5 things musicians should know about production deals

 11 June 2014

Securing a production deal can feel like an exciting next step for any musician, but there are plenty of legal pitfalls that it's important to be aware of. Here are five key points that every musician should consider before they say yes to a production agreement.

Production companies simply don't have the means to fund the launch of new artists.
Production companies simply don't have the means to fund the launch of new artists.

After months, even years, of trying to find any sort of deal to move your music career forward, you've found a company that would like to offer you a production deal.

Typically the company is neither a major nor an independent record label, but works with artists to develop the artistic sound of their music, their image and marketability, solely to licence or assign the artist's mastered sound recordings to record labels.

However, if you think that being offered a production deal means you are guaranteed to get a lucrative record deal, think again. You still have to protect your dream from the legal pitfalls a production deal might throw your way.

There are a few very important points to consider when you are about to enter into a production agreement with a production company.

1. Maximise your chances of a record deal

A production deal is typically used as a platform to secure the involvement of a record company. Production companies simply don't have the means to fund the launch of new artists. Neither do they have the distribution capabilities or the strategic retail alliances. 

If you think a production deal means you are guaranteed a lucrative record deal, think again. 

In other words, you will need to make sure that you maximise your chances of getting a record deal.

Tip: You can link your recording commitment to the ability of the production company to secure a deal from a properly funded record company.

You could commit to an initial period with an option to terminate the deal if the production company is unable to secure a record deal.

2. Avoid giving up all master rights

The deal with the production company tends to be an exclusive deal to record music for that company for a period of time, known as the 'term'. 

As the production company will want to license or assign rights in the mastered recordings to record companies, it will usually insist on acquiring all rights. It will want these in the event that it is able to secure an appropriate record deal.

Tip: You could limit the rights of the production company in a number of ways. For instance, you can make sure the term is indeed limited and ensure that the production company does not have the rights in perpetuity.

3. Hold back from losing global rights

You should be wary of giving up all rights in all territories worldwide to the production company.

There are lots of sham production agreements around. 

Tip: You could limit the territories to parts of the world where you know that the production company is well connected.

Do your research on the production company: are they well-known within the industry generally? Are they better known in Europe than in the United States, for example?

4. The deal should add value

There are lots of sham production agreements around. A case in point is music managers looking to improve their bargaining positions by getting artists to sign a production agreement.

Tip: In a genuine production agreement, the production company should have its own well-equipped recording studio facility.

A good producer performs a number of duties including sound engineering, voice coaching, working on melodies and samples, and participating in recording sessions. Some producers even get involved in recording sessions playing musical instruments like bass guitar or drums.

Doing your research also means that you become familiar with the production company and its work.

Remember once you have signed a production deal you are stuck with it. It's too late after you've signed the agreement if you don't like the producers' work, particularly as their fee will impact on your potential earnings.

5. Get a fair royalty split

In a recording agreement with an independent record company, the royalty split is usually a 50:50 split of the net receipts.

In a genuine production agreement, the company should have its own well-equipped recording studio.

The pitfall is that the production agreement, which is not a record deal, will probably also seek a 50:50 split of the profits. This will obviously reduce your royalty entitlement from the record company once the producer royalties have been factored into the calculation.

Additionally a third party producer may also be involved in 'producing' the album, meaning that there will also be third party producer royalties to be deducted before you receive anything.

So you could end up receiving just between 10 per cent and 15 per cent of the net receipts from the exploitation of the master recordings.

Tip: To prevent this scenario, you should negotiate the royalty payments in your favour. Ensure a right of approval over any record deal with any third party producer.

Whatever you agree, never sign anything without getting proper legal advice from a solicitor.

Peter Adediran leads the team at PAIL Solicitors, advising artists, managers, producers, agents and singer/songwriters within the music industry.


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