Forget a Record Deal, Get a Rights Management Deal

by | Apr 8, 2013 | Music Licensing

A Look at the BMG Chrysalis Master Model

If you are a frequent reader of this column, you know that I have strong opinions on signing to major label. Specifically, I’m adamantly against it (for many reasons) in most circumstances. Yet, in survey after survey, we see results that as many as 75% of independent musicians still want a major label record deal. I’m here to tell you that you will not get a record deal, and what’s more, you do not want one. Further, many artists may not fully understand what a “record deal” actually is in today’s music business, outside of the fairytale, back-of-the-club signings you’ve heard of.

So let’s unpack what you really want and how to get there. 

First, a “record deal” is no longer just about recording songs; in truth, it never was. Record deals are really about controlling copyrights, collecting and dispersing royalties, and exclusive distribution. There used to be “traditional” deals, where the full band was signed to a label, and then songwriters signed to publishers. Then there was the Promotion/Press and Distribution (P&D) deal, where a label would take your finished album, “press” it and release it while also marketing it to radio and retail outlets.

And then there is the rarified 360 deal. A very basic definition is of this deal is the record company, management, and subsidiary publisher end up controlling and taking a piece of the entirety of your revenue streams (recordings, publishing, licensing, touring, merchandise, public persona, story rights, etc.) all the way around… hence “360 (degrees).” As a music publisher and songwriter, I’ve been horrified by this money grab of increasingly more of your intellectual property for exploitation. The financial trade off is not beneficial in most cases, and this is all going to be a mess legally long-term.

Traditional deals, which basically bribed artists of their intellectual property with mismatched advances in exchange for hearing themselves on the radio, are basically gone; and good riddance, I say! 360s are really for mega pop stars who want to open nightclubs and launch clothing lines in addition to dance remixes. P&D deals were really hard to work, because you were stuck with a fixed album, and there was little participation in licensing and ancillary income.

For those who want to release great music, what is it that compels you to want a deal? It’s resources. Money is part of that, but also being able to work with better people, experienced professional guidance, and some help with distribution and marketing.

When artists say they want a record deal, I’m fairly sure they do not mean that they would like to give up creative control of their image. Most likely they do not really want to be told where and when they can and can’t play a live show, and for what minimum rate. I’m also betting they do not mean that they want cede creative control over what songs make it to the studio, or what person produces them, or how they will be marketed.

What you really want is a Rights Management Deal.

Enter BMG Chrysalis (U.S.) and their Master Model. BMG has long been one of the top five music publishers in the world and, having worked with them on licensing, I can tell you they are technologically superior in tracking and royalty distribution. BMG is really an artists services company that is not as interested in breaking stars as they are in sustaining long careers.

The Master Model is a fresh spin on the old P&D deal. It’s simple and fair. Rather than a takeover of rights, BMG offers the artist a partnership: The opportunity to construct a realistic budget for the release, which BMG bankrolls.

BMG CEO Hartwig Masuch recently said:

“Developing a strong catalog of master recordings has formed part of our plan since BMG was founded in 2008. We see a lot of opportunity in the market and are now accelerating our investment.”

BMG does not pay traditional advances to artists. Instead it agrees on a realistic project budget with the artist and releases money for manufacturing, marketing and promotion, which is then recouped according to the agreed revenue split. Every deal is different, but most of these splits have ranged from 70-75% to the artist, 20-25% to BMG, with the proviso that 75% of the agreed costs come out of the artist’s share first. Those kinds of terms are unheard of in today’s market.

Masuch added, “The beauty of our Masters Model is that because it is based on a mutually agreed upon budget with the artist, it can operate at virtually any level of sales.”

So stop with the record deal talk, that’s so last century! Everybody knows Rights Management Deals are the new thing. Maybe you’re next?

-Michael St. James is the founder and creative director of St. James Media, specializing in music licensing, publishing, production and artist development.