Negotiating With Record Labels

Your time has arrived and you have received an offer of a recording contract.  Although many artists are not business-minded, the recording industry is a business so you as an artist need to know how it works.Let’s take a look at some very important things to consider when making this important negotiation.

1. Do some research and be as knowledgeable as you possibly can on record company contracts. You will need to know this before you are ready to do any kind of record company negotiations. In short, know and understand the recording industry and the nature of the business relationships between artists and labels. It is fine to view samples of recording contracts so that you will  be aware of what issues are normally dealt with and how they are usually resolved. I would also say it is a great idea should you get into this area to hire or consider legal help in these matters. It is a serious time and you will want to feel comfortable in knowing that you are really covered in all situations.

2.Make the duration of your record contract three years and no longer. (This would include renewal options.) This is recommended because if you are not dealing with a major label you may find the label is not able to adequately promote your work, and a long-term record contract with an ineffective label could prove to be a long an non-productive venture.

3. Seek a royalty of at least 6 percent of domestic sales and 4 to 5 percent of foreign sales. Your original request can be significantly higher than this, in order to give you room to offer concessions during the negotiating process. If you  negotiatate properly, you may be able to obtain a royalty of up to 10 percent. Keep in mind though that the higher the royalty the lower your advance is likely to be.(Should you choose to seek one).

4. Should you seek an advance make sure you cover your production expenses (recording, mastering a CD, etc). This way you will not have to cover these expenses out of your own pocket. Make sure you research these expenses  before you sit down at the negotiating table, so that you will know how much you need. Remember, this advance is not free money but money you will eventually end up paying back. So, keep this in mind.

5. Be sure you know the who, what, when and how the label is going to use to promote your work.
Establish the standards and their minimums so there is no miss understanding about what is expceted. You will also want to have the right to terminate the contract if these standards are not met.

6. Make sure that the 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.