Do’s and Don’ts: Deal or No Deal

DEAL or NO DEAL: What you should look for in your record deal?

I am sure you have watched or at least heard of the hit show “Deal or No Deal” hosted by Howie Mandel. The contestants take risks when choosing which case to open as they compete for monetary prizes. Once you sign your record deal, that becomes the deal and saying “NO DEAL” later in the game probably will not get you out of that deal without a major fight. That is why it is important for you to completely understand the deal BEFORE you sign your name to it.

Here are a few things for you to double check.

LOOKOUT #1: Tune-Out Clause

Pay attention to how they [the label] will approve songs and push that the rejected songs should be considered as new songs during the next option period. Just because that song did not fit the first album might not necessarily mean it will not fit into the second one. In the end it will save you studio, production and recording costs if you are able to recycle the songs that the Label chose not to use.

LOOKOUT #2: Album Due Date

If the Label deducts from your paycheck because albums are not completed on-time, make sure there is a clause that addresses you being late because the Label made a mistake or caused the delay, so that you will not be penalized for their mishap.

LOOKOUT #3: Recoverable Expenses

You will have to repay the Label for expenses that they pre-pay in order to make your album. So, it is good for you to have them specify what the money will be used for ahead of time and that money will only be spent on things the agreement expressly covers so that you don’t get stuck with a huge bill down the road. Labels want to recoup their money for CD packaging, videos, tours and any other promotional material.

LOOKOUT #4: What is a SALE?

You want the Label to specify what constitutes a sale. What we would think or what normal people think may not be the same as the label’s definition. You want sales to always mean 100% of the records that are not returned to the Label.

LOOKOUT #5: Doubledipping

When it comes to royalties or the money that you will make, Labels often find ways to reduce what you will actually receive. It may be hard for you to spot “doubledipping” or when the same deductions are coming out in several different ways. In the end, it will leave the Artist asking what happened to my money and where did it go. This is where knowing the definition of sales and your royalty base fees will come in handy.

LOOKOUT #6: The Full Royalty

It is important that you are receiving as much of the royalty as possible when your album is initially released or when it is the “HOT ALBUM,” not six months from your release date when the buzz is gone. You will always sale more records and make more money during the release period… not six months down the road.

Of course there are tons of things you should know that I couldn’t possibly tell you in this article… and because it would put people in my profession out of business. If you have never studied the music business in detail then reviewing your contract alone may not be the best decision. Contracts are difficult to read and you should consult with an industry professional who has experience in these type of contracts BEFORE you take the deal.

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Written by: LaQuita R. Stokes, Attorney at Law

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