Understanding key terms can help you take control of your career, but navigating recording agreements can be daunting – especially with all the legal jargon involved.
Let’s break down some of the most important concepts you’ll come across in a typical recording agreement. Plus, we’ll explain how Songpact can help you take control of your career, ensuring you fully understand what you’re signing.
1. Term
The term of a recording agreement refers to how long an artist is committed to a record company. This period is typically broken into an initial period (for the first album or project) and option periods, where the label can decide whether to extend the contract for future albums.
2. Option Period
An option period is a contract extension at the discretion of the record company. If the label likes how the initial release performed, they can exercise the option to extend the agreement and require the artist to produce more music under the same terms.
3. Rights Period
The rights period defines how long the record company retains ownership or control over the recordings. In the past, this could be for the life of the copyright (usually 70 years after the artist’s death), but now it’s more common to see fixed exclusive licence periods, typically ranging from 3 to 15 years. The length often depends on the label’s level of investment in the artist’s career.
4. Minimum Commitment
This is the minimum number of albums or recordings that the artist is required to deliver to the label during each contract period. For instance, a contract might stipulate the release of one album per period to fulfil the artist’s obligations.
5. PPD (Published Price to Dealer)
PPD refers to the wholesale price of an album, and it’s often used to calculate an artist’s royalty rate. For example, an artist might receive 20% of the PPD as their royalty. If the PPD of an album is £10, the artist would earn £2 per album sold.
6. Advances
An advance is a pre-payment of royalties given to an artist by the record company. It’s essentially an upfront sum that is later deducted (or recouped) from the artist’s future royalties. Advances help artists cover immediate expenses, but it’s important to note that they are recoupable.
7. Recoupment
Recoupment is the process by which a record label recovers its expenses (including advances and production costs) from the artist’s royalties. Until these expenses are fully recouped, the artist may not see any additional income from their music sales or streams.
8. Controlled Compositions
This clause defines the mechanical royalties (publishing royalties) that a record label pays for the reproduction of the artist’s own songs in their recordings. Labels typically negotiate a reduced mechanical royalty rate for songs written or co-written by the artist, referred to as controlled compositions.
How Songpact Can Help
At Songpact, we specialise in simplifying the complexities of music contracts. Whether it’s understanding your royalty rate, deciphering terms like “recoupment” or “advances,” or grasping the length of your rights period, our platform helps artists clearly understand every aspect of their contracts. Our plain-English contracts ensure that producers, artists, and songwriters know exactly what they’re agreeing to, so they can focus on creating music without getting bogged down in confusing legalese.
With Songpact, you’ll have peace of mind knowing your agreements are transparent, fair, and easy to understand, putting you in control of your music career.