What´s the Big Deal? (Part One)

There’s a great song by Bernard Igmar with a lyric that goes "…but there is one thing you can be sure of/everything must change." This song entitled "Everything Must Change," was first recorded in the mid-70s, and while it was considered to be one of the most profound lyrical statements of its time, its core concept is timeless. And, nowhere does it apply more aptly than to the music industry, a business that is fraught with change.

Some of those changes have been dramatic relative to trends in deal making and that’s what I want to cover in this article.

In the late 70s and 80s, when I was negotiating deals for artists such as Lindsey Buckingham and Stevie Nicks of Fleetwood Mac, Rickie Lee Jones, INXS, and Jane’s Addiction, to mention just a few, it seemed that record companies were intent on grooming artists carefully, catering very personally to their long term career needs. It was a record company’s custom to take an artist under its wing and "develop" him or her, very often with a business eye focused on a long-range plan. It was certainly my intent in venturing into deals for artists to secure contracts geared to providing opportunities that would serve to build their careers. Then, the departments at most record companies were interrelated with the others; each one in and of itself, closely-knit. Like a big family, each faction could count on the others as they formed a tightly woven support system. So, in those days and for a number of years later, deals were handled with the primary focus on developing the talent and staying with the act for the long haul. The custom was also for labels to manage and handle all the details for growing an artist’s career with an in house "team" mindset. Consequently, my contracts were fairly easy to implement.

Not anymore. Today is a very different story. The deals I negotiate today require new strategies.

Record companies in this era are no longer the "fraternity" type operations; instead they’re large, mostly public corporations—big companies that operate with a "strictly business" approach. Their concern revolves around profit centers, share price, quarterly reports and P/E ratios. They have independent departments, many of which are only interested in their respective responsibilities. One department may have little idea, or even care, what the other department is doing. For example, the marketing department might not be the least bit interested in what the A & R side of the label is doing, even though both internal entities are handling the same project. Most often, each is focused on its own department’s bottom line and making its numbers. And the whole focus is short term. If you’re not cutting it within a pre-determined time frame, you’re history.

So in light of these new changes, fledgling artists often ask me: What should I ask for in my record deal? Here’s what I tell them:

1. If you’re signing a deal make sure your attorney is in your camp and not teetering between trying to cut a deal for you while also trying to make your record company happy. Your attorney should be your advocate and put your interests above all else.
2. Try to get the company to commit to more than one album; two albums (or more if you can get them to), so that you don’t risk being a one hit wonder and so you have time to develop and provide margin for error. You don’t want a label to dump you because your first release didn’t meet their financial projections. I got just that the latter, for a new band out of Seattle, Vendetta Red. The longer you can stick around, the better your chances for getting your career solidly off the ground and building some momentum. Having said that, you also want to make sure you can include clauses that will get you out of the deal if it proves nonproductive to your career.
3. One of the biggest mistakes new acts make is that they become excited at getting a big cash payment on the front end, but don’t secure the back end. Better to take less up front and a bigger percentage of royalties and bonuses later on.
4. Make certain your deal includes full marketing and promotional support and that means lots of advertising and promotion of your records. Ask for everything from media appearances to independent marketing and promotion. And don’t let them skimp on the public relations effort, either. Also, try to retain ownership of all merchandising elements like caps with your act’s name on them, T-shirts, mugs, and the like.
5. Ask for guaranteed single releases and the release of music videos. These all help to sell the albums and put more money in your pocket.
6. Include tour support as part of your contract. It’s all about exposure when it comes to notoriety and sales.
7. Insist on keeping your publishing rights. Someday your band may break up but your songs won’t and others may want to record them. (Ever heard of the Beatles? They’ve probably made more money in elevator music than most millionaires make in a lifetime)! Some labels try to sweet talk these rights right out of you, but don’t let them. You always want to control your creations.

Tune in for the next issue of Music Biz when I’ll discuss what other changes may be in the offing. Don’t forget what I said earlier: Everything must (and will) change, so make sure the deal you strike provides for every eventuality.