Music Contracts: Common Pitfalls To Avoid


It is pertinent that every creative within the music ecosystem who wants a sustainable career in the music business is aware of the type of contract they plan to sign. Before you sign any contract, ensure you UNDERSTAND YOUR RIGHTS as this helps you identify the rights you will retain and the rights you will be giving up. This includes ownership rights, creative control (If you value your creative independence, bargain for conditions that give you some say) and the various revenue streams your music generates.


Here are some of the pitfalls to avoid in a music contract:

UNFAVORABLE ROYALTY RATES: you want to ensure that you are not collecting a low royalty rate for the exploitation of your musical works and that the royalty rates/structure is clearly defined in the contract. You also want to make sure that you are receiving a fair cut and to do this, you need to do your research. Understand the differences between gross revenue (total sales) and net revenue (revenue after expenses) calculations and ensure to approach the negotiation table well prepared. The decision you make today will determine how your retirement will be.


EXTENDED DURATION: Prolonged contracts have the potential to keep you confined/locked in for years thereby limiting future opportunities in other words, extensive contracts can restrict your ability to explore new opportunities or collaborate with different labels in the future. Choose a reasonable term length that aligns with your career goals while also allowing you a room for growth.


AMBIGUOUS ACCOUNTING PRACTICES: Make sure the contract is written in a clear and transparent manner, and you should be able to understand how your royalties are calculated and where, how and when the payment will be due and payable. Also, keep an eye out for hidden fees and make sure you are aware of who is financially accountable for what. Ensure that details about accounting statements and audit rights are included, and records properly kept for audit purposes.


PERPETUITY CLAUSES: Steer clear of perpetuity clauses that grant ownership of your music indefinitely. Negotiate for contracts with defined time limits that allow for renewal or renegotiation after a set period.


ABSENCE OF REVERSION PROVISIONS: Look out for clauses that enable the Artist to regain ownership of their intellectual property rights after a set, mutually agreed-upon time. Incorporate reversion clauses to ensure that where the other party fails to properly exploit the work, the rights will revert to the artiste.


NO EXIT CLAUSE: Since the music industry is dynamic, having an exit clause provides a safety net in case things do not go as planned. Ensure that the contract outlines the conditions under which either party can end the contract, such as breach of contract, failure to meet certain performance benchmarks, amongst other salient reasons.

In conclusion, one way to make sure the contract stays relevant as the industry changes is to include provisions that address potential new technologies and distribution channels. Never give in to immediate pressure to sign a contract. Carefully read the contract and consult with a qualified legal professional to review the terms of the agreement so as to ensure your rights are protected.