Part 3: Managing Artist Relationships. Chapter 11.

Part 3: Managing Artist Relationships

Chapter 11

Start Thinking. . . What role do unions play in record company

contracts?What are the important issues that should be

negotiated in a recording contract?

Chapter GoalsLearn the basic elements in a recording

contract.Be able to distinguish between royalty artist

issues and nonroyalty artist issues.Understand union involvement in the process

and the standing agreements that the AFM and AFTRA have with record companies.

AFTRA AgreementsAmerican Federation of Television and Radio

ArtistsAFTRA National Code of Fair Practice for

Sound Recordingscovers all singers on a recording

AFTRA AgreementsVocal ContractorsUnion contractor

3+ AFTRA singers in recordingsinging member of the groupsupervises adherence to AFTRA code

Overdubbing and trackingSound recording copyright sharesAFTRA’s Sound Recording Sessions Report

AFTRA AgreementsScaleClassifications of employmentRecording funds/advanceContingent scale paymentsPayments to nonroyalty singersAFTRA Health & Retirement Funds

AFTRA AgreementsAcquired MastersRecordings by small companies and indie

labelsSignatory third party acquiring master:

must ensure nonsignatory producer complied with AFTRA code

must comply with all obligations H&R and contingent payments

New use of masters

AFTRA AgreementsNonunion RecordingAdvantages of collectivismChanging technologyBut AFTRA obligations must be met when

distributing nationallyMoney not saved in the long run by initially

circumventing AFTRA and the AFM

AFM AgreementsSound Recording Labor AgreementInstrumentalists, conductors, arrangers,

orchestrators, and copyistsCovers provisions for production of music

videos and concert DVDsEmployer pays wages + AFM Health &

Welfare Fund + AFM Employers Pension Fund

AFM AgreementsSound Recording Labor AgreementContract provides

200% of sidemusicians’ pay for the leader AFM contractor for 12+ musiciansdoubling, cartage, etc.backup artists

Royalty artists“Outside” masters

AFM AgreementsSound Recording Special Payments FundPhonograph records

record companies make payments to fund twice a year

paid to musicians who performed in preceding 5 years

same scale payments for all musiciansMotion pictures

Film Musicians Secondary Markets Fund payments reflect relative success of project

AFM AgreementsMusic Performance FundsNonprofit organization to keep live music

available to publicTrustees schedule live music performances

by AFM membersIf no admission charged live performances

may be broadcastDigital downloading adversely affected

physical sales and therefore MPF

AFM AgreementsNonunion RecordingTaft-Hartley Act and right-to-work lawsAFM control

professional symphony and popular music recording

less control in gospel, Christian, jazz, and country fields

Young Sounds of the AFMSpec sessions

Royalty Artist ContractsTypes of Deals1. The label signs the artist; a producer

handles project in-house; artist gets royalties2. The label already has artist under contract;

retains independent producer 3. Independent producer and artist produce

master tape, then convince record company to acquire it

4. Master lease deal5. Artist forms a production company to deliver

a master tape to a label

Royalty Artist ContractsNegotiations Conservative signing policies Terms of contract Maximize self-interests versus compromise Royalty rate adjustments or bonuses as

plateaus reached

Royalty Artist ContractsThe Issues Term Exclusivity Royalties, advances Production budget minimums Creative control Commitment to promote Chargebacks Ownership of masters

Royalty Artist ContractsThe Issues Publishing rights, controlled compositions Video rights Foreign releases Assignment Right to audit Default, cure Royalty discounts

Royalty Artist Contracts360 Deals Power shift between artists and record

companies Two types of 360 deals/“artist brand”

agreements:1. record company gets traditional revenues +

percentage of the artist’s other income streams

2. true partnership Environment = double-edged sword

Royalty Artist ContractsNew Use and Legacy Royalty Rates Dramatic changes in technology Historically, new uses fitted into existing

categories Digital downloads Telephone ringtones Instant recording at live performance

venues

For Further Thought. . . What is the difference between a royalty

artist and a nonroyalty artist?What contractual issues related to creative

control should be negotiated by an artist?Why is it possible for an artist to have

fulfilled all recording obligations under a contract, have some recordings that sold well, but still not receive any royalties?