Before signing a music contract: essential checklist

The term is how long the contract lasts. A one-year term is very different from a ten-year term. Some contracts have an initial term with options to extend - make sure you understand who has those options and when they can be exercised. The territory is where the contract applies. A worldwide deal covers all countries. Some deals are territory-specific (e.g., UK and Ireland only). Consider whether you want to tie up all territories with one partner or retain flexibility in some markets. Option periods: Many record and publishing deals include options for the company to extend the contract. For example, an initial one-album deal with options for four more albums. If the company exercises these options, you are committed. Understand when options expire and what triggers them. Key questions to ask: - How long am I committed for? - What happens when the contract ends? - Who decides whether to extend or renew? - Can I get out early under any circumstances?

The royalty rate is the percentage of income you receive. But the headline rate often does not tell the whole story. You need to understand: What the rate applies to: Is it a percentage of gross income, net income, or something else? Net can mean many things depending on what deductions are made first. Deductions: What costs are taken off before your royalty is calculated? Common deductions include distribution fees, marketing costs, packaging deductions (a legacy from physical sales), and third-party costs. Advances: An advance is money paid upfront against future royalties. It feels like income, but it is actually a loan that gets repaid from your royalties. Until you "recoup" (pay back) the advance, you will not receive additional royalty payments. Accounting periods: How often will you receive statements and payments? Quarterly, semi-annually, annually? Longer periods mean waiting longer for your money. Cross-collateralisation: Some contracts allow the company to offset losses from one project against earnings from another. If your first album loses money but your second makes money, the company might use the second album's earnings to cover the first album's losses.

Recoupment is one of the most misunderstood aspects of music contracts. When a label or publisher gives you an advance or spends money on your behalf (recording costs, marketing, videos), you usually have to pay that back from your royalties before you see additional money. Key questions: - What costs are recoupable? Just the advance, or also recording, marketing, video, tour support? - At what rate do I recoup? If your royalty rate is 20%, you might recoup at that rate too, meaning £100 of costs requires £500 of gross income to recoup. - Are costs cross-collateralised across projects or releases? Example: You receive a £50,000 advance. Recording costs are £30,000. Marketing costs are £20,000. Total recoupable: £100,000. If your royalty rate is 20%, you need to generate £500,000 in gross revenue before you see additional royalty payments beyond the advance. This is not necessarily unfair - advances provide guaranteed income - but you need to understand the numbers before signing.

Assignment clauses determine what rights you are transferring and for how long. Copyright assignment: Some deals require you to assign (transfer) your copyright to the company. This means they own it, potentially forever. Other deals are licenses, where you retain ownership but grant the company the right to exploit your work for a period. Masters: In a traditional record deal, the label typically owns the master recordings. In a distribution deal, you usually keep ownership. In a licensing deal, you license masters for a period and they revert to you. Publishing: Full publishing deals often involve assigning copyright in exchange for advances and administration. Administration deals leave you owning the copyright while the publisher administers on your behalf for a fee. Reversion: When do rights come back to you? Some contracts have clear reversion terms (e.g., rights revert 15 years after release, or when the album goes out of print). Others are life-of-copyright, meaning the company owns rights for decades. Questions to ask: - Am I assigning or licensing? - Do I keep ownership of anything? - When and how do rights revert to me? - What happens if the company is sold or goes bankrupt?

Newer contracts increasingly include clauses about artificial intelligence and data training. These are important to understand: AI training: Some contracts grant the company the right to use your voice, likeness, or music to train AI systems. This could mean your work is used to create synthetic versions of your voice or style. Digital likeness: Clauses may allow the company to create and exploit digital versions of you (avatars, holograms, synthetic performances). New technology: Broad "new technology" clauses give the company rights to exploit your work in formats that do not exist yet. This can be reasonable, but watch for terms that allow exploitation without additional payment. Questions to ask: - Can my voice, likeness, or music be used to train AI? - Who owns outputs created using AI trained on my work? - Am I compensated for new technology uses? - Can I opt out of specific uses? If you do not understand AI clauses, seek advice. This is a fast-moving area where the implications may not be obvious.