Recording Agreement Explained Part 2: Term and Options

Okay, so the recording contract. The thing most musicians dream and strive for. So well done, you are now presented with one. It is important not to get carried away. First off, THE RECORD COMPANY IS NOT THE ENEMY, so approach with caution not angry scepticism. You need to take a deep breath and consider what all that legal jargon is trying to say. I mean, your music is your baby; you want it taken care of.

The Time Thing: Time periods and deadlines are crucial when addressing the commitments from both the artist and label. It is a two-way street and some key points are as follows:

(a)  The Release Commitment: This outlines how the label has to exploit and make public the recording commitment produced by the musician(s) within a certain time periods. This is laid out to prevent the label from simply shelving the recordings. The territory specifications are important here, the label may only be required to promote in a particular territory (UK, USA, Australia, etc) in which case you should be able to have another label releasing your music in other territories not covered by the agreement.

(b)  The Recording commitment: This will specify how and when the songs need to be presented to the label, e.g. 6 months from the date of the agreement. It will usually also state how many songs, the quality of the recording expected and the total playing time required to fulfil the commitment. An example being an EP of 3 to 8 songs equating to 23- 25 minutes playing time.

The artist needs to be VERY aware of the full length of time they will be bound to a label, especially at the prospect of it all not working out. The contract will usually specify an initial period of say 12 months that artist is committed to the label which may include the time needed to deliver the recording commitment plus a certain period of time from the release for promotion what-have-you.

It all seems straight forward up until now, but what about this ‘Option to Extend’ thing?

An Option is a contractual legal term that gives the label the irrevocable right but not the obligation to extend the recording contract for successive periods usually with a new recording commitment imposed on artist. For example, the Initial Period may have required an EP to be produced of a certain length with a certain amount of songs. If the option to extend the contract is exercised then a new requirement of say an album of 14 songs with a playing time of a minimum of 45 minutes to be made within this a certain period, for example 6 month period after the exercise of the option.

It is important to note then that:

–          If the record company decides to exercise them under the contract, artist is bound to abide by the new terms. If label doesn’t think a subsequent album artist make will have enough success to guarantee the investment, guest what, artist is dropped.  It may seem harsh, but the label needs to be able to better guarantee their return from their commitment the artist.

–          There is usually more than one option period outlined in the contract, such as ‘First Option Period’ then ‘Second Option Period’ usually up until 4-5 Option periods; each with an additional recording commitment.

by Julia Bell and Juan Lopez

[notice_box]For recording contract templates please visit The Music Law Contracts website[/notice_box]

Images source: Mike Licht