BEWARE OF THE CON BEFORE SIGNING A CONTRACT

Contracts are a very formal way of doing business. Contracts are sometimes necessary to complete a business transaction. In the recording industry a contract can make or break your career if not entered into advisedly. Anyone entering into a contract should have some knowledge of the music business. You have to understand that a contract is a written form of the terms agreed upon by two or more parties to be carried out and adhered unto according to the provisions articulated within it and the laws that govern the state for which it is written. Once you’ve signed a contract you’re locked into it until the terms are fulfilled. With respect to contracts, I can recall having a conversation with a good friend of mine who is also a writer and director in the film industry and he made a very true statement. He stated that a contract is only as good as the paper it’s written on, if you can confide in, trust, and have some type of proof or evidence that the person you are entering into contract with is legit. I believe that this is of equal importance as having and understanding of the terms of the actual contract itself. Beware of Cons before signing a contract! Having to sue someone and go to court over a breach of contract can be extremely costly and very time consuming. It can also detract you from the primary focus of the business at hand. So what’s extremely important when entering into a contract is to first make sure that the person or organization that you are going into a contract with is right? Take the time to get to know them and make sure that the relationship is a right fit for you to go into business with and form a contractual agreement. Do some research and ask for references if necessary. Second, make sure the contract is right in that it is articulated appropriately to satisfy your wants, needs and desires of the deal.

A few years ago l learned of a new type of contract being used by record companies called 360 Deals. Upon my first look at it, I will have say that I really didn’t think it was a good idea. Nor did I think it was more than a way to get more money from an artist who was very new and not really understanding of their rights. Well, after some careful thought and consideration as well as some research, I view these types of contracts a little differently now. First of all, What is a 360 Deal you may be asking? Well, simply put, a 360 deal is a deal that was introduced by record companies a few years ago, when record companies began to lose lots of money.  This lost was partially due to the influx of digital resources and the reduction of CD sales. This new concept would allow these companies to recoup costs and advances given to artists from more than just the sell of their music. Instead they would be able to get a percentage from any work an artist did i.e. concerts, merchandising, endorsements, licensing, etc. Now at the onset, this type of contract again looks and feels like a poor attempt for record companies to get over on an artist. However, upon further review of this concept it really gives a record company the opportunity to build a brand with the artist.  This actually allows the record company to become more involved with the overall career of the artist instead of just what they do musically.

I recently did some research on Live Nation. They have recently taken on this concept of the 360 Deal and surprisingly, they are not even a record label.  However, they are the largest concert promoter in America. They were able to use this concept to make deals with industry powerhouses like Madonna, Jay-Z, and Justin Timberlake. By using the 360 Deal concept, they have greater access to addition streams of income from these already known artist with proven brands from their concerts, merchandise, endorsements and licensing agreements. This has actually created some success for Live Nation and is expected to prove to be even more profitable over the next few years according to their President and CEO, Michael Rapino in an interview he did with the Wall Street Journal.

So in principle, if you can become more educated about the business side of the music industry, you will be better equipped at avoiding the con before signing a contract. You can then become a professional at weighing and benefiting from the pros of every contract you enter into.

-Mike Sears