revenues + percentage of the artist’s other income streams true partnership
Environment = double-edged sword

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Royalty Artist Contracts
Dramatic changes in technology
Historically, new uses fitted into existing categories
Digital downloads
Telephone ringtones
Instant recording at live performance venues

For Further Thought. . .
 What is the difference between a royalty artist and a nonroyalty artist?
 What contractual issues related to creative control should be negotiated by an artist?
 Why is it possible for an artist to have fulfilled all recording obligations under a contract, have some recordings that sold well, but still not receive any royalties?