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Building
a Better Music Business -- The Foundation
Judging from, oh, every source except the RIAA, it has become obvious that the majority consensus is that the recording industry is on a self-destructive path. Another widely held view, is that they've already come to the end of the path. So let's leave the topic of what to put on the tombstone of the 20th century music business model behind for a moment. It's time to start thinking about the issues that need to be addressed before the blueprints of the new plan are offered for final approval. New Ingredients There are two tiny little changes that could separate the music industry of the 21st century from every other incarnation of the entertainment business in the last 100 years. They are so incredibly simple that I'm surprised no one has thought of this before. I know that this is going to be a bold, revolutionary idea, the mere thought of which will give some of you shudders. But those people are probably wearing a suit, so I don't care. As for the rest of you, sit down before you read this and lean back in your chair so your bottom jaw doesn't hit your desk too hard. Ready? Change No. 1 -- Just Say "No" The first change is the responsibility of the artists. Signing bad contracts is what caused all of this in the first place. We've been doing it forever. Every time an artist signs a contract that signs away rights unnecessarily, it hurts every other artist that follows. The bigger the status of the artist, the more difference the act of acceptance or denial of poor contract terms becomes. "Doctor,
it hurts when I do this." In contrast to the previous use of the phrase "Just Say No", this time the purpose is to deny the addictive substance (music) from those who would choose to abuse it, not to ask for an ineffective, passive agreement from the abuser that they won't continue their destructive activity. Change No 2 -- Honesty This one is the responsibility of the record labels. If the music industry wants to change its image from that of the sleazy agent, the easiest way to do that is to start offering honest contracts. If you're done laughing now, don't forget to consider that if Change No. 1 occurs, the record labels (majors and independent) will be forced to incorporate Change No. 2. They will have no choice but to begin to write honest contracts if we refuse to sign any more bogus agreements. Here are a few things to watch out for and why you should say "No" if asked to agree to these terms. And when they tell you that "It's the industry standard", you should reply, "Not any more." The 75% Clause For the life of me, I cannot understand why anyone signs a contract which allows for a "three-quarter mechanical royalty rate, payable on a maximum of nine tracks per Album" -- a phrase I lifted directly from a major label distribution agreement. As I have been informed numerous times, the mechanical royalties are the monies paid to the songwriter and publisher. The current United States statutory rate is 8 cents per song per unit sold, with 4 cents going to the writer; the other four cents to the publisher. This rate is defined by the copyright laws. With the RIAA busy in Washington, D.C. pressing for changes to the copyright laws and claiming to be acting in the best interests of the copyright owners, the record labels which comprise the RIAA are busy eroding the Constitutional rights of the songwriter by asking artists to agree to pay them less than the federally mandated royalty rate. Any record label that adds this particular clause is obviously hypocritical and feels that the U.S. Congress has overestimated the value of a copyright. Any artist who signs a contract containing this clause is eroding the constitutional rights of every other songwriter in the country for the length of the contract. My personal opinion is that the above clause is unconstitutional. If McDonald's started making their employees agree to be paid less than federally mandated minimum wage, they would be in court so fast it would make Ronald McDonald's head explode. Yet, for some odd reason, the record labels have been doing exactly that for years. Another variation on this clause would concern the artist royalties, wherein royalties are only paid on 75% of sales, to account for all the freebies that they will have to give away in the name of promotion and payola. If they're giving them away, there are no sales dollars. So you're letting them give away free copies of your work and then reduce your royalties on actual sales. Can you spell "dumbass?" I knew you could. The third variation on the 75% Clause is called the "Packaging Deduction." This usually runs about 25% and is simply ludicrous. The Alternative Approach No matter what you get offered as an artist royalty on page one of the contract, if there are odd deductions and clauses added in, the label really has no intention of paying you that. They prefer to play a game with your agreement and see if you can figure out how much you're really going to get paid. Chances are you'll overlook the impact of one of these clauses and get a big, unpleasant surprise somewhere down the road. So let's say that you've got a contract for a 20% artist royalty sitting in front of you, but it's got a 75% clause built in. This means you're really only looking at a 15% royalty. What do you say? How do you react without appearing to be a "difficult" artist? Here's a suggestion...
Just do this with every potentially confusing and royalty eroding clause. Make them take out the bull and give you an honest quote on what they're really going to pay you. If they won't do it, they're trying to pull something over on you. If you don't understand it, don't sign it. Walk away and find someone to deal with who is willing to be honest and forthright. If you're as good as you think you are, they won't let you walk away. If they do, they were probably part of the original problem anyway. If this is the case, you haven't lost anything. In fact, you just did yourself (and everyone else) a favor. Just make one demand - honesty in your contract. If your label can't do this one simple thing for you, then you have to ask yourself why you are willing to give them the right to control your career for the next 3 to 7 years. It's just crazy enough that it might work. One thing's for sure -- it would change the entire landscape of the industry. Clear, concise, honest contracts are one thing that were never part of "the way we've always done it". Everyone knows it. But everyone also seems to accept it as the way things are. Stop doing that.
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