Read Between The Lines Before You Sign

by Chip Cox

Normally this column involves legal matters for bands that have already signed or expect to sign a contract soon. Of course, that leaves out an awful lot of musicians who are hoping to be noticed and signed. Let’s focus on one of the danger areas of the demo process by pointing out some issues using a genuine demo contract as an example. The quoted material is for a compilation release by an American label but information identifying the label has been removed. However, it is typical of similar contracts offered by other labels.

“Artist agrees to purchase _______ copies of CD from Label at a price of $3.75 per unit plus shipping (usually $4.25 total for bands in the US, shipping is more if you are international). Additional copies can always be ordered at any time directly from Label for the same price as listed above. Payment must be received prior to artist's inclusion on the compilation.”

“Artist agrees to furnish a payment of $125 to Label for all promotional endeavors. Promotion will include, but is not limited to; a 4-week national college radio campaign to 300+ stations, press & publicity through an indie publicist, promotion to retail record stores & press outlets. All promotion is furnished by Label and all costs are covered by the $125 payment. Payment must be received prior to artist's inclusion on the compilation. NOTE: This is not an optional condition of the contract.”

“For a period of 12 months following release of the CD, Label shall have the exclusive right to:

1) Enter into a recording agreement with Artist OR

2) Match any other offers received by Artist in which event an equal offer (in goods and services combined) offer from Label will prevail. OR

3) Receive an override of 2 (two) Artist royalty points on each un-delivered CD should the Artist sign a recording agreement with another label.”

The last paragraph is the main problem with this agreement. Requiring a band to buy X number of copies isn’t really a problem since the bands aren’t going to receive royalties on the sale of this CD; the only way they’ll make any money is to buy and sell this CD at their shows. The quoted price is reasonable.

The promotional expense isn’t much good. Mailing a few hundred of these CDs to college stations isn’t going to obtain much, if any, airplay. The particular subgenre for this label doesn’t even get regular airplay on most college stations outside of specialty shows. If the CDs were targeted to those few specialty shows, then it would be more effective. As for retail outlets, the typical promotion consists of an ad in the weekly new releases material from a distributor. Sometimes, the label will actually mail a promo copy to a store that specializes in the genre, which frequently winds up marked for sale as “used”. As you can imagine, these sorts of compilations aren’t big sellers.

It’s the last paragraph that should cause a good lawyer to warn off a band considering signing this contract. Look at the first option. Would your band really want to be on this label? They’ve got an exclusive period of twelve months to decide if they want to sign your band - if you’ve got hopes elsewhere, you might not want to sign this document. The second option worries me even more because of the vagueness: “equal offer (in goods and services combined)”. How’s that going to be valued? It’s one of those areas that scares lawyers to death.

Chip Cox is a former professor at the University of Missouri Law School and currently practices entertainment law in his hometown of Kansas City, Missouri. He can be reached via e-mail at chip@inspiratron2100.com